CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, Western Australia based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.
Australia’s New Play on Mongolia’s Resource Boom: Wolf Petroleum
July 16 (WSJ – Deal Journal Australia) Australian investors will soon have a new play on Mongolia’s resources boom, but it won’t be the usual suspects like copper and coal.
ASX-listed minerals explorer Strzelecki Metals plans to acquire unlisted Wolf Petroleum, which has rights to explore vast tracts of the Mongolian steppe for oil and natural gas. The all-scrip deal comes after Wolf’s advisor, Perth-based Garrison Capital, scrapped plans for an initial public offering over the coming year.
Mongolia’s close proximity to China, the world’s largest energy consumer, and untapped resources potential has prompted a string of big M&A deals over the past year.
Headline transactions include Hong Kong conglomerate Kerry Group’s sale of a majority stake in its Mongolian coking coal assets to Mongolian Mining Corp. for US$464.47 million, and Thai coal producer Banpu’s acquisition of the shares it didn’t already own in Hunnu Coal, which valued the company at US$443 million.
In addition, Rio Tinto took control of Ivanhoe Mines as the pair invest billions of U.S. dollars in Mongolia to develop the Oyu Tolgoi copper deposit.
If approved by shareholders, Strzelecki will be renamed Wolf Petroleum and restart trading in November. The combined company is likely to have a market value around 50 million Australian dollars (US$51.1 million).
Strzelecki Chairman Brian McMaster said favoring a backdoor listing over an IPO wasn’t related to the sudden downturn in Australia’s equity market.
“It is substantially to do with accelerating Wolf’s exploration program, which is ahead of schedule,” Mr. McMaster told Deal Journal Australia.
After the reverse takeover and proposed share consolidation, Wolf will have around A$5 million in cash and will look to raise more funds “toward the end of the year”, Mr. McMaster said.
Sharing a border with China, Mongolia is a relatively new frontier for oil exploration and production. The Mongolian Government recently estimated there may be as many as 10.7 billion barrels of crude oil-in-place in more than 30 blocks.
It is lightly explored, however, with China’s state-owned PetroChina one of the few significant producers.
Mongolia also lacks infrastructure, so challenges remain in railing oil to China as exports would need to compete with other commodities and passenger trains for capacity. Accessing an oil pipeline from Russia to China is an option, but Russian producers like Rosneft have first refusal.
Formed by Garrison in 2010, Wolf is now regarded as the biggest oil tenement holder in Mongolia with more than 80,000 square kilometers.
It has been running seismic studies for the past year to identify the best targets, and plans to start a drilling campaign next year.
Wolf’s Baruun Urt block in the east of the country is relatively close to PetroChina’s existing oil fields, while its massive Jinst block in the south west is the biggest single exploration block in Mongolia.
Under the terms of the deal, Wolf’s existing shareholders, including Garrison’s executive chairman Matthew Wood, will be offered 25 Strzelecki shares for every one Wolf share.
Strzelecki Metals dials into Mongolian oil and gas sector with Wolf Petroleum acquisition – Proactive Investors, July 16
Newera Mongolian Geological Mapping Results - Shanagan Coal Project
July 16, Newera Resources Limited (ASX:NRU) --
· Newera’s initial interest in the Shanagan project was generated by a single, previously identified and sampled coal seam, outcropping over several kilometres.
· Recently completed high resolution geological mapping at 1:10,000 scale, identifies up to nine coal seams, through surface mapping and identification of discrete coal outcrops.
· Interpretation of the mapping results by Newera’s geological consultants in Mongolia suggest potential for a combined coal seam thickness in excess of 20 metres.
· The coal seams exist in Late Permian coal-bearing strata occupying an asymmetrical syncline with a dominant flank with 5 - 10 degree dips from the east and a shorter flank with 30 - 40 degree dips from the west.
· Interpretation suggests that if economic, the seams should be accessible by open pit.
· An immediate exploration program is planned for coming months including a five hole drill program.
Ivanhoe Mines Rights to Cease Trading on New York Stock Exchange and NASDAQ on July 18, 2012, and on Toronto Stock Exchange at Noon on July 19, 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 16, 2012) - Ivanhoe Mines (TSX:IVN)(TSX:IVN.RT)(NYSE:IVN)(NYSE:IVN.RT)(NYSE:IVN.R)(NASDAQ:IVN)(NASDAQ:IVN.RT)(NASDAQ:IVN.R) today reminded eligible shareholders that the company's current rights offering will expire in four days, on July 19, 2012.
Under terms of the rights offering, all holders of rights must either a) validly deliver their completed rights certificates to the Subscription Agent, CIBC Mellon Trust Company, before the expiry deadline on July 19, 2012, at 5:00 p.m. Eastern Standard Time (EST); or b) provide a notice to the Subscription Agent guaranteeing delivery of their rights certificates within three trading days of the July 19 expiry deadline, in both cases accompanied by payment of the total applicable subscription price.
An earlier deadline will apply for rights held through securities brokers, dealers, banks, trust companies or other custodians that participate directly or indirectly in the book-based systems administered by CDS Clearing and Depository Services Inc. or the Depository Trust Company. Holders of such rights should contact their broker, dealer, bank, trust company or other custodian to determine the deadlines applicable to them.
Details of the rights offering are contained in the final prospectus, notices and the rights certificate that were mailed to each registered shareholder resident in Canada and the United States on June 27, 2012. The final prospectus, dated June 7, 2012, and the notices are available on SEDAR and EDGAR. The rights offering was summarized in a news release issued by Ivanhoe Mines on June 8, 2012.
Key terms contained in the final prospectus for the rights offering include:
· Each Ivanhoe Mines shareholder has received one transferable right for each share of common stock owned as of June 19, 2012, the record date for the rights offering.
· Every 20 rights will entitle the holder to purchase seven (7) common shares of Ivanhoe Mines.
· Each holder may choose a subscription price of either US$7.00 per share or CDN$7.17 per share. The US and Canadian subscription prices represent a discount of approximately 32% to the closing prices of US$10.31 on the NYSE and CDN$10.62 on the TSX on June 7, 2012.
· Approximately 260 million common shares are expected to be issued under the rights offering, which would represent approximately 35% of Ivanhoe's current outstanding shares.
· A rights-offering prospectus and rights certificate was mailed on June 27, 2012, to each shareholder of record subject to applicable law.
· The rights offering will be open for exercise for 21 days from the date of mailing to shareholders and will expire at 5:00 p.m. Eastern Standard Time (EST) on July 19, 2012.
· Trading of the rights on the TSX will stop at noon (EST) on July 19, 2012. On the NYSE and NASDAQ, trading of the rights will stop at the close of trading on July 18, 2012.
· Shareholders who do not wish to exercise their rights to buy new common shares under the offering will have the option of selling the rights that they receive from Ivanhoe Mines through the TSX, the NYSE or NASDAQ.
· Shareholders who do not exercise all of their rights will have their present ownership interests in Ivanhoe Mines reduced, as a percentage of the total outstanding common shares, as a result of the rights offering.
Rio Tinto has committed to take up its full basic subscription privilege under the rights offering with respect to its 51% shareholding in Ivanhoe, subject to certain conditions. Rio Tinto will also provide a standby commitment for the full amount of the US$1.8 billion rights offering, subject to certain conditions including the price of Ivanhoe's common shares on the NYSE not falling below the subscription price at any time on or after the fifth business day before the expiry of the rights. Under the standby commitment, Rio Tinto is required to acquire any Ivanhoe common shares not taken up under the rights offering.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
TODAY, NO TRADES WERE HELD AT THE MSE
July 16 (InfoMongolia) In the past week, specifically on July 09 and 10, 2012, the Mongolian Stock Exchange (MSE) has traded a total of 559.2 million MNT worth exchange. The number of companies that have fulfilled MSE's new system requirements has now become 13, whereas 10 companies were registered as of July 10, 2012.
Although MSE reported that the process of converting into the new system is being successfully carried out, there were no trades processed at MSE today. This is the second occurrence in the 20 years of MSE history, where no trades were processed.
The MSE had installed the new “Millennium IT” modern trading system in the frames of the "Master Services Agreement" with the London Stock Exchange. However, because there are not many broker and dealer companies which can fulfill the requirements of the new system, the range and activity of trade has drastically declined. Thus, the MSE has made a “zero” halt on the first working day post the Naadam celebrations.
LSE's MillenniumIT technology goes live at three exchanges on three continents
Borsa Italiana, Johannesburg Stock Exchange and Mongolian Stock Exchange migrate to LSE's low-latency trading platform, Millennium Exchange
London, July 16 (Automated Trader) - London Stock Exchange Group (LSEG) has announced that within the last month three exchanges on three continents, Borsa Italiana, Johannesburg Stock Exchange and Mongolian Stock Exchange have migrated to the Group's trading platform, Millennium Exchange.
The Mongolian Stock Exchange migrated to the new platform on 2 July, marking the culmination of a 14-month project to completely modernise the country's capital markets infrastructure. As well as overhauling the market's technology, LSEG has developed an education programme for market participants and worked with the Mongolian government to re-write the country's capital markets regulations and securities law. An official launch in Mongolia is scheduled for later this year.
Xavier Rolet, CEO London Stock Exchange Group said: "London Stock Exchange Group was very pleased to have been selected to work with the Mongolian Stock Exchange and we are delighted to have successfully delivered a world-class exchange platform. The development of stable, efficient and transparent capital markets infrastructure is a vital step in Mongolia's journey towards greater prosperity. London Stock Exchange Group's MillenniumIT technology, now installed at the MSE, will create new and exciting opportunities for the country's leading companies and allow them to raise capital, in Mongolia and overseas, with confidence. We look forward to the future and continuing to work with our partners in Mongolia."
Borsa Italiana became the fourth of LSEG's markets to migrate to MillenniumIT joining London Stock Exchange, Turquoise and the Order Book for Retail Bonds. Equity, structured product and fixed income trading at the Italian exchange will now take place via Millennium Exchange. Borsa Italiana has also updated the configuration of its servers in Milan.
Johannesburg Stock Exchange also completed its migration to Millennium Exchange within the last month. The JSE moved its trading system back to Johannesburg from London - a transfer aimed at enhancing operational efficiencies and ensuring trading optimisation for market participants.
Tony Weeresinghe, CEO of MillenniumIT and Director of Global Development at the LSEG said: "These migrations serve to highlight Millennium Exchange's extraordinary versatility. From Mongolia's fledgling market to Borsa Italiana, one of Europe's largest exchanges, our technology provides world-leading latency, exceptional flexibility and scalability. The Mongolian project in particular demonstrates the speed with which our systems can be installed and activated even in a market with no history of electronic trading."
MillenniumIT technology is now installed in over thirty securities exchanges across Europe, Asia, Africa and the Americas.
Mogi: actually nothing has been announced yet, DP opened the door once again to everyone except MPP, i.e. Justice Coalition, Civil Will-Green Party, and even the independents
Mongolian rivals join forces to govern
July 16 (Financial Times) Two bitter political rivals in Mongolia have joined forces to form a coalition government that will rule the resource-rich nation for the next four years.
The centre-left Democratic party, which won the recent election but fell short of an outright majority in parliament, agreed to form a coalition that includes the Mongolian People’s Revolutionary party, a breakaway party headed by Nambaryn Enkhbayar, the former head of state who is facing trial for corruption.
Mongolia’s $10bn economy is one of the fastest-growing in the world and it sits atop vast reserves of copper, coal and gold. Many of those deposits are just starting to be developed, and the government that sits in power for the next four years will play a key role in shaping the direction of mining policies and the development of natural resources that are coveted by Mongolia’s larger neighbours, Russia and China.
The ruling partnership is unusual because of the bitter acrimony between the Democratic party and the MPRP, and the pending legal action against Enkhbayar on corruption charges, which he denies. Earlier this year he went on a hunger strike to protest the allegations, which he says are politically motivated.
Mr Enkhbayar, who previously served as both president and prime minister as part of the Mongolian People’s party, split with that party to found the MPRP in 2011. His trial on five charges of corruption is set to begin on Wednesday, although it has been delayed many times.
The trial could prove divisive between the coalition partners and analysts say the possibility of the MPRP pulling out of the government if the courts reach a guilty verdict in Mr Enkbayar’s case cannot be ruled out. If the courts clear Mr Enkhbayar of the charges, then he could play a very active role in the government through the MPRP.
Some analysts expect that resources nationalism could rise due to the MPRP’s presence in government and Mr Enkhbayar’s nationalistic remarks before the election.
Mr Enkhbayar advocates making Tavan Tolgoi, the large Mongolian coking coal deposit, 100 per cent state-owned, a move that would scuttle the plans for a public listing of the mine in London and Hong Kong next year.
However Mr Enkhbayar’s son, E. Batshugar, rejected the characterisation of the MPRP’s policies as “nationalistic”.
“Having foreign investors in Mongolia is one of the keys to our development,” he told the Financial Times by phone.
DEMPARTY: WHO TO COLLABORATE WITH -- IS THE QUESTION
Ulaanbaatar, Mongolia, July 16 /MONTSAME/ At the 39th meeting on Monday, the National Consultative Committee of the Democratic Party (DP) backed an issue of appointing Z.Enkhbold MP as the Parliament Speaker and N.Altankhuyag MP as the Prime Minister by 100-percent votes.
A matter on forming a new government with the "Justice" coalition was to be finalized but the gathered decided not to hurry and to consider it together woth other political parties, said D.Erdenebat MP, a new head of the DP faction, and N.Altankhuyag and Z.Enkhbold MPs. According to them, the meeting reached an agreement to set up a working group responsible for studying the matter.
The former DP chairman N.Altankhuyag had said before that the DP was ready to collaborate with the "Justice" coalition--the Mongolian People's Revolutionary Party and National Democratic Party--but the Committee tasked the faction with consulting the matter with other forces after seriously considering it. For this reason, the faction met at 4.00 pm on Monday to draw a decision. Later it will be considered and approved by the National Consultative Committee.
The first one to offer an official suggestion to collaborate has been the “Justice” coalition followed by the Civil Will-Green Party and independent candidates. Nothing is heard from the Mongolian People's Party, they said.
DP approves nominees for Premier and Speaker, negotiation to start with Justice Coalition, CWGP proposal to be studied
July 16 (news.mn) National Consulting Committee /NCC/ of Democratic Party held a meeting today at State Palace. As a political party who took a majority seats in the parliament the Democratic Party will lead process of formation of new government.
Newly established Democratic Party group in the parliament held a meeting on July 14 and suggested to the National Consulting Committee to accept N.Altankhuyag, leader of Democratic Party as Prime Minister and Z.Enkhbold, MP as a Speaker.
According to the D.Erdenebat, newly elected head of DP group in the parliament, former general secretary of DP, member of Governing Board accepted N.Altankhuyag’s nomination as Prime Minister and Z.Enkhbold’s nomination as Speaker.
Third issue of the Governing Board meeting was issue of coalition. Before the Naadam Festival head of DP N.Altankhuyag announced that DP sent a proposal to the “Justice” coalition to join in formation of new government.
“Third issue was most important and much concerned. Initiative of formation of new government in our side. We have only one circumstances for coalition of new government-able to support and resolve with DP expected social and economic problems faces to Mongolia. As informed before we suggested to the “Justice” coalition proposal to join in coalition with DP. The National Consulting Committee accepted this proposal and give a right of negotiation to DP group in the parliament” said D.Erdenebat to the journalists.
As informed our reporter Civil Will-Green Party, who has 2 seats in the parliament expressed they will to join coalition. And DP group going to establish working group to discuss and study Civil Will-Green Party proposal.
BANK OF MONGOLIA: Monthly Statistical Bulletin, June 2012
July 16 (Bank of Mongolia) --
B. Chadraa: ‘First Mongolian satellite to be launched in the USA in 2013”
July 16 (UB Post) --
-What is the main purpose of this project?
-The satellite will cover mostly Mongolian territory. In particular, it will be flying around at 52 degrees, northern latitude, at a height of 450-500 kilometers. From that point it is able to get images and other information about Mongolia. We are aiming to receive results of the experiments directly to Mongolia. In other words, we will build a receiving station in Mongolia. The main purpose of launching this satellite is to show the world how capable Mongolia is as a nation and how capable out people are. It will prove that despite our small population, Mongolians can work and think at Western standards and beyond. We will show the world that we aren’t behind other nations in terms of intelligence, capability, and determination – not only on earth, but in outer space as well.
-There must be many experiments conducted from the satellite.
-This is a small satellite. We will carry out our scientific experiments and other works that will advertise Mongolia. We will be researching 2-3 things specifically. Scientists from the Astronomy Center and Nuclear Physics Research Center will cooperate with these tasks. Our citizens should show support for the proposals. During the launch of the satellite, some educational and cultural tasks based on information technology will be carried out. We are also discussing the project to deliver folk songs with a traditional Mongolian melody from space.
-Is every country able to launch a satellite?
-Basically, any country can launch their own satellites. As a country with a space status, Mongolia has more advantages. Large nations that have experience in spaceflights are supporting this. B.Tuguldur and Ts.Nandinbaatar, who initiated this project, attended the International Space Studies conference in Los Angeles and many countries expressed their support. We decided that we would be able to launch our satellite from the USA space rocket next year. We would assemble the satellite, do research and build a receiving station here in Mongolia. The launching issue will be supported by the USA. We have announced all of this and hope that the government and the people of Mongolia will encourage and support this work.
-How much of a budget does this project need? Do you have any foreign support?
-There won’t be any money coming from western countries. Of course, we won’t refuse funds if other nations offer to help. We will generally do all the works in Mongolia. The cost of the project will depend on the size of the satellite. It will actually be much cheaper than most people think. We have been thinking of seeing President Ts.Elbegdorj regarding this issue. Most importantly, we have people who wish to see this project succeed and we have started the designing process.
-What size will the satellite be?
-It will be about few kg. We are planning to make it to work with a solar power supply. The solar panels stretch and become bigger in space. We haven’t defined final sizes yet.
-How big will the control center be?
-The receiving station from the Salyut and Soyuz in 1981 was only one room. We think it would be around that size even now. Science and technology has developed so much since then.
-How many countries have launched satellites in space so far?
-Only 16 countries have launched satellites since the 21th century. The advancement of science and technology is one of the things which indicate the potential of the people in a country. It is a very important time to show our intellectual potential to the world.
-Why is the satellite set to take off from the USA?
-We can send it from other countries, but the USA turned out to be most suitable in terms of timing. The States will launch a space rocket in the first quarter of next year and allowed us to join in. The date has coincided and that’s why we are sending our satellite from the USA. This project is open to everyone. We think that all countries, especially our two neighbors Russia and China, will support this. Besides this, we expect that the government will launch a satellite for communications in the coming years. Our work will be a major step in accelerating this work.
-What benefits will Mongolia have by launching a satellite?
-We don’t compare this flight with large satellite flights. However, the entire world has admitted that space is the future of mankind. A space station that is 110 metres long and 70 metres tall has already been built as a result of international cooperation. People are also aiming to occupy Mars and the Moon. Since Mongolia has a space status, we have to engage in this work and proceed forward. Personally, I believe that this project will prepare young Mongolians to get involved in this field. Space exploration has become the future of the world and it has become important to prepare young people for this. It is of great importance for the reputation of Mongolia and its people who are living in the country and abroad. There aren’t many countries which have launched a satellite into space. Space technology uses the most advanced science, so it will be of significant importance for Mongolian development. Nano-technology and smart technology is used in space. Countries with experts who know the latest and best technology will have no problems. It is an opportunity for our country to keep up with the world. I’m sure all Mongolians will see the advantages of our project.
Strategic risk alert: Mongolia’s resource nationalism
July 2012 (AEGIS Advisory) --
Two weeks after Mongolia’s parliamentary elections Ulan Bator is still without a new government. While two formerly ruling parties dominate the legislature as expected – the Democratic Party (DP) with 31 of the 76 seats and the Mongolian People’s Party (MPP) with 25 – each is trying to build a coalition without the other. Yet whatever government emerges, the election saw resource nationalism attract support from across the political spectrum. And it is certain to feature in Mongolian politics in the months ahead.
How will it play out? May’s foreign investment law requires foreign ownership of more than 49% of any enterprise in ‘strategic industries’ (ie mining, banking, telecoms), or for $75 million + transactions in strategic sectors, to be approved by parliament. Its avoidance of blanket proscription of foreign ownership suggests it is aimed at certain investors rather than all – almost certainly Chinese ones, given its genesis as a reaction to Chinese firm ACH’s attempt to buy mining assets. But Mongolia has repealed or suspended implementation of economically damaging knee-jerk legislation before – 2006’s so-called Windfall Profits Tax, which imposed a 68% levy on commodities revenues, was effectively repealed last year. And if the investment law does survive, Mongolia’s ability to turn on Chinese firms may be limited.
This is because of a simple strategic logic. Mongolia prefers Russia (its guarantor when it broke free from Chinese rule) over China (its imperial overlord), but it cannot break free from Beijing. Take coal. The government’s $2.5 billion Dalanzadgad-Choibalsan railway aims to ferry Mongolia’s minerals to Russia’s railways and Pacific ports. But a 90 million tons per year (tpy) drop in European and Russian coal demand since 2000 has turned Russian producers toward the Asian market and clogged Siberia’s rail lines and coal ports. Politically savvy Russian coal exporters like SUEK and Mechel will fight to keep Mongolian coal off Russian rail lines and out of their Pacific export terminals, while the potential 80 million tpy increase in Siberian coal production capacity by 2020, and likely export terminal capacity growth of less than 30 million tpy, means there will be no room for Mongolia’s product. On the other hand, on 7 June the Mongolian Mining Corporation broke ground on its own rail line that will allow the Ukhaa Khudag coking coal mine to move large volumes of coal to the Chinese border crossing at Gashuun Sukhait – a commercial proposition driven by the logic that Mongolian surface miners in the Southern Gobi can with a rail line deliver coal 500 km into China at costs of less than $60 per metric ton (m/t) compared to the $70+ cost of local Chinese underground product. Factor in that China takes 99% of Mongolia’s coking exports, and Ulaan Baatar is clearly stuck with Beijing – even if this is a logic its politicians try to ignore.
What of western investors? If as seems likely the investment law is aimed at Chinese firms then their western counterparts should have little to fear. But given that both the DP and MPP have to some extent adopted the resource nationalism agenda it would be surprising if the issue did not play out in other areas.
The key new risks Western investors should be wary of are potential tax increases for companies already developing mines and a slowdown or even moratorium on issuing new exploration and mining licenses until the government feels it has terms it deems ‘fair’. If the MPP’s harder line resource nationalist rhetoric continues arousing popular support, tax increases on Western investors’ mining projects will become substantially more likely. If investors resist, Mongolia may follow Russia’s lead and use ‘environmental regulations’ as a way of coercing compliance. Either way, investors should brace for two to four quarters of turbulence as Mongolian politics works through its current bout of resource nationalism.
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Wealth Rises In Mongolia, As Does Worry
ULAN BATOR, Mongolia, July 15 (The New York Times) — Three kinds of foreigners, they say, prowl the world’s energy frontiers: missionaries, misfits and mercenaries.
Howard Hodgson, a weather-beaten Australian drilling executive with the mouth of a sailor, is proud to say he is in it for the money.
When he landed here more than a decade ago, Mr. Hodgson found an economic wasteland still reeling from the fall of Mongolia’s Communist overlords in 1990. The few other expatriates on the scene were mostly busy proselytizing, and there was little to do during the brutal winters but develop a taste for fermented mare’s milk.
Yet to Mr. Hodgson, a veteran of the wilds of Papua New Guinea, Myanmar and Pakistan, the young democracy was a welcome change of scenery. “I’d had enough running around in the jungle,” he said recently.
What made him stay, he said, aside from a nascent mining sector, was an advantage particularly irresistible to a man who had spent a career dodging cannibals, rebels and terrorists: “Here you won’t get shot.”
These days, the perks are far plusher. Mongolia, it turns out, sits atop a treasure trove of copper, coal and gold that is changing the fate — and the face — of this mostly empty country, thanks to China’s insatiable demand for natural resources. The surging mining trade has made Mongolia the world’s fastest-growing economy, transforming Ulan Bator into a city where Soviet bust meets Chinese boom.
And now the mercenaries in finance, attracted by a frenzy of deal-making, have joined in, too. “It’s a bit of a gold rush,” Mr. Hodgson said as he worked a booth at a coal industry conference packed with tailored suits and foreign accents.
For locals, their gentrifying capital, home to half of Mongolia’s 2.7 million people, has become a petri dish for their hopes and fears. Amid the crumbling Stalinist apartment blocks and rising skyscrapers, a debate is raging over mining’s impact, pitting those who praise the industry for sweeping away decades of decay against others who see materialism and corruption polluting Mongolia’s traditional way of life.
Like it or not, mining is changing Ulan Bator. Until a few years ago, the skyline was dominated by a pair of cooling towers. These days, the city’s tallest building is a gleaming 25-story hotel with $300-a-night rooms and unreliable heating.
Its glass sheath overlooks Mongolia’s economic and political nucleus, Sukhbaatar Square, which is surrounded by a telling collection of buildings: the Mongolian Parliament, the stock exchange, the headquarters of the Mongolian Mining Corporation and a billboard for the country’s first British private school, which is to open in September. Across the street, a new mall beckons the nouveau riche with name-brand stores like Burberry and Emporio Armani.
“If it wasn’t for mining, this place would look just as it did 50 years ago,” said Haydn Lynch, who moved here in April from Sydney, Australia, to take an executive position with the exploratory mining company Xanadu Mines.
First-world profits are colliding with third-world problems. A series of flock-devastating winters and the lure of mining riches have attracted thousands of herders from the grasslands. They live on the city’s outskirts in crowded yurt slums some locals refer to as Mongolia’s favelas. Unemployment is rampant there; electricity and drinkable water are not. The less fortunate take shelter in the sewers, where they huddle beside hot-water pipes when the temperature plunges to 40 below.
“At the moment people are waiting for the mining wealth to somehow spill over to them,” said Sumati Luvsandendev, director of the Sant Maral Foundation, a nonprofit organization. According to the foundation’s recent polls, 96 percent of Mongolians think corruption is widespread and 80 percent say they believe their country’s oligarchs have too much power.
Discontent over corruption and the government concessions to foreign mining firms were the major campaign issues in last month’s parliamentary elections. Those now in power face high expectations to spend the mining windfall on health care, infrastructure and economic development.
Still, some wonder whether Mongolia can avoid the familiar demons of political instability, corruption and widening poverty that plague other mineral-rich developing nations. Government officials say they are working hard to avoid the “resource curse” that bloats the bank accounts of a corrupt elite at the expense of the wider public. They say they are also mindful of the potential for the so-called Dutch disease, the strengthening of a nation’s currency that often accompanies a surge in natural resource exports, making its other industries less competitive.
“Mongolia is at a crossroad,” said Saurabh Sinha, an economist with the United Nations Development Program in Ulan Bator. “Will the government use the mining wealth sustainably and equitably for improving the lives of all its people? Or will it become a Nigeria?”
Some Mongolians are starting to feel the benefits. This year, civil servants received a 50 percent pay increase. Or consider the improved fortunes of Uuganbaatar Nyamdeleg.
Stuck in Ulan Bator’s perpetual gridlock one evening, Mr. Nyamdeleg, a mop-haired 26-year-old, recounted how he left his $500-a-month job as a hotel bellboy in 2011 to become a mining safety inspector, earning $1,000 a month. Today he has offers from two mines willing to pay him $1,500 a month. “Only mining pays that kind of big money,” he said.
Mongolia’s boom has also been a magnet to some who left years ago in search of greater fortunes. Zolboo Bataa, 34, spent nine years in Ireland, where he obtained a business degree and built a promising corporate career. But with Ireland in deep recession, Mr. Bataa returned home in March, quickly landing a job with a mining equipment company.
“If you don’t see the opportunity in Mongolia now, you’re a fool,” he said over a pint of beer one night at Hennessy’s Irish pub, an expatriate haven tucked into a dingy hotel.
Gantuya Badamgarav, 44, agrees. The embodiment of Ulan Bator upward mobility, Ms. Badamgarav taught herself English 14 years ago using a Russian-English dictionary and went on to become one of Mongolia’s highest-paid executives.
But she gave it up on the expectation that she could do even better seeking a piece of the new wealth flowing through town. In April, Ms. Badamgarav opened an art gallery in a new mall, filling it with abstract oil paintings and metal sculptures. Wearing skinny jeans and biker boots, Ms. Badamgarav said she expected Mongolia’s mining boom to fuel a Chinese-style cultural renaissance, and she plans to be ahead of the curve.
“In China, once they had luxury cars and Louis Vuitton bags, art came next,” she said.
With the country on the brink of prosperity, Ms. Badamgarav is betting her future on her nation’s soaring aspirations. “Mongolians are like dogs just let off the chain,” she said. “We’re hungry to afford the good stuff.”
Mongolia: Focus on Investment in Tourism
July 11 (Oxford Business Group) With the 2015 target date by which Mongolia hopes to welcome 1m visitors per year drawing nearer, officials are calling on the government to channel investment into the country’s tourism industry and take specific steps to encourage greater private sector participation.
Mongolia’s wealth of attractions, such as its fossil fields in the Gobi Desert and the diversity of its unspoiled landscapes, should provide solid foundations to develop the tourism sector and tap niche markets.
But officials have voiced concerns that underinvestment in the industry and a lack of action aimed at driving growth are restricting its potential, with some critics questioning whether tourism risks being eclipsed by the country’s dominant mining sector.
Figures show that the number of people coming to Mongolia is on the rise, with visitor numbers up 11% in the past three years and revenues showing an increase of 32.5% for the same period. However, with tourism still only contributing around 5% to GDP, industry officials are calling for tangible measures to be put in place aimed at generating sectoral growth. In particular, they highlight the need for investment in transport infrastructure, internet and communications connections, high-quality hotel accommodation, flight links and human resources.
“Investment is needed to create a productive tourism sector,” Ts. Orgodol, the head of tourism at the Ministry of Nature, Environment and Tourism, told the Mongolian Economy magazine in June. “Instead of just talking we must start taking action. The government must create a favourable environment for the private sector to operate.”
Orgodol said Mongolia lacked platforms, such as research centres and museums, which would enable the country to share its rich history with visitors. “Today we are not able to tell those great historical stories and display them through exhibits,” he said.
With expansion in Mongolia’s tourism industry slower than industry officials would like, Orgodol, along with others, also fears that the sector is missing out on opportunities to attract good quality human resources, such as translators, guides, managers and accountants, who are instead opting to take up employment in mining.
Some officials, such as B. Indraa, the director of the Mongolian National Tourism Organisation, have additional worries that mining could threaten elements of the country’s heritage. In June, Indraa voiced her concerns on hearing that mining companies had acquired land-use rights in places of historic interest, including the Bichigt Khad Valley, the Darkhad Valley and the sacred meditation sites of Danzanravjaa.
“It’s sad to see the landscape and culture in many areas of Mongolia are irreversibly changing because of mining. There’s no escaping the fact,” she told the Inter Press Service.
While there is frustration among those who believe mining has contributed to delays in the government’s efforts to drive up visitor numbers, some tourism officials acknowledge that the lucrative extractive industries can also play a key role in providing the funds for much-needed infrastructure development.
N. Erdenebat, the vice president of the Mongolian Tourism Association, pointed out that other resource-rich countries had successfully adopted this strategy. “We can reach the level of countries such as Canada, Australia, Chile, Malaysia, and Arabic countries, which all invested their resource profits into their tourism industries,” he said.
Mongolia has already taken the first step along this path by using mining revenues to partially finance the country’s forthcoming Khushigiin Khundii International Airport, which is expected to be a key component in driving tourism growth and improving domestic links.
The mining industry is also proving to be a key driver in Ulaanbaatar’s development, leading to an influx of expatriate workers, investment in public transport, and a wave of major retail brand shop openings. The Hong Kong-based Shangri-La Group, along with MCS Holding, Mongolia, plans to open a 273-room hotel in the capital city by 2013 on the back of the city’s expansion, while Hyatt Regency Ulaanbaatar is to build a 259-room facility which is scheduled for completion the following year.
While concerns remain about the pace at which Mongolia’s tourism sector is expanding, most industry players acknowledge that pushing for resource revenues to be channelled into the industry rather than targeting mining is the way forward. Certainly, Mongolia’s rich resources could be key in the country’s efforts to fund the new infrastructure and marketing initiatives that its tourism industry needs to drive growth.
Mongol Rally gets under way from Goodwood Motor Circuit
July 14 (BBC News) Hundreds of "amateur adventurers" are setting off from West Sussex in "tiny, unsuitable cars" on a 10,000 mile charity drive to Mongolia.
The annual Mongol Rally, which was founded in 2004, is being launched from the Goodwood Motor Circuit.
More than 270 teams have signed up, with another launch being held in the Czech Republic on Monday.
Drivers will then either head north via the Arctic Circle or travel through Kazakhstan or Iran and Turkmenistan.
'No set route'
Teams are expected to take between three and six weeks to complete the rally.
The rules are that each vehicle must have no more than 1.2 litres of "raw engine power under the bonnet", each team must raise at least £1,000 for charity, and that there is no set route, no professional drivers and no back-up or support of any kind.
The official charity of the Mongol Rally 2012 is Lotus Children's Centre in Ulaanbaatar, Mongolia, with the total amount expected to be raised by the teams set to be more than £300,000.
Among those taking part are three paraplegics, who have named their team The Wheelie Wanderers, two couples on their honeymoon, two teams of entire families, and four all-female teams.
Teams from Columbia, Brazil, India and Taiwan are also competing.
"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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