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UPDATE 1-Chalco extends offer for SouthGobi amid political opposition
* Chalco extending offer period for another 30 days
* Mongolia cautious about Chinese investment
* SouthGobi shares trading well below offer price (Adds comments, details)
HONG KONG, Aug 2 (Reuters) - Chalco has decided to extend its offer for a majority stake in Mongolia-focused coal miner SouthGobi Resources Ltd (TSX:SGQ, HK:1878) or the second time, the Chinese aluminium giant said on Thursday, in the face of stiff political opposition in Mongolia.
State-controlled Chalco will extend the time for it to make a proportional takeover bid for up to 60 percent of the common shares of SouthGobi by another 30 days as it is still trying to obtain approval from the Mongolian government, Chalco said.
"Additional time is needed to engage with the Mongolian government and review the terms and conditions of the transaction," it said in a filing with the Hong Kong stock exchange.
Toronto- and Hong Kong-listed SouthGobi's shares have wilted since April, when Aluminum Corporation of China Ltd -- better known as Chalco -- announced a $926 million, or C$8.48 a share bid for a controlling interest in the company, which owns large coal projects in Mongolia close to the Chinese border.
SouthGobi shares last traded at C$4 in Toronto.
The proposed deal has the backing of SouthGobi's majority shareholder, Ivanhoe Mines Ltd, but it faced political opposition within Mongolia almost immediately, which is becoming wary about the growing Chinese presence in its mining sector.
"Mongolia is known to be sensitive to the acquisition of resources by China, as this could put both the demand and supply side in the hands of Chinese state-owned companies," HSBC said in a July report.
Authorities in the resource-rich country threatened to revoke SouthGobi's mining licenses and the government outlined plans to enact new investment rules that would allow it to review deals involving foreign companies with assets in the country.
On July 3, Chalco announced it would delay its plan to acquire the majority stake in SouthGobi by 30 days as it was seeking regulatory backing in Mongolia.
Even if Chalco wins Mongolian approval, it would likely lower its offer given the recent sharp declines in SouthGobi's share price amid uncertainty over its mining licences in Mongolia, analysts say.
SouthGobi suspended some of its mining operations in June as it could not obtain permits to carry out day-to-day operations. Operations in its Ovoot Tolgoi mine remain suspended, also because of a recent sharp drop in coking coal prices in China, a source with direct knowledge of the matter told Reuters.
A takeover by Chalco should benefit SouthGobi as the Chinese company would become a major source of demand for its coking coal and help SouthGobi source electricity and build highways needed for production expansion and transport, analysts say.
Related:
Ivanhoe and Chalco agree to extend SouthGobi bid by Chinese firm – The Canadian Press, August 2
A Mongolian Lesson for Investing Hordes – WSJ, August 2
SouthGobi says Ivanhoe mines, Chalco extend takeover bid 30 days – Proactive Investors, August 3
Ivanhoe Mines renamed Turquoise Hill Resources, shares move higher
August 3 (Proactive Investors) Ivanhoe Mines (TSE:IVN) (NYSE:IVN) late Thursday announced its name change to Turquoise Hill Resources Ltd. has gone into effect.
Shares of the company surged up 7.6 per cent Friday afternoon, trading at $8.64 as at 1:30 p.m. ET.
The company said its new trading symbol will be "TRQ" and will become effective at the opening of trading on the Toronto Stock Exchange, the New York Stock Exchange and the NASDAQ Stock Market on August 8, 2012.
"Changing our name to Turquoise Hill Resources marks another milestone in our corporate history," said Turquoise Hill CEO Kay Priestly.
"Our new name more closely aligns the company with our world-class Oyu Tolgoi Project and will have added significance as we rapidly approach the start of production."
A corporate name change was an element of a deal with the company's majority shareholder, Rio Tinto (NYSE:RIO) (LON:RIO), to ensure funding of the $6 billion Oyu Tolgoi copper and gold mine in Mongolia.
In April, Rio provided an additional credit facility up to $1.5 billion to ensure construction wouldn't be delayed. Rio said it would also support the completion of a loan of $3 billion to $4 billion to be provided by third-party lenders.
The deal resolved issues over financing Oyu Tolgoi, which will, once in production, be set to beat Chile's Escondida as the world's largest copper mine. Initial production at Oyu Tolgoi is expected later in 2012.
Also as part of the agreement with Rio, Ivanhoe founder Robert Friedland resigned as chief executive along with six other Ivanhoe directors and four senior management members also resigned.
The company noted that the change to Turquoise Hill Resources will not affect existing Ivanhoe Mines stock certificates. Shareholders are not required to submit their current certificate for new Turquoise Hill Resources stock certificates.
The new name was approved by shareholders at the company's annual meeting on June 28, 2012.
Turquoise Hill Resources, formerly Ivanhoe Mines, is an international mining company focused on copper, gold and coal mines in the Asia Pacific region.
The company's primary operation is its 66 per cent interest in the Oyu Tolgoi copper-gold-silver mine development in southern Mongolia. Other assets include a 58 per cent interest in Mongolian coal miner SouthGobi Resources (TSX:SGQ); a 59 per cent interest in copper-gold miner Ivanhoe Australia (TSX:IVA)(ASX:IVA), which is also developing a molybdenum-rhenium mine; and a 50 per cent interest in Altynalmas Gold, a private company developing the Kyzyl Gold Project in Kazakhstan.
In other news, SouthGobi Resources (TSE:SGQ) Thursday reported Ivanhoe Mines (TSE:IVN) – now Turquoise Hill - and Aluminum Corp of China Ltd., also known as Chalco, both agreed to extend their friendly takeover bid of the Mongolian coal producer.
The proposed deal, valued at $926 million or $8.48 per share, has the backing of Turquoise Hill - SouthGobi's largest shareholder.
The company has entered into a lock-up agreement with Chalco and has agreed to tender all SouthGobi shares to Chalco.
Mongolia has profited from selling coal, copper and other minerals to China's booming economy but some in the thinly populated North Asian nation are uneasy about possible economic domination by their giant neighbour.
Chalco's plan to buy a 60 per cent stake in SouthGobi from Turquoise Hill triggered anxiety in Mongolia about Chinese ownership of a major resource producer.
The deal remains subject to all statutory and regulatory approvals, including Canadian and Chinese regulatory approvals, and Chalco shareholder approval.
Newera: Drilling to Commence – Shanagan Project, Mongolia
August 2, Newera Resources Limited (ASX:NRU) --
HIGHLIGHTS
• Newera Resources Ltd is pleased to advise that its Mongolian subsidiary company, Newera Resources Mongolia LLC, has executed a drilling contract with Mongolian drilling contractor Best Drilling LLC.
• The drilling contract covers an ~ 1,000 metre drilling program that Newera intends to undertake on its Shanagan coal project area 140km south east of Ulaanbaatar.
• Drilling is planned to commence in Mid-August – pending the licence holder gaining all necessary Government approvals prior to the planned commencement date.
Background:
In May 2012, Newera Resources Limited (ASX: NRU) announced it has executed a binding agreement giving Newera an option to acquire an 80% interest, in the Shanagan Uul East Project ("Shanagan Project"), located in Central Mongolia.
The Shanagan Project comprises of one exploration license covering an area of approximately 2,223 hectares in a known coal bearing region, 140km southeast of Ulaanbaatar. The Shanagan Project is ideally located approximately 50km from an existing heavy duty rail line that services the nearby Baganuur lignite coal deposit, and connects to the trans-Siberian railway that services China in the South to Russia in the North.
Newera's initial interest in the Shanagan project was generated by a single, previously identified and sampled – coal seam, outcropping over several kilometres.
Newera subsequently contracted a Mongolian based geological consulting group - Nordic Geological Solutions, to undertake a field mapping exercise at 1;10,000 scale over the area of interest within the Shanagan Project boundaries.
The mapping exercise was completed and very positive results were presented to Newera.
Newera further requested the consulting group to compile and review the results of the mapping and pass back to Newera, their professional observations. Those observations are summarised below.
"NORDIC GEOLOGICAL SOLUTIONS LLC
Ulan Bator, July 13th 2012
RE: MAIN RESULTS FROM NGS MAPPING OF SHANAGAN BLACK COAL TENEMENT
HIGHLIGHTS FROM NGS MAPPING
• A team of 3 experienced geologists from Nordic Geological Solutions LLC recently successfully completed high resolution mapping (i.e. 1:10,000 scale) with special focus on the coal-bearing sector of the Shanagan exploration property.
• Mapping confirmed Late Permian coal-bearing strata within a c. 8 km2 area in the eastern part of the exploration tenement.
• Significantly, up to 9 laterally continuous black coal seams were identified by the mapping team, extensively exceeding the previous understanding of the number of Late Permian coal seams thought to exist, and as such, adding considerable value to the Shanagan project.
• The seams outcrop, or sub-crop, along the flanks of a NE – SW trending asymmetrical syncline.
• The thickness of the Late Permian coal measures estimated at c. 200m based on the detailed mapping - possibly thicker within synclinal sedimentary depocentre.
• NGS estimates combined coal thickness of c. 20m, with coal / clastic sediment ratio similar to the Late Permian Blackwater Group in the Bowen Basin.
• Sedimentary bedding dips between c. 5 and 40 degrees, with low angle dips along the extensive western flank and steeper dips along the restricted eastern flank.
• Favourable open-cut strip ratio for the vast majority of the deposit expected by NGS.
• Late Permian sandstone strike ridges continue for 100's of metres along strike, indicating somewhat limited post Permian structural deformation, with largest fault displacement of only a few 10's of meters in places.
• The coking properties of the extensive Late Permian coal-bearing system in Mongolia is well documented (e.g. Erdenetsogt et al., 2009). Given the Late Permian age of the Shanagan coal measures and the synclinal architecture of the deposit, the potential coking coal distribution is predicted to be somewhat complex by NGS.
• NGS recommends a phased JORC-compliant drilling and trenching program to commence as soon as practicable possible. In this context NRU has already secured a drill rig for this initial exploration program.
• The initial drilling program to comprise 5 holes with a combined length of c. 1,000m, as well as trenching along the flanks of the syncline, with the aim of providing a maiden JORC resource during the next quarter. Drilling program to be supervised by 5 experienced NGS geologists.
• Extensive coal quality testing (including coking properties) to be conducted at SGS laboratory in Ulaanbaatar.
Enebish Burenkhuu Fails to Get Reelected as MIG Director – AGM Results
August 3, Mongolia Investment Group (HK:402) --
Mining juniors struggle to convince investors
August 3 (The Australian) YOU know things are tough when you can't float a company with coal targets in Mongolia. And when anything with gold under its belt can't seem to attract enough money to get listed.
Sure, coal's under a bit of a cloud at the moment, but Mongolia is one of the hottest stories around - not just because of China and all those smoke-belching factories and power stations, but because new railways linking to Siberian ports offer the prospects of exporting to the rest of Asia (and being much closer than Australian, South African or even - in some cases - Indonesian coal mines).
Yet Kumai Energy has seen fit to withdraw its prospectus for an initial public offering through the Australian Securities Exchange, despite seeming to having a story that is suited to the market's interests: coal in Mongolia, with four prospective licences.
In all, the upcoming floats list on the ASX makes for grim reading. There are 12 resource floats listed - one has withdrawn, six have their listing dates as "to be announced" and we await to see whether the others get off.
Alicanto Minerals has its listing set as 2 August - but that did not happen yesterday. The company is going to market with gold and base metals properties in Western Australia.
So we'll be watching closely to see what happens to those due to list over the next five weeks: Swift Resources (phosphate), Vesuvius Resources (vanadium near Meekatharra), Victory Mines (rare earths, uranium, platinum metals), and Yeeda Oil (oil and gas in the highly prospective Canning Basin in the Kimberley region).
The languishing 'TBA' floats are - believe it or not - all gold stories: Aperio Resources (gold in Burkina Faso), Boadicea Resources (gold in Western Australia), Crest Minerals (gold near Kalgoorlie), Dome Gold Mines (gold in Fiji), Gossan Hill Gold (gold in NSW), Messina Resources (gold in WA, and its close has been extended until August 15), and Red Cat Minerals (gold in Madagascar).
It's the market, of course: the bottom has well and truly dropped out of the junior sector. Those investors left in the market are interested in drilling results - not promises of future potential.
These companies all have a plausible story to sell. No one seems to be listening, though.
NUMBER OF MSE COMPLIANT BROKERS REACHES 23
August 3 (MSE) The number of members that met the requirements set by the new trading system is increasing day by day. Consequentially, the number of compliant members has reached 23.
1. "ZERGED" LLC
2. "MERGEN SANAA" LLC
3. "BDSEC" JSC
4. "ALTAN KHOROMSOG" LLC
5. "BULGAN BROKER" LLC
6. "DARKHAN BROKER" LLC
7. "MONSEC" LLC
8. "TULGAT CHANDMANI BAYAN" LLC
9. "TAVANBOGD" LLC
10. "DELGERKHANGAI SECURITIES" LLC
11. "FRONTIER" LLC
12. "DCF" LLC
13. "MICC" LLC
14. "TENGER CAPITAL" LLC
15. "MIBG" LLC
16. "FINANCE LINK GROUP" LLC
17. "RESCAP SECURITIES" LLC
18. "TDB CAPITAL" LLC
19. "STANDARD INVESTMENT" LLC
20. "TUUSHIN INVEST" LLC
21. "GRANDLINE" LLC
22. "GOLOMT SECURITIES" LLC
23. "PROGRESS PARTNERS" LLC
Therefore, the number of members that contributed to the Settlement Guarantee Fund has reached 42; the number of members that concluded a revised agreement with MSE has reached 52, as well as the number of members that placed the collateral has reached 24.
Former Mongolian president to serve four years in jail
ULAN BATOR, Aug. 2 (Xinhua) -- Former Mongolian president Nambar Enkhbayar will have to serve four years in jail and have 25 million tugrik (18,660 U.S. dollars) worth property confiscated after being found guilty of corruption here Thursday.
Sukhbaatar district court sentenced Enkhbayar to seven years' jail, three of which will be pardoned, after a three-day trial. The court also awarded Gandan Buddhist monastery 54 million tugriks (40,300 U.S. dollars) as compensation for damage and revenues of TV9 which Enkhbayar owns will be confiscated.
Four others, including former government officials and a businessman, were also found guilty of corruption and abuse of power.
At the closing of the trial, Enkhbayar said, "The outcome of this trial will show if Mongolia is a truly democratic country or not. State prosecutors twisted actual facts in order to prosecute me for political reasons. They represent old times. I'm not afraid of anyone. I will fight for justice and a new Mongolia."
Enkhbayar's trial was broadcast live on some TV channels including his own TV9 and is drawing much attention in Mongolia. Members of his party protested the ruling of the court and wrestled with policemen.
His defense lawyers said Enkhbayar should be acquitted because he has done much good for Mongolia.
The defense lawyers can appeal the court decision within 14 days.
The court ruling may change political landscape in Mongolia. Enkhbayar's Mongolian People's Revolutionary Party or MPRP was poised to join the coalition government with Democratic Party of Mongolia. MPRP leadership said they will consider court ruling and decide whether to join the coalition government.
S.Narangerel, chief defense lawyer of Enkhbayar said "decision of the trial shows that there is no independent court in Mongolia. This is repetition of 1937 repression. This is a politically motivated decision. This court decision is aimed to isolate Enkhbayar from political life of Mongolia and remove a major political rival."
Enkhbayar was arrested on April 12 on charges of involving in the illegal privatization of a hotel and a publishing house, and using TV equipments donated to a Mongolian Buddhist organization to establish his own television station TV9.
However, supporters said Enkhbayar, who served as president of Mongolia from 2005 to 2009, was framed by incumbent President Tsakhia Elbegdorj for political reasons.
Enkhbayar lost to Elbegdorj by a small margin in 2009 presidential elections. He first conceded but later rejected the election results, claiming irregularities.
Enkhbayar is also chairman of MPRP, a splinter party from former ruling Mongolian People's Party. MPRP and Mongolian National Democratic Party formed Justice Coalition, which has 11 seats in the country's 76-member parliament.
Related:
UPDATE 1-Former Mongolian president jailed, raising fears for mine programme – Reuters, August 3
Mongolia's Ex-President Given Four-Year Jail Term In Graft Trial – Bloomberg, August 3
Mongolian Ex-President Sentenced to Prison – WSJ, August 3
Former Mongolian president jailed – Financial Times, August 3
Mongolia ex-leader Nambar Enkhbayar jailed – BBC News, August 3
Jailing of former Mongolia president rattles investors - Deutsche Welle, August 3
MONGOLIA'S EX-PRESIDENT GETS JAIL OVER CORRUPTION – AP, August 3
Mongolian court jails ex-president for corruption – AFP, August 3
Wife of former Mongolian president blasts husband's sentence
August 3 (Xinhua) The wife of former Mongolian president Nambar Enkhbayar on Friday blamed the country's incumbent leader for a four-year jail sentence of her husband, saying there were no facts or evidence for the trial.
The court imposed the sentence to Enkhbayar for corruption based on rumors and gossips, Onon Tsolmon, who once served as a special advisor to the Mongolian General Intelligence Agency, told local media.
"(Incumbent President Tsakhia) Elbegdorj is the person behind the sentencing of my husband. Judges of Sukhbaatar district court which has no conscience and compassion will bear their bad karma one day," she said.
Tsolmon also lashed out at three senior officials, saying they sentenced her husband at the instigation of Elbegdorj.
She said she will fight against this injustice using all available means.
Earlier in the day, Sukhbaatar district gave Enkhbayar a seven-year prison term, three of which will be pardoned, after a three-day trial that started on July 31.
According to the court ruling, 25 million tugriks (18,660 US dollars) worth of Enkhbayar's property will be confiscated. Revenues of TV9, a TV station which Enkhbayar owns, will be seized as well.
The court also awarded Gandan Buddhist Monastery 54 million tugriks (40,300 dollars) as compensation for damage.
Enkhbayar was arrested on April 12 on charges of involving in the illegal privatization of a hotel and a publishing house, and using TV equipments donated to a Mongolian Buddhist organization to establish TV9.
However, supporters said Enkhbayar, who served as president from 2005 to 2009, was framed by Elbegdorj for political reasons.
Enkhbayar lost to Elbegdorj by a small margin in the 2009 presidential elections. He first conceded but later rejected the election results, citing irregularities.
The former president is also chairman of Mongolian People's Revolutionary Party (MPRP), a splinter party from former ruling Mongolian People's Party. MPRP and Mongolian National Democratic Party formed Justice Coalition, which has 11 seats in the country's 76-member parliament.
Members of the Mongolian People's Revolutionary Party opposes the court decision
August 6 (UB Post) Former President N.Enkhbayar (considered as the Godfather of Corruption) and three other accused were the news highlight last week. The composition of the court passed the decisions considering the evidence and witness testimonies, compiled in dossiers to prove their guilt. After announcing a court decree, N.Enkhbayar, D.Chuluunbaatar and J.Myagmarjargal were brought to the Place of Detention and if they do not accept the court decision and appeal against the court's decision, they will apply for bail.
The supporters, members of the Mongolian People's Revolutionary Party (MPRP), established by N.Enkhbayar, and his attorney S.Narangerel are opposing the court decision. What's more, some of the members even abused the police who were protecting the premises of Sukhbaatar District Court.
After the trial, S.Narangerel, the attorney of N.Enkhbayar, held a press conference and claimed "The judges didn't accept my proposal to take witness testimonies from D.Choijamts Khamba (Buddhist Bishop) and Kh.Narankhuu, the former Executive Director of Erdenet Factory, at the trial. The judges passed the decision based on only gossip and oral facts." Headed by the members of the MPRP, E.Bayanselenge and L.Tsog, who were elected to the Parliament from the party list, the delegation of the MPRP have gathered outside the Sukhbaatar District Court and claimed, "We're throwing bouquets of mourning to the judges who buried justice and are offering our condolences. The people of Mongolia have seen the trial for three days on television channels and they know that bad decisions have been made. No one can trick justice. Sentencing the Secretary General of the MPRP was obviously a political persecution. The "Shudarga Yos' (Justice) Coalition of MPRP and the Mongolian National Democratic Party will fight to set Justice in society of Mongolia."
E.Batshugar, the son of N.Enkhbayar, has come to the gathering and stated the decision was a persecution. The gatherers have been swearing and cursing Ye.Sagsai, the Deputy Director of the Ulaanbaatar Prosecutor's Office and Ts.Soyombo-Erdene, the Presiding Judge of the Sukhbaatar District Court.
The police and officials from the State Special Security Department have protected the premises of the Sukhbaatar District Court and Ulaanbaatar Prosecutor's Office in order to prevent any possible attack to them.
Silk Road Finance Launches Burma-focused Investment Bank
August 2 (hedgeweek) It's not everyday you get to cover developments in the secretive south-east Asian state that is Myanmar. But this week it was announced that Silk Road Finance, an investment bank operating in Mongolia and other frontier markets, had launched Mandalay Capital, a Myanmar-focused investment banking firm. The new entity will advise international clients on potential planned investments in the country, as well as build relationships with domestic institutions and assist them with capital raising. Significantly, the US administration recently approved American companies to invest in Myanmar and promote much needed foreign investment.
Alisher Ali, Founder and Chairman of Silk Road Finance stated: "We are delighted to establish Mandalay Capital as the first Myanmar-focused pure play investment banking firm. Following our success in Mongolia and Central Asia, we are keen to pursue this unique opportunity to extend our pioneering frontier markets experience into Myanmar." Apparently, Mandalay Capital has already won the mandate to raise capital for a debut Myanmar-focused venture capital and private equity fund. The firm is building its team in Yangon to source, structure and close other such Myanmar-related deals and investment projects.
"Discover Mongolia" International Mining Investors' Forum to Take Place in Ulaanbaatar, Mongolia Over the 30th and 31st of August, 2012
ULAANBAATAR, MONGOLIA--(Marketwire - Aug 2, 2012) - The Organizing Committee of "Discover Mongolia - 2012" International Mining Investors' Forum (www.discovermongoliaforum.com) is pleased to announce the key speakers for this year's event.
The International Mining Investors' Forum, taking place in Ulaanbaatar, Mongolia attracted over 1,500 delegates in 2011 from around the world. With 2012 participation expected to surpass that of the previous year, a strong focus of the forum will be on helping the attendees to continue identifying potential opportunities to benefit from Mongolia's resource-driven economic growth. To this end, the forum is expanding its scope to better support the understanding of regional supply and demand functions as they relate to the Mongolian growth story.
"We understand that Discover Mongolia delegates do not consider Mongolia as an isolated story; potential investors are concerned with developments in the markets that relate to Mongolian growth and that contribute to its potential," says Jargalsaikhan Dugar, a member of the Organizing Committee. He added, "We are very pleased to announce that this year's forum will include a regional view that will provide a much more robust understanding of Northeast Asia's supply and demand of raw materials."
In addition to a concentration on regional supply and demand, the organizing committee acknowledges that there are other market conditions affecting Mongolia's potential for investors that must continue to be addressed. Therefore, the "Discover Mongolia - 2012" agenda will include such sessions as: political stability and the recent parliamentary election, slowing Chinese economic growth, infrastructure issues facing Mongolia's development, and the legal environment for foreign investment into Mongolia.
To address these and other topics the speakers for this year's forum include distinguished members of both the private and public sector, from Mongolia and abroad. In addition to those mentioned in previous statements this year's speakers will include:
Peter Nicholls - Vice President, Oyu Tolgoi LLC. Mr. Zoljargal - Deputy Governor, Bank of Mongolia. Ambassador Urban Rusnák - Secretary General, Energy Charter. Ian Runge - Founder of Runge Ltd. Karr McCurdy - President and CEO, Behre Dolbear Group. Mr. Kuleshov Vladimir Vladimirovich - Director, Institute of Economics and Organizing Industrial Production of Russia. Dr. Gyeng Chul Kim - President, Korea Transport Institute. Mr. James Passin - Fund Manager, Firebird Management LLC.
OYUNA, Peter Marigold collaborate for 2012 London Design festival
August 2 (World Interior Design Network) London-based furniture designer Peter Marigold has collaborated with the cashmere brand Oyuna to create a symbolic installation at 2012 London Design Festival.
The installation has been created to bring alive the beauty and artisan craftsmanship of the cashmere pieces while capturing the brand's Mongolian nomadic spirit.
The installation is an abstract reinterpretation of the traditional Mongolian ger tent-house which redefines common perceptions of indoor-outdoor space. Made by blackened raw steel, and dark cast wooden surfaces, the skeletal organically finished structure provides the backdrop to OYUNA's distinctive cashmere shawls, throws and clothing.
Modular in shape, the display is formed of individual steel frames that can be adapted to different spaces. The angled edges evoke the Mongolian landscape, combining both architectural form and the living environment.
OYUNA was founded by Oyuna Tserendorj and David Bernasconi in London in 2002. Oyuna's designs are inspired by the colours of Mongolia's wild plains and by the creativity of inner city London life.
New Standing Committee on Citizens' Complaints Established
August 3, (News.mn) The Parliament has approved first law. By the amendments to the Law on Parliament the parliament will have 8 standing committee instead of 7. Yesterday lawmakers agreed to establish Standing committee on Regulation of petition and complains.
The Standing committee aimed to give a respond to citizen's complain and petition addressed to MP's.
"Citizens sent various petition to MPs. By the procedure Parliament Office suppose to respond to them. But practically citizens letter remained unsolved. Establishing Standing committee on Regulation of petition and complains the Parliament of Mongolia to launch new political culture. Same time parliament will able to know and study what citizens want, what is the problem of concern of people" said MP Kh.Temuujin, initiator of the draft law.
THREE INDEPENDENT MEMBERS ARE APPEALING FOR CONSENSUS
August 2 (InfoMongolia) The three independent members of the Parliament Kh.Bolorchuluun, S.Ganbaatar and Ts.Davaasuren have called a press conference today on August 02, to state about their appeal on moving the Parliament forward out of the tangled up unstable situation.
In the appeal it mentioned that already over month has passed since the Parliamentary Elections of 2012, political powers who claimed seats in the Parliament hadn't reached negotiations, thus with this act they were neglecting fundamental interests of a nation and disrespecting citizens, who gave their votes for them.
Henceforth, in order to move out of this deadlock state, the General Election Commission (GEC) should carefully handle issues connected to incidents of handing out cash and bribing voting citizens during the stages of election process which have already been proved by several evidences. These actions shall be considered as breaching of legislations on election procedures and the GEC shall solve the issue promptly and fairly, says the appeal.
Furthermore, it also appeals to the President of Mongolia to take necessary measures within his full rights in imposing appropriate punishments upon those who have violated the law on elections and this Presidential action can be set as a role model for the next coming elections. The independent members also addressed the MPP to take steps on not to interrupt the State works, to reach negotiations for the good sake of Mongolia and its people by respecting voters choices and putting MPP's interest on the second.
BoM Auctions $32.5m at ₮1349, ¥23m at ₮211.9
August 2 (Bank of Mongolia) During the forex auction, the BoM sells USD 32.5 million at closing rate of 1349.00 and CNY 23 million at closing rate of 211.90.
Japan Will Work on Mongolian Railroad Development
August 6 (UB Post) The operations of Mongolian Railroads have been introduced to the Chairman of Japan Freight Railway Company Naohiko Ito, who is in Mongolia on an official visit. He has visited the Ulaanbaatar Railroad Authority's Management Department and was surprised to find out how different Mongolian and Japanese railroad operations are.
Surprised to find that the railroad system which was incorporated at the beginning of railroad services in Japan, Naohiko Ito commented, "The job of the loading and hauling process is done by an intermediary company. Also the load receiving and reports and documentations are handled by separate companies."
During the meeting between the Deputy Head of Mongolian Railroad Authority L.Purevbaatar and Naohiko Ito, they discussed the possibilities of working together to develop the Mongolian railroad, to educate young people in information technology and the modern railroad system in Japan. Naohiko Ito also stressed that with the vast amount of green land, the potential for railroad development is far greater in Mongolia than in Japan.
Mongolia-India joint military exercises in Belgaum from Aug 6
August 3 (Press Trust of India) Aiming at sharpening their counter insurgency skills and enhancing training infrastructure for UN peacekeeping missions, Mongolian Army will participate in joint exercises with its Indian counterpart at Belgaum in Karnataka from August 6.
The Mongolian Army will be represented by 38 personnel and for over 10 days they will participate in several counter insurgency and counter terrorism operations in Belgaum, Army officials said here.
Codenamed as 'Nomadic Elephant', the exercise will focus specially on the needs of peacekeeping missions under the UN flag and will help in increasing the coordination and understanding between troops of the two nations, they said.
The infantry exercise will see participation of 44 specially selected troops from the Jat Regiment.
Besides the UN peacekeeping missions, the eighth round of joint exercise will also aim at conducting special sessions to modernise Mongolian defence establishment.
Defence cooperation and relations between the two nations have seen a steady growth over the last decade with the first joint exercise in 2004. For the last few years, the joint drills are being held every year, officials said.
In 2005 the joint drills were held at the Mizoram-based Counter Insurgency and Jungle Warfare School (CIJWS) at Vairnagte and in 2008 it was conducted in Mongolia.
Besides the joint exercises, the two nations have also successfully been conducting visits and exchanges of senior military officials.
FACTBOX-Key political risks to watch in Mongolia
ULAN BATOR Aug 4 (Reuters) - June's parliamentary election proved inconclusive, and the coalition government that is still taking shape is certain to involve parties hostile to foreign mining firms, a move that will worry investors.
The key risk for the mining firms - the engines of economic growth in Mongolia - is that resource nationalist lawmakers, who were the big winners in the poll, exert pressure on the coalition to renegotiate key contracts, and pass legislation to limit foreign ownership of mineral deposits.
The priority for Mongolia is the development of its tiny but fast-growing economy, and foreign investors want to know if the government can create a stable legal environment while pleasing its impatient citizens as well as its two giant neighbours, Russia and China.
Following is a summary of key political risks to watch:
INVESTMENT POLITICS
The makeup of the new government will determine the investment climate, and the pace at which Mongolia's huge mineral deposits are brought to production.
The coalition, to be led as prime minister by Democratic Party (DP) chief Norov Altanhuyag, will include minority parties such as the Mongolian People's Revolutionary Party and Mongolian National Democratic Party, both of which want to limit foreign investment in the booming mining sector.
A key figure in an environment of increasing hostility, at least outwardly, towards foreign mining corporations, is former president Nambar Enkhbayar, chief of the Mongolian People's Revolutionary Party.
He wants to review the contract for Rio Tinto's giant Oyu Tolgoi copper and gold project, and also says the 7.5-billion tonne Tavan Tolgoi coal mine - expected to be listed on overseas stock exchanges - should remain in Mongolian hands.
Enkhbayar's political grouping is likely to press for laws demanding more from foreign investors, which could delay mine development.
Few major Mongolian projects are progressing smoothly.
The government wants to launch a $3 billion initial public offering of the Tavan Tolgoi or "Five Hills" coal deposit. State-owned Erdenes Tavan Tolgoi had been planning to list 29 percent of the company in London and Hong Kong by May, but it cannot until Mongolia's parliament passes a securities law.
An initial proposal to hand development rights in the project to China's Shenhua, Peabody of the United States and a Russian-Mongolian consortium was suspended, and the government is trying to devise another deal that will include Japanese and South Korean partners.
After struggling for years to find the right investors, Mongolia might yet choose to develop Tavan Tolgoi's western block on its own, an executive with the state-owned firm in charge of the project said in April.
In mid-May, Mongolia's parliament passed a controversial law aimed at capping foreign ownership in "strategic" industries such as mining, but investors expressed relief that the legislation was weaker than first anticipated.
The bill was watered down considerably since first drafted by a group of backbench lawmakers who were alarmed by a decision by Canada's Ivanhoe Mines to sell its 58 percent stake in coal miner SouthGobi Resources to the Aluminum Corporation of China (Chalco).
It stipulates that foreign investors are allowed to own a maximum of 49 percent of companies involved in the mining, finance, media and telecommunications sectors before being subject to scrutiny by a government panel, but it now only applies to deals valued at above $75 million, or ones involving state-owned companies like Chalco.
What to watch:
- Precise formation of the coalition, the strength of resource nationalist representation in parliament, and whether they can force the government to review contracts. Building a durable coalition in Mongolia's especially fractious, factional political atmosphere will not be easy.
- Whether the government can produce an investment agreement for Tavan Tolgoi that will satisfy foreign partners and keep the public happy, and whether it can do it in time.
- More inward investment. In November, commodities trader Trafigura and private equity investor Origo Partners Plc , formed a joint venture to develop Mongolian coal and iron ore deposits for export, and in February Goldman Sachs bought a 4.8 percent stake in a Mongolian bank.
THE RESOURCE "CURSE"
Mongolia's economy grew at 16.7 percent year-on-year in the first quarter of 2012, according to the World Bank, more than double the pace of China, making it the fastest-growing in Asia.
The country is already showing classic symptoms of "Dutch disease", including soaring inflation and high interest rates.
In July, ratings agency Fitch said "rising systemic risks" could leave Mongolia vulnerable to a repeat of the boom-and-bust cycle it experienced in 2007-2009, should commodity prices fall rapidly. The risks are a result of an extremely loose credit environment, high inflation despite interest rates of 13.25 percent, and a widening fiscal deficit, the agency said.
The government is trying to bring in structures that will protect it against fluctuating commodity prices, and wants to use the proceeds from mining to pay for infrastructure, health and education, and develop other sectors.
It is under pressure to spread the wealth, and has already extracted pre-payments from foreign firms involved in both the Tavan Tolgoi and Oyu Tolgoi projects in order to give money to the public.
What to watch:
- Economic indicators, especially signs of overheating.
- How Mongolia uses the income from its mining projects. It has set up education and fiscal stabilisation funds, but it has also promised direct dividends for Mongolian citizens. (Mogi: before elections parties agreed no direct cash handouts)
- How it deals with rapid economic change as well as inflation as foreign investment transforms the country's mainly rural economy.
- The International Monetary Fund has warned that Mongolia's economic policies are creating inflationary pressures.
GETTING ON WITH THE NEIGHBOURS
Many of Mongolia's 2.7 million citizens are concerned about growing Chinese and Russian influence, and their fears were not allayed by the plan to hand the majority of Tavan Tolgoi's western block to Chinese and Russian interests last year - a decision that was later reversed.
China already dominates Mongolia's economy, buying 90 percent of the country's exports in the first half of 2011, though the government wants to bring this number down and diversify Mongolia's markets.
Mongolia's reliance on Russia and China for fuel, power and transportation also poses a major risk to its mining sector. Russia has been known to turn off supply taps, and China is not averse to closing crucial railway links.
Mongolia also depends on Russia's railway network to fulfil plans to deliver coal to Japan and South Korea. Mongolia's plans to build itself a railway network capable of transporting coal to foreign markets is likely to be delayed.
What to watch:
- Will efforts to ease dependence on China increase Russia's influence, and vice versa?
- Is the Chinese market for coal and other minerals its only option in the short term?
- How will the government handle growing nationalist sentiment, and fears about the role of foreign firms and workers?
West Eyes Strengthened Ties with Mongolia
By J. Berkshire Miller, a political analyst on the Asia-Pacific for the Diplomat, which is based in Tokyo
August 5 (Defense News) Mongolia continues its rapid ascent in the strategic playbook of the United States.
In July, during a visit to Mongolia, U.S. Secretary of State Hillary Clinton praised Ulan Bator as a model democracy in a region flush with kleptocratic regimes. Clinton lauded Mongolia's development, noting that the Central Asian country's progress bolsters the case to "dispel the myth that democracy is a Western value."
Clinton also used pointed language aimed at China, claiming that prosperity was interlinked with a free democratic system and the promotion of human rights.
Mongolia presents the U.S. with a unique geopolitical opportunity to manage the renaissance of Chinese primacy in Central Asia. Mongolia's history and geography bind it to China and Russia, and this makes it an essential strategic partner for those wanting to hedge against the influence of either or both.
Mongolia's eastern border with China is less than 1,000 kilometers from North Korea, which makes it an intriguing partner on security and defense issues with the U.S., Japan and South Korea.
According to Jane's Information Group, Mongolia has no aspiration — or capacity — to develop a strategic weapon system, but this cannot be entirely dismissed if developments surrounding North Korea's latent nuclear weapon program take a drastic turn.
Ulan Bator has long been part of Washington's strategic calculus in Central Asia and its importance has been magnified by the war in Afghanistan. More than 100 members of the Mongolian Armed Forces are serving in Afghanistan as part of the International Security Assistance Force. Mongolian troops have helped to train the Afghan National Army in mobile field artillery techniques and continue to provide security at Kabul International airport.
Mongolia also committed troops to the NATO mission in Kosovo from 2005 to 2007 and contributed peacekeepers to South Sudan last year. NATO has commended Mongolia's enhanced role overseas and indicated that it shows "Mongolia's intent and capability to contribute to international security."
These deployments also built on the U.S. goodwill Mongolia secured through its troop contributions to the Iraq War, which prompted visits by then-U.S. Defense Secretary Donald Rumsfeld and then-President George W. Bush, the first sitting U.S. president to visit the nation. With this bolstered strategic relationship, Mongolia hopes to improve its interoperability with Western militaries and enhance its capacity in counterterrorism, cybersecurity and peacekeeping.
Ulan Bator's cooperation with NATO was formalized this year when it signed an Individual Partnership and Cooperation Programme, which is expected to focus on building up Mongolia's military capacity, as well as improving interoperability with NATO troops.
In a statement, NATO applauded the announcement and said it "attaches great importance to [its] partnership with Mongolia." The program is symbolically important because it is the first official partnership approved since NATO amended its policies on external partnerships in 2011.
But it's not just the United States that has been paying attention to Mongolia. Shortly after the first Khaan Quest exercise in 2004, senior party officials in China began pushing for increased engagement with their northern neighbor on security and defense issues. The two countries meet annually for China-Mongolia Defence Consultations, aimed at promoting regional defense and bilateral defense cooperation.
In June, the leaders of Mongolia and China met in Beijing on the sidelines of the 12th Heads of State summit for the Shanghai Cooperation Organization (SCO). Chinese President Hu Jintao stressed the relationship, noting, "Mongolia and China should continue deepening mutual trust and grasp the overall direction of the ties from a strategic height and a long-term angle."
Mongolia has observer status in the SCO, which continues to provide Ulan Bator with a convenient avenue to pursue its short- and medium-term strategic goals in the region — improving its market share and attracting foreign investment.
Mongolia also plays host to an annual gathering of militaries for Khaan Quest, which is broad in scope (China and India are invited) but narrow in intent (essentially another mechanism for military cooperation with the U.S.).
What is the end game? The U.S. views Mongolia through an integrated lens balancing its economic interests with strategic concerns. As the world's fastest-growing economy (GDP growth at 17.3 percent in 2011), Mongolia is an appealing target for foreign investors in sectors such as mining, nuclear power and technology. For Washington, though, security still trumps in Mongolia. The U.S. continues to view Mongolia as a credible partner in an uncertain area filled with truculent neighbors.
With the wide array of defense concerns around the Asia-Pacific region, it will be important for the U.S. to maintain attention to its bilateral relationship with Mongolia. The Pentagon should continue supporting Khaan Quest and enhance country-to-country military exercises and training.
Furthermore, Washington should take advantage of Mongolia's unprecedented partnership with NATO to further integrate Ulan Bator into its security architecture in Central Asia. The time for Mongolia is now.
Voter education, Political corruption and Tweeting in Mongolia
By Maral B.
August 3 (news.mn) …Getting something for your relatives using your friends in government is a usual thing in Mongolia. What's wrong about asking a favor from your friends whom you helped to be appointed in those positions?
This was the main argument that one of the highest titled, state honored lawyers, Narangerel, uttered in defense of former President Enkhbayar Nambar during a three-day trial of political corruption that took place in Ulaanbaatar on July 30, 31 and August 1, 2012.
The trial was widely televised providing an opportunity for the public to see and hear the arguments of both the prosecution and defense. For those who imagined a court hearing from a Hollywood movie, the trial may have seemed rather slow and boring. In the civil law tradition, Mongolia doesn't have jury. The main decision makers are three judges who are obliged to carefully read the case before the trial. The judges decide both issues of law and fact. The civil legal tradition is followed in the nations of continental Europe, Japan, Korea and many other countries around the world.
The court trial doesn't explain everything at the outset. Connecting the dots is easiest for those who are already familiar with civil law procedures and the papers inside the thick folders. However, the Mongolian public was interested in knowing even those small dots of Enkhbayar's case to understand how political corruption occurred in Mongolia.
Many of the foreign journalists observing the trial seemed to capture only occasional statements of lawyers and individuals when there was some kind of debate.
During such debates, the most common words Mr.Enkhbayar used was "I didn't do it" or "ask them, not me"—meaning that those who benefited from the questionable privatization of state owned old buildings in lucrative locations, or preferential contracts with mining corporations, etc., were not Enkhbayar himself, but his son and his sister. However, all those companies which initially got the state buildings became daughter companies of Enkhbayar's own company after the "dirty jobs" were already made. Enkhbayar looked clean, according to this scheme, his defense strongly argued.
Three days of televised debate opened up stories of many political corruption tricks and tricky decision-making routes in which a politician could argue that he was "clean" while the evidence of unexplained wealth of his family members was growing on the public's eyes.
The Mongolian public watched this interesting court trial with considerable excitement, not because they wanted the worst for Enkhbayar, but because it was quite educational. It was like a free class in law and procedure, and a lesson how and why a politician can be charged of crimes he influenced to happen. It was a trial of political corruption, but not just a hearing on wrongful conversion of property. Ordinary thieves would be convicted and sentenced to ten years for the theft of 700 dollars. But political corruption is often first suspected by evidence of unexplained wealth or illegally obtained wealth. This defendant was sentenced to just four years imprisonment for a seventy million dollar crime.
"His sentence was too soft," was the most common reaction of Mongolians interviewed in the country's main newspapers and websites by the morning of August 2, 2012. The reactions on twitter were the same.
"Enkhbayar's lawyer seems to agree that his client did political corruption, but argued that these wrongdoings were okay in Mongolia. This argument is too valueless," a young woman tweeted immediately after the televised statement of lawyer Narangerel.
One might wonder how important such a tweet was. Well, Mongolia is in first place in the number of tweeting in support of its Olympics team according to web page http://www.london2012.com/countries/supportyourteam/. There are 204 countries listed in the web and USA ranks second after Mongolia tops the list with over 300,000 tweets. This makes them far ahead from the third country which has nearly 14,000 tweets.
So, international journalists could use Mongolian tweeters as a good source of timely information and "see" the mood of the Mongolian public via it.
In past, there was quite an awkward embarrassment of a Beijing-based reporter of a very prestigious magazine. After he was blasted in Mongolian media, he confessed to a Mongolian, off-the-record, that he made an under-researched sensational story on Mongolia from Beijing where he wasn't able to access sources online. The accurate information on his article was all available on videos and photos on Youtube, Twitter, Facebook and even by Googling the story he could have found many stories. Unfortunately, none of these media was available and uncensored in Beijing!
The lesson was, he confessed, "never to report on Mongolia's controversy from Beijing, but rather to come to Mongolia, or search information on Mongolia from a freer country".
The mood of the free and democratic Mongolian public on Enkhbayar's case is very different than the poorly informed international outcries that occurred at the outset of the story. While the international press was still relying on their sources based in Beijing, the number of Mongolian tweets grew by hundreds and thousands each day.
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"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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