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.
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Announcement: Shift to Fee Based Subscription for CPSI NewsWire and Questionnaire for Subscribers
August 14 (Mogi) I'm planning to change my newswire service to a fee based one.
Before I give you my reasons, let me start with a little history.
I started out this newswire thingie as just a way of being a good team player by sharing information with my colleagues, of things that I like to be informed of and thought would be useful in their work. It evolved to being distributed to clients and now basically anyone who has the courtesy of introducing him/herself to me (some people don't really).
Never did I think that I would have, as of now, well over a thousand subscribers in the list and never did I imagine at the time there would be so much Mongolia coverage and so many press releases that I would like to stay on top of.
I hope all of you have enjoyed and found my news useful in your profession and curiosity, but as the time it takes for me to filter and compile the news has gotten longer and longer, to justify my effort and time it takes away from my other responsibilities, I thought it would now make sense to put a monetary value to such efforts.
Hence my decision to add a fee. But don't worry, this won't affect you if you're already a client of CPS.
So, since I have no such experience, my questionnaire is following:
- First of all, do you find my newswires useful?
- If so, would you be willing to pay for it?
- Or would you rather just unsubscribe from the whole thing?
- Any other comments and suggestions?
I'm tinkering over ways I could structure this, i.e. the right price (trial period, annual, quarterly discounts, company, individual packaging), the right distribution and payment methods (paypal, credit card, bank transfer, …).
So, please give me any feedback, comment, advice you may have. Hope I'm not being too full of myself, thinking CPSI NewsWire was even worth something.
Any honest feedback would be very helpful.
Gratefully yours,
Mogi
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SouthGobi shares tumble 23% as CEO says Chinese takeover may be pulled
TORONTO, August 14 (The Canadian Press) - SouthGobi Resources Ltd. (TSX:SGQ, HK:1878) shares tumbled 23 per cent Tuesday in the first day of trading since its CEO said he believes a Chinese company won't go ahead with a takeover attempt for the miner, which faces a government crackdown on its operations in Mongolia.
Alexander Molyneux, president and chief executive officer told analysts on a conference call Monday that current foreign investment stipulations in Mongolia make a Aluminum Corporation of China Ltd. (Chalco) takeover "almost impossible."
The company's shares (TSX:SGQ) closed down 84 cents at C$2.86 on the Toronto Stock Exchange. Shares in parent company Turquoise Hill Resources (TSX:TRQ) lost 27 cents to close at $8.28.
Chalco and Turquoise Hill, formerly called Ivanhoe Mines, agreed earlier this month on a 30-day extension of the offer for up to a 60 per cent stake in SouthGobi, but not less than 56 per cent. It will now expire on Sept. 4.
"It is my personal belief that this extension has been granted to find some way out of the proposal," Molyneux told analysts on a conference call to discuss the troubled company's latest quarterly results.
Chalco's offer to buy a controlling stake in SouthGobi has raised concerns in Mongolia about Chinese ownership of the company.
Earlier this year, Mongolia's parliament passed a foreign investment law that appeared aimed at stopping Chalco.
It requires government approval for investments in mining or other strategic industries if the investors are foreign state-owned companies or if foreign investment would exceed 49 per cent of the venture.
Molyneux said no offer has come and SouthGobi hasn't had any "meaningful" contact with Chalco, adding that he is unaware if Chalco has been talking to Turquoise Hill.
"Our view — and this is just SouthGobi's view and not the view of Chalco or our major shareholder — is that there is no clear way forward for a Chalco proposal at this time."
Last month, SouthGobi filed a notice of investment dispute on the government in Mongolia.
Molyneux said the foreign investment law is still not regulated, and it isn't clear whether it will be further altered.
"Without clear regulation on the foreign investment law or without a process through which such foreign investment proposals can be reviewed and considered, it's almost impossible to see how Chalco can navigate it's bid through the Mongolian government infrastructure."
Mongolian authorities have asked SouthGobi to suspend production while they review a plan by state-owned Chalco to acquire a majority stake in SouthGobi from Turquoise Hill.
On Monday, the company reported a second-quarter profit of $237,000, or nil per share, compared to earnings of $67.3 million, or 37 cents per share during the same quarter of 2011. Revenue fell to $8.4 million from $47.3 million a year earlier as the company was forced to curtail operations.
Turquoise Hill and SouthGobi have most of their operations outside Canada but are listed on the Toronto Stock Exchange and have corporate head offices in Vancouver.
Turquoise Hill is developing the Oyu Tolgoi mine in southern Mongolia.
Rio Tinto owns a 51 per cent stake in Turquoise Hill, which in turn owns two-thirds of the Oyu Tolgoi project. The Mongolian government owns the remaining third.
Mongolia has profited from selling coal, copper and other minerals to China's booming economy, but some in the sparsely populated North Asian country are uneasy about possible economic domination by their giant neighbour.
SouthGobi Resources is focused on metallurgical and thermal coal deposits in Mongolia's South Gobi Region. The company's flagship coal mine, Ovoot Tolgoi, produces and sells coal to customers in China. It plans to supply a wide range of coal products to markets in Asia.
UOBKH chops SouthGobi (01878) TP to HK$30 from HK$66
August 15 (ET Net) UOB Kay Hian more than halved its target price for SouthGobi Energy Resources (01878) to HK$30 from HK$66, and maintained its "hold" call.
SouthGobi thinks it will not able to resume production until end-3Q. Management has not provided any estimate or guidance for 4Q.
Mineral Resources Authority of Mongolia (MRAM) earlier announced its intention to suspend certain mining and exploration licences of SouthGobi, following Chalco's (02600) acquisition proposal.
Since then, SouthGobi has faced hostility from the Mongolian government. Many government bodies and regulator authorities are reluctant to provide approvals and permits.
UOBKH thus cut 2012 and 2013 net profit estimates from US$4m and US$34m to a loss of US$41m and US$17m due to production suspension in 3Q, lower ASP and delayed production ramp-up.
Rio Tinto's Turquoise Hill Says Oyu Tolgoi Project 94% Complete
August 15 (Dow Jones Newswires) Rio Tinto PLC's (RIO) massive Oyu Tolgoi copper and gold project in Mongolia is nearing completion and remains on track for commercial production next year, with the cost for the first phase of development expected to come in as expected at US$6.2 billion, the mining company's Turquoise Hill Resources Ltd. (TRQ.T) subsidiary said Wednesday.
Additional diesel-powered electrical generating capacity has been installed at the South Gobi Desert site to meet power needs during construction, and electrical transmission lines running from neighboring China are in place but it is still waiting for a supply agreement to be signed between the two countries before power can be imported, the company said.
Canada's Turquoise Hill, formerly known as Ivanhoe Mines Ltd., in its second-quarter earnings statement said the first phase of construction of the project was 94% complete at the end of July. Initial output of copper and gold concentrate is set to begin before the end of this year, and commercial production is expected in the first half of 2013.
Transmission lines in both Mongolia and China have been tested with full power loads and are ready for commissioning, and the venture is pushing on with arrangements to ensure power from China is available in the second half of the year, the company said. Commercial discussions on a power deal between the countries continue, it said, adding that if negotiations aren't successful a dedicated power plant would be required which would set back the start of commercial output.
Rio Tinto is managing the development of Oyu Tolgoi and owns a 51% stake in Turquoise Hill, which in turn holds a 66% stake in the project to the Mongolian government's 34% interest. Oyu Tolgoi, Mongolian words that in English mean "turquoise hill," is one of the world's largest undeveloped copper and gold assets, with a measured and indicated resource estimated at 41 billion pounds of copper and 21 million ounces of the precious metal.
Turquoise Hill said it swung to a net loss of US$285.9 million in the three months through June from a profit of about US$0.6 million a year earlier, including US$168.7 million in financing costs, US$8.7 million in foreign exchange losses plus other expenses. Revenue for the period fell to US$28.2 million from US$47.3 million.
Rio Tinto sweats on power deal
August 15 (BusinessDay) Rio Tinto and its partners in Mongolia's Oyu Tolgoi mine are running out of time to strike a power supply deal for the massive copper and gold project.
Oyu Tolgoi ranks as arguably Rio Tinto's most important growth project, but a cloud continues to hang over plans to start the project as early as next month because a power supply deal with China remains elusive.
Oyu Tolgoi is located close to the Chinese border, and a paucity of power options near Oyu Tolgoi – which is located in the South Gobi desert – means Rio and its parties need to rely on importing power from China for the initial years of operation at least.
Electrical transmission cables have already been laid and tested, but the Rio Tinto subsidiary company that is developing Oyu Tolgoi – Turquoise Hill Resources - reported today that a deal with Chinese authorities had still not been reached, despite close to a year of talks.
"If those negotiations are not successfully concluded, and the establishment of a dedicated power plant is required for production at Oyu Tolgoi, that would adversely affect the project's ability to achieve the planned start of commercial production in 2013," the company said in a statement.
Rio and its partners have been saying similar things for many months now, and the situation becomes more concerning as Oyu Tolgoi's start date approaches.
The project is expected to "start-up" in the September quarter of 2012, and first commercial production is expected in the first half of 2013.
Mongolia and China have endured a tense relationship over many centuries, so striking a deal between respective Governments can be tricky at times.
Turquoise Hill was previously known as Ivanhoe Mines, but the name was changed in recent weeks to reflect a new era for the company, which began when Rio took majority ownership of the company earlier this year.
Rio's chief executive Tom Albanese is addressing major investors in Sydney this afternoon.
Entree Gold Reports on Second Quarter 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2012) - Entrée Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(NYSE Amex: EGI)(FRANKFURT:EKA) ("Entrée" or the "Company") has today filed its interim operational and financial results for the quarter ended June 30, 2012.
Greg Crowe, President and CEO, commented, "Both of our senior projects are advancing rapidly. During the second quarter, Rio Tinto confirmed its funding for Phase 1 and Phase 2 construction of the Oyu Tolgoi mining complex. Ivanhoe Mines, now known as Turquoise Hill Resources, successfully closed a $1.8 billion rights offering in July, which is a key component of the funding commitments. Phase 2 includes the development plan for Lift 1 of the Entrée - Oyu Tolgoi LLC Hugo North Extension deposit. In addition, Rio Tinto has provided a bridge loan to ensure uninterrupted progress of development and has committed to fully support a project finance package of US$3-4 billion. In Nevada, recent metallurgical results yielded excellent copper recoveries for both the Ann Mason sulphide deposit and the Blue Hill oxide target. These results will be considered as part of the Preliminary Economic Assessment expected within the second half of 2012."
Highlights for the quarter ended June 30, 2012 and beyond include:
Mongolia
Lookout Hill Joint Venture
· On April 18, 2012, Ivanhoe Mines (now known as Turquoise Hill Resources Ltd., "Turquoise Hill") announced that it has signed a binding memorandum of agreement with its majority shareholder Rio Tinto that establishes Rio Tinto's support for a series of funding measures expected to cover all projected capital requirements for the Oyu Tolgoi mining complex for the next four to five years.
· On April 25, 2012, Entrée announced that core hole EJD0034A collared on the eastern flank of the Heruga deposit intersected 590 metres of 0.33% copper, 0.70 grams per tonne ("g/t") gold and 56 parts per million ("ppm") molybdenum, or 0.80% copper equivalent ("CuEq"). This intersection is not included in the reported Heruga inferred resource estimate (see news release of March 30, 2012) and may represent an eastward step-out to the deposit.
· On July 27, 2012, Turquoise Hill announced the closing of its $1.8 billion rights offering, with proceeds to be used to advance the construction and development of the Oyu Tolgoi mining complex.
Development of the Oyu Tolgoi mining complex continues at a rapid pace, with Turquoise Hill announcing on June 28, 2012 that Phase 1 construction was 90% complete. First development ore has been delivered to the crusher, marking yet another key milestone for the project team and stakeholders. As this project advances, the Company looks forward to first development production from the Lift 1 underground operations on the Entrée - Oyu Tolgoi LLC ("OTLLC") joint venture ground expected in 2015.
Entrée's joint venture partner, OTLLC, continues to explore various targets on the Entrée-OTLLC joint venture ground. Diamond drilling of a Cretaceous covered area, located 7 kilometres north of Hugo North Extension and to the west of Ulaan Khud, commenced June 25, 2012. Twenty-nine shallow initial holes are planned and when complete the more prospective areas will be filled in with additional holes. Results will be used for locating subsequent diamond drill holes. Ten holes had been completed to the end of June.
Shivee West
Entrée continues to explore its adjacent 100% owned Shivee West property. In April 2012, Entrée mobilized a field crew to Mongolia to focus on geological mapping, excavator trenching and sampling in the Argo Zone, Zone III and Khoyor Mod areas. In total, 22 trenches (1,723 metres) were excavated. The area of Argo gold mineralization was extended 140 metres further north from mineralization defined by 2011 reverse circulation drilling. The Argo Zone now measures approximately 400 metres long by up to 130 metres wide. One of the trench samples returned 81.4 g/t gold over 3 metres, confirming and expanding 2011 high-grade gold values.
Khoyor Mod is a new discovery located approximately 6 kilometres south of Argo and comprises a 250 metre by 300 metre area of quartz stockwork within Devonian sediments. The stockwork is anomalous in gold (trace to 0.58 g/t) and copper (67 - 505 ppm) and is indicative of a porphyry target.
…
Credit Suisse lowers Mongolian Mining (00975) to HK$3
August 10 (ET Net) Credit Suisse lowered its target price for Mongolian Mining Corporation (MMC)(00975) to HK$3 from HK$4.7, and downgraded the stock to "underperform" from "neutral".
The research house revised down its 2012 and 2013 ASP by 20% and 12%, to reflect the less-than-expected Mongolian hard coking coal and semi-coking coal prices. It said MMC's HCC production and earnings will plateau in 2014 when thermal coal seams production starts.
Credit Suisse estimated MMC's premium valuation is likely to moderate post its fast 2013 growth. Hence, the house also revised down its 2012 and 2013 earnings by 31% and 27%.
MCS Brothers Further Increase Short Positions in MMC
August 14 (Mogi) On August 8, Od and Odjargal Jambaljamts increased their short positions from 14.95% to 17.93% each.
NVMN: Working Out Logistics for Mongolia-Shenzhen Lithium Railing
SAN ANTONIO, August 14 (BUSINESS WIRE) Nova Mining Corp. (OTCBB: NVMN) announced today that they are working out logistics for using rail between Mongolia and Shenzhen, China as a desired means for transporting lithium. The Company is currently pursuing a Definitive Agreement with Mongolian National Mining Consultants Limited (MNMC) for the exclusive right to purchase 100% of the Lithium produced from MNMC mining properties at a discount to market price. Recently, the Company learned that it may have as much as $12Bil in lithium product available at the MNMC properties in Mongolia. Company management has come to the decision that rail could offer lower costs, more reliable scheduling and quicker delivery.
The importance of reliable transportation and quicker delivery may become advantageous, considering the upcoming and highly-anticipated Apple (NASDAQ: AAPL) iPhone 5 release. Nova Mining Corp calculates that the iPhone 5 release will have an equal or greater effect on tightening lithium supplies and raising prices worldwide as the recent iPad launch had. As such, Company management feels that any escalating demand on already short lithium supplies may leave some buyers out in the cold.
Nova Mining Corp enjoyed recent successful negotiations concerning supplying lithium in Shenzhen, receiving three supply deals for the critically short mineral in July. Management would like to take advantage of the close proximity of Mongolia to Shenzhen and any transportation positives available. As part of the Company's business model, reliable supply of product could become a valuable point of leverage in the current lithium "seller's market".
Nova Mining Corp. (NVMN) seeks out the most potentially lucrative mining projects, supplies and sales of strategic high-demand minerals, such as lithium, as part of its aggressive economic business model. Lithium is the main ingredient in long life batteries, like those used in Apple's popular iPhones and iPads, Google's (NASDAQ: GOOG) new Nexus 7 tablet and Tesla Motor's (NASDAQ: TSLA) new performance electric cars.
BoM issues ₮38.05 billion 1-week 13.25% p.a. bills
August 15 (Bank of Mongolia) BoM issues 1 week bills worth MNT 38.050 billion at a weighted interest rate of 13.25 percent per annum /For previous auctions click here/
N.Altankhuyag: Axe agencies but expands Ministries
August 14 (Business-Mongolia.com) This morning PM Altankhuyag presented the draft law on the structure of the Government and Cabinet members. After that he made statement to the media representatives.
PM Altakhuyag commented that after the approval of the law, the name of Ministries will be clear. The previous Government had 15 ministries, but the current Government will have 19 and number of ministries are increased from 11 to 16.
Before, the Committee of Development and Innovation had agency status. In order to provide power to implement its function, is status should be upgraded into the Ministry level and it will bear name of Ministry for Economy and Development. Also, Ministry of Minerals and Energy and Ministry of Roads, Construction and Urban Development are to be split. The reason is that single ministry in charge of the crucial sectors, creates much bureaucracy in the decision making.
Road is important sector in Mongolia as well as urban development, but these two sectors are managed under 1 manager is also not good to make progress. This was proven during this summer's continuous rain. Such observations made us to split the ministries, but we are reducing number of agencies by over 10 from 43. Ministries will have deputy ministers also.
Council for Parliamentary Speaker established
August 15 (UB Post) The Speaker of the Parliament of Mongolia Z.Enkhbold, issued an order to approve the Parliamentary Council.
The Council was approved with the following Members of the Parliament:
1.Ch.Ulaan, the Deputy Speaker of the Parliament
2. D.Erdenebat, the Chairman of the Democratic Party faction in the Parliament
3. N.Battsereg, the Chairman of the "Justice" Coalition (the merge of Mongolian People's Revolutionary Party and Mongolian National Democratic Party) faction in the Parliament
4. N.Altankhuyag,the Head of Democratic Party
5. U.Enkhtuvshin, the Head of Mongolian People's Party
6. S.Oyun, the Head of Civil Will-Green Party
7. Ts.Tsolmon, the Chairman of Security and Foreign Policy Standing Committee
8. G.Bayarsaikhan, the Chairman of Environment, Food and Agricultural Standing Committee
9. Z.Bayanselenge, the Chairwoman of Social Policy, Education, Culture and Science's Standing Committee
10. A.Bakei, the Chairman of State Structure's Standing Committee
11. Ts.Davaasuren, the Chairman of State Budget Standing Committee
12. Sh.Tuvdendorj, the Chairman of Legal Standing Committee
13. B.Garamgaibaatar, the Chairman of Economic Standing Committee
14. S.Ganbaatar, the Representative of the Independent Candidates elected in the Parliament
15. L.Erdenechimeg, the Representative of the Women Candidates elected in the Parliament
Amendments to the composition of the Council will also be made after the Mongolian People's Party faction in Parliament is formed officially.
The first meeting of the Council was held yesterday, where the package of the 2013 State Budget and the issue of building the new Parliament Palace were discussed, reports the official website of the Parliament.
Mongolian president stresses importance of upcoming NAM meeting
Beijing, Aug 14 (IRNA) – Mongolian President Tsakhiagiin Elbegdorj said Tuesday that his country attached great significance to the upcoming meeting of the Non-Aligned Movement slated for August 26-31 in Tehran, Iran.
Elbegdorj made the remarks in a meeting in Mongolia's capital city of Ulaanbaatar with the visiting Iranian Deputy Foreign Minister for Asia and the Pacific Affairs Abbas Araqchi.
During the meeting, Araqchi submitted an invitation from Iran's President Mahmoud Ahmadinejad to his Mongolian counterpart to attend the Non-Aligned Movement (NAM) summit meeting in the Iranian capital.
The Mongolian president welcomed the invitation saying that Ulaanbaatar would participate in the meeting at the highest level.
President Elbegdorj then referred to the 40 years of historical cooperation between Tehran and Ulaanbaatar, stressing the need to promote bilateral relations.
FACTBOX-Key political risks to watch in Mongolia
ULAN BATOR Aug 14 (Reuters) - A new prime minister was confirmed in early August, ending weeks of uncertainty after June's parliamentary election proved inconclusive.
Norov Altanhuyag of the Democratic Party (DP) takes over in a transfer of power from the former ruling Mongolian People's Party (MPP). The key risk for the mining firms -- the engines of economic growth in Mongolia -- remains the influence of resource nationalist lawmakers, who were the big winners in the poll.
Until and unless the new coalition government sends signals that it is in favour of foreign investors and does not intend to renegotiate key contracts or pass legislation to limit foreign ownership of mineral deposits, these firms will be wary of making big new commitments to the country.
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
A key figure in a environment of increasing hostility, at least outwardly, towards foreign mining corporations, had been former president Nambar Enkhbayar, chief of the Mongolian People's Revolutionary Party. In early August, he was jailed for four years for corruption.
He had targeted the contract for Rio Tinto's giant Oyu Tolgoi copper and gold project, and also said the 7.5-billion tonne Tavan Tolgoi coal mine -- expected to be listed on overseas stock exchanges -- should remain in Mongolian hands.
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. (Mogi: "new" securities law it should say)
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. (Mogi: the law doesn't cap foreign investment but adds government, parliament approval processes to it)
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).
An example of the power of opposition to foreign -- especially Chinese -- ownership of Mongolian assets came in August, when SouthGobi said it expects Chalco to ditch its takeover bid as a result of political opposition.
The ownership law says 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 100 billion tugrik ($73.66 million) or ones involving state-owned companies. (Mogi: not so true, government approval for +33% stake, and parliament approval for +49% and ₮100B deals)
What to watch:
- The new government's relations with foreign investors, and whether pressure from resource nationalists is brought to bear on lawmaking.
- 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 benefits for Mongolian citizens.
- 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 (Mogi: above 2.8 now) 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 (Mogi: dependent on Russia for fuel, on China for export transportation, but power? Hmmm) 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?
NAM summit in Tehran of great importance to Mongolia
August 14 (Press TV) Mongolian President Tsakhia Elbegdorj, pointing to the paramount significance of the Non-Aligned Movement (NAM) for his country, said he will take part in the next NAM summit in Tehran at its highest level.
During a meeting with visiting Iranian Deputy Foreign Minister for Asia and Oceania Affairs Abbas Araghchi in Ulaanbaatar on Tuesday, Elbegdorj praised decades-long relations between Mongolia and Iran, and called for further expansion of economic, cultural and educational ties between the two countries.
Araghchi, for his part, expressed hope that Iran-Mongolia trade and cultural relation would further grow in light of the two nations' economic development.
The Iranian diplomat also extended President Mahmoud Ahmadinejad's invitation to the Mongolian leader to attend the forthcoming NAM summit in Tehran.
The 16th summit of the NAM member states will be held in the Iranian capital between August 26 and 31.
The Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei will address the Tehran NAM summit.
United Nations Secretary General Ban Ki-moon is also expected to partake in the event during which the Islamic Republic will assume the rotating presidency of the movement for three years.
NAM, an international organization with 120 member states and 21 observer countries, is considered as not formally aligned with or against any major power bloc.
NAM's purpose, as stated in the Havana Declaration of 1979, is to ensure "the national independence, sovereignty, territorial integrity and security of non-aligned countries."
WHEN NOMADS SETTLE THE CITY: THE URBANIZATION OF MONGOLIA
ULAN BATOR, August 14 (Worldcrunch) – Over the last decade, Mongols have rapidly begun to concentrate here in its capital, as well as other cities.
This trend is accelerating and making Ulan Bator an unbearably crowded place, though still relatively small in comparison with most of China's major cities. Nevertheless, the impact may be more drastic on a nation historically made of nomadic people.
After the declaration of independence in 1924, Ulan Bator's city planning was directed by the Soviet Union. The capital was designed to contain a maximum population of 400,000.
In recent years, however, it has rapidly become home to 1.3 million people, almost half of Mongolia's entire population.
Traffic is one of Ulan Bator's major issues. On the roads, which are not wide to start with, some drive on the right, some on the left. Apart from the very center of the capital, there aren't many traffic lights at intersections, and the result is horrendous traffic jams.
Another of Ulan Bator's ills is pollution, which largely comes from the raw coal that the majority of the habitants burn for heating in the long winter. As for the herders who live on the hillside, they generally use dried cow dung as fuel. In the winter, the atmosphere above the city is full of the soot and smoke.
Go to the capital
Still, more and more Mongols and their flocks are marching towards the capital. According to Mongolian law, any Mongol can move around freely. Around the cities, as long as they make a demand, they get a free piece of land of 0.7 hectare to tie down their yurt, the traditional portable round dwelling, and keep their flock. Herders are increasingly moving closer to the capital, often settling down on the outlying hillsides.
Ulan Bator is a city surrounded by mountains; the Tula River (Mogi: Tuul), known as the Mother River, traverses the city. Looking at it from afar, the densely dotted yurts look like white galactic disks embedded on green brocade. With the yurts on the slopes complementing the tall buildings in the basin, the capital makes for a unique urban picture indeed.
But why do the herders want to come to the city? It is a complex question. One expert who has studied Mongolian livestock husbandry told me that because of the popularity of television, more and more Mongols are gradually getting to know about modern society. The young Mongol generation aspires to have contacts with the outside world, and going into the city is the only way to do that.
The Mongolian population has a median age of 35, a young country indeed.
Out of the 2.7 million Mongols, more than 300,000 go and study or work in Japan, South Korea and China. The majority of the Mongol ruling class has had foreign experience. They are having a great influence on Mongolia's opening up to the outside world.
Another reason for the move to the cities is that the desertification of Mongolian territory. Suitable land for pasture is decreasing year by year, and it is becoming more and more difficult to pursue a nomadic life style.
Urbanization
With the acceleration of urbanization, Ulan Bator's real estate sector is burgeoning. Rent is extremely expensive. In a country where annual GDP per capita is only $3,042, an apartment of 30 square meters costs $300 to $400 per month.
For ordinary residents of the capital, 30 square meter apartments are the norm. A living room plus a bathroom, just like a standard hotel room, makes up a household's entire living space. They receive guests and eat in the same room. They, of course, also sleep in it, just like in a yurt. The earliest yurts didn't have beds anyway, and Mongols often slept on a felt rug on the floor.
What foreigners notice most about Ulan Bator may be all its pubs. They are in every corner of the capital and full of drunken men, even in the day time. In a place where there are only three months of warm weather, a drinking culture runs deep. (Mogi: haha)
Disparities
The wealth disparity is wide in Mongolia. For most herders who are newly arrived in the capital, they came with no tradition of saving money. After selling off their flocks they can only afford to live in yurts. Buying a house is an unreachable dream for them.
Over time, their children grow up and yearn to live in a building, to have convenient living facilities, to watch television, and to surf online. The diligent ones can find their own place in the rapidly developing city. They work for foreign companies from all over the world, adapt to the urban life and become Mongolia's middle class.
Others, however, are bound to remain marginalized, unable to adapt to the city's rhythms or to secure a livelihood.
Nevertheless, more herdsmen are bound to become city folk. The process may take a generation or two, but by now it appears inevitable.
Photo Essay: Change in the Gobi: Mongolia's Economic Boom
August 14 (TIME) Photographer Davide Monteleone and I may have had one of the only drivers in the Gobi—that forbidding expanse of gravel and sand in southern Mongolia—who had no sense of direction. Granted, the instructions we received were pretty vague: at the second (or was it the third?) livestock path, we should take a left. What counted as an animal thoroughfare, we wondered? Was it that little indentation in the gravel? Or the line of hoof prints heading east?
After much bumping along, we finally reached our destination, a traditional Mongolian circular tent called a ger, surrounded by a crowd of camels, goats and other livestock. I wanted to talk to the herders, who were unhappy with the compensation they had received from Oyu Tolgoi, the copper and gold mine that is Mongolia's biggest foreign investment project to date and which may add one-third of future value to the country's GDP. Davide was photographing the forbidding panorama and the hardy nomads who live there. And then, just as he was trying to compose a picture that would convey the aridness of the landscape, it began to rain. Fat drops fell, landing on the camels' eyelashes. Here we were in one of the driest places on earth, in the middle of a freak rainstorm.
Mongolia is a land of improbable contrasts. It is the most sparsely populated country on the planet, with fewer than 3 million people. Yet it is also, by some estimates, the world's fastest growing economy, powered by at least $1.3 trillion in untapped minerals. The natural-resource boom is remaking the capital, Ulan Bator, which now boasts shiny new skyscrapers and luxury malls that contrast with the city's decrepit Soviet architecture. Yet one-third of the country remains impoverished. Democracy, which the country's citizens embraced after a peaceful revolution in 1990 that displaced the long-ruling socialists, gives people a voice through regular elections. But corruption has eroded the life-changing potential of the rush of foreign investment—valued at $5 billion last year in a country with a $10 billion GDP. Mongolia, today, is increasingly a land of haves and have-nots, a land of both wind-chapped nomads and mining executives who power Hummers, not horses. For anyone in Mongolia, our off-course driver included, it's hard not to feel disoriented.
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"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
Telephone/Fax: +976-11-321326
Mobile: +976-99996779
Email: mogi@cpsinternational.mn
Website: www.cpsinternational.mn 
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CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
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