Friday, January 25, 2013

[BoM lowers policy rate, Erdenes TT looking to replace Chalco with Shenhua, and ₮413b domestic bonds sold in last 2 months]

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Blue Wolf Mongolia Countdown: 87 days left till liquidation


Bank of Mongolia lowers policy rate to 12.5% by 0.75 percentage points

January 25 (Cover Mongolia) Mongolia's central bank today announced it is lowering its policy rate by 0.75 percentage points to 12.5%. This is the first time Bank of Mongolia has lowered its rate since lowering it from 11.5% to 10% in 30 September 2009.

Link to policy rate history


Wolf had A$5.7m at end of December


January 24, Wolf Petroleum Limited (ASX:WOF) --


·         Wolf Petroleum takeover and re-listing

Strzelecki (STZ)  announced  a takeover offer for all of the securities in Wolf Petroleum (Wolf).

On 29 October 2012 STZ announced that it had received 100% acceptances from Wolf shareholders and STZ was renamed and re-listed on ASX as WOF on 21st of December 2012.

·         Production Sharing Contract Awarded

The government of Mongolia, under the National Security Council's guidance, gave rights to the Petroleum Authority of Mongolia (PAM) to sign a Production Sharing Contract (PSC) with Wolf Petroleum Limited.

The PSC with the government of Mongolia secures favourable investment terms and enables Wolf  to conduct oil exploration for up to 14 years (including available extensions) and production for up to 30 years.

·         Board changes

The board has been restructured and new directors have been appointed. The newly appointed directors have outstanding international industry experience. Critically for Wolf, this experience includes a strong  and  proven capability in the resources  sector  in Mongolia, especially in exploration and development.

·         Aggressive Exploration Programmes Underway

Wolf has planned aggressive exploration programmes in order to complete two-and-a-half-year contract commitments in one year and commence  the initial drilling programme in 2013.

Link to release

Link to Quarterly Cash Flow Report


Xanadu: Quarterly Activities Report

January 24, Xanadu Mines Limited (ASX:XAM) --


·         Exploration drilling completed at the Elgen-Zost epithermal gold project

·         At the Oyut Ulaan Porphyry copper project, drill target definition continues  

·         Completion of the Oyut Ulaan transaction requires approval under the new Foreign Investment Law

·         New board appointments confirmed including Denis Gately, Non-Executive Chairman and independent Non-Executive Directors Mark Wheatley and Dr Darryl Clark

·         International CEO search underway

·         Cash on hand at 31st December 2012 was AUD$7.4m to fund exploration and working capital

EKHGOVIIN CHULUU LLC (Joint Venture Company Xanadu/Noble Group)

·         Exploration programs completed ahead of winter recess.

·         At  Nuurstei (EC 80%)  a bulk sample confirmed moderate ash, low moisture, high CSN (8), indicating a premium hard coking coal

·         At Khus (EC 51%) drilling (17 holes) and sampling have indicated the potential for bituminous coal

Link to article


Centerra Gold 2012 Fourth Quarter and Year-End Results Conference Call and Webcast

TORONTO, ONTARIO--(Marketwire - Jan. 24, 2013) - Centerra Gold Inc. (TSX:CG) will host a conference call and webcast of its 2012 fourth quarter and year-end financial and operating results at 10:00AM Eastern time on Thursday February 21, 2013. The results are scheduled to be released after the market closes on Wednesday February 20, 2013.

·         North American participants should dial the toll-free number (800)-745-8951. 

·         International participants may access the call at +1 (212)-231-2900. 

·         The conference call will also be broadcast live by Thomson Reuters and can be accessed at Centerra Gold's website at

An audio recording of the call will be available approximately two hours after the call via telephone until midnight Eastern Time on Thursday, February 28, 2013. The recording can be accessed by calling (416) 626-4100 or (800) 558-5253 and using the passcode 21644903. In addition the webcast will be archived on Centerra Gold's website

Centerra is a gold mining company focused on operating, developing, exploring and acquiring gold properties primarily in Asia, the former Soviet Union and other emerging markets worldwide. Centerra is the largest Western-based gold producer in Central Asia. Centerra's shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is based in Toronto, Canada.

Link to release


Mongolia Loan May Help Tavan Tolgoi Exit Chalco Deal, CEO Says

By Michael Kohn

January 24 (Bloomberg) Mongolia pledged to give Erdenes Tavan Tolgoi LLC, its largest coal company, a $355 million loan that Chief Executive Officer Yaichil Batsuuri said may be used to help it exit an agreement to supply China.

Erdenes Tavan Tolgoi may use the funds to pay the $180 million it owes Aluminum Corp. of China Ltd. as part of a supply contract signed in 2011 for steelmaking coal, Batsuuri said today in an interview in Ulan Bator. The $250 million that Chalco, as the Chinese company is known, gave the Mongolian miner as a prepayment can be repaid with coal or cash, he said.

Erdenes TT, as the state-owned company is known, halted deliveries to Chalco on Jan. 11 after it failed to pay a company that provides logistical support amid a cash crunch. The coal supplier is also seeking revisions to the contract signed with Chalco (2600), it's biggest customer, because prices were set at a level that's now below the cost of extracting and delivering the coal, Batsuuri said.

"We wish to cooperate with Chalco in the future, but not in the way that we are working at the moment," Batsuuri said at Erdenes TT's offices in Ulan Bator. "We want to change our way of cooperation, especially the price mechanism."

Erdenes TT exported 2.4 million tons of coking coal to Chalco in 2012, short of the three million tons it had planned to ship, said Batsuuri. Mongolia is the largest exporter of coking coal to China.

Mongolia exported 20.9 million tons of coal last year, down from 21.3 million in 2011, according to the National Statistics Office. The value of the exported coal in 2012 was $1.9 billion, compared with $2.27 billion in 2011, according to the agency.

Contract Talks

An executive team from Erdenes TT is holding talks with Chalco on future coal deliveries, said Batsuuri. The company will only supply coal after it revises prices and volumes with Chalco, he said. Erdenes TT loses $5 on every ton delivered because of rising transportation costs and the price its paid for the coal, Batsuuri said.

Yuan Li, a spokesman for Chalco's parent, Aluminum Corp. of China, didn't answer calls to his mobile phone today seeking comment. Chalco earlier this week said that officials from its international trading unit met with Erdenes TT in November to discuss prices and the volume of shipments. The fundamental terms of the accord shouldn't be changed, the Chinese company said Jan. 22 in a e-mailed response to questions.

The $355 million loan will probably come from the Development Bank of Mongolia, Batsuuri said. The lender last year raised $600 million through the sale of bonds, according to its website.

Mining Wealth

Erdenes TT last year gave the Mongolian government about $310 million as part of a state-initiated program to distribute the nation's mining wealth to all citizens, Batsuuri said. That compounded its cash crunch, he said.

The Mongolian government agreed in December to provide Erdenes TT a loan of $200 million and this week decided to increase that amount to $355 million, Batsuuri said.

In addition to paying Chalco, Batsuuri said the company will also use part of the government loan to buy equipment and develop the West Tsankhi block of the Tavan Tolgoi coal field, which is Mongolia's largest with 6 billion metric tons of reserves. The participation of foreign companies including Peabody Energy Corp. (BTU) and China Shenhua Energy Co. in West Tsankhi is still being reviewed by the government, he said.

Erdenes TT will also not sell shares to the public this year, according to Batsuuri, who said his preference is for an initial public offering no sooner than 2014.

Link to article


Mongolia coking coal mine troubles mountLeslie Hook via FT, January 24 (Mogi: mistakes Chalco prepayment amount from $250m to $350m)

Mongolia to Cancel China Coal-Supply Contract, Delay IPOChuin-Wie Yap via WSJ, January 24


Mongolia Taps Shenhua to Break China Coal Impasse - Ambassador

BEIJING, January 25 (Dow Jones Newswires)--Mongolia is reaching out to China's largest coal producer China Shenhua Energy [1088.HK] in an effort to break a deadlock over the terms of a souring coal supply deal with another Chinese giant, Aluminum Corp. of China [ACH], Mongolia's ambassador to Beijing said Friday.

The growing squabble with China, its largest trading partner, underscores how swiftly changing political and public sentiment in Mongolia toward foreign investment in the country's fledgling mining sector could throw into disarray the development of its Tavan Tolgoi deposit, potentially the world's largest untapped coal reserve.

State-owned Erdenes-Tavan Tolgoi LLC, which owns the project, has halted coal exports in a bid to renegotiate an agreement reached last July to sell coking coal to Aluminum Corp. of China, also called Chalco, Mongolia ambassador Tsedenjav Sukhbaatar told the Wall Street Journal.

Under the original terms of the deal, Chalco lent Tavan Tolgoi $350 million to be repaid in coal, but capped the commodity's price at $70 a metric ton.

"Chalco was just using a moment when the government badly needed funding to get a deal that was unacceptable in the sense of normal international trade," Mr. Sukhbaatar said.

A new management team at Tavan Tolgoi, appointed last fall by the freshly elected Mongolian government, has repaid nearly two-thirds of the $350 million loan but now wants to redraw the contract to reflect fluctuating market prices for coal, he said. Coking coal import prices have since reached around $190/ton, according to the consultancy.

The impasse had led in part to Tavan Tolgoi being unable to continue to pay for the logistical operations of transporting and exporting the coal to China, he said.

Mongolia is now tapping Shenhua, which is in the running as a candidate to develop part of Tavan Tolgoi, to try to resolve the dispute.

"What we're trying is to deal with Shenhua as the principal and the biggest coal company," he said. "They have the infrastructure. They are the international company. Chalco has nothing to do with coal."

Mongolia has held some talks on the issue with Shenhua, with no clear results, he said.

Shenhua's media office didn't respond to several calls for comment Friday. Chalco referred all questions to an e-mailed statement saying it hoped Mongolia would honor all the terms of its agreement, "including confidentiality arrangements."

All other forms of Mongolian commodity exports apart from coking coal are proceeding as normal, Mr. Sukhbaatar said.

He said Tavan Tolgoi isn't likely to hold its initial public offering this year as planned, as Ulan Bator would prefer the mine's infrastructure to be in place first as it would potentially improve the offer price.

Link to article


Chinese top legislator to attend meeting in Russia, visit Mongolia

BEIJING, Jan. 24 (Xinhua) -- Chinese top legislator Wu Bangguo will attend the 21st Annual Meeting of Asia-Pacific Parliamentary Forum in Vladivostok in Russia and pay an official goodwill visit to Mongolia from Jan. 27 to Feb. 1.

Wu, chairman of the Standing Committee of the National People's Congress, was invited by Valentina Matviyenko, chairwoman of the Russia's Federation Council and Mongolia's State Great Hural Chairman Zandaakhuu Enkhbold, respectively.

Link to article


UPDATE 3-Giant Mongolian coal mine puts $3 bln IPO on ice

* Tavan Tolgoi says facing financial problems, rules out 2013 IPO

* Looking to renegotiate supply deal with China's Chalco

* Says Mongolia govt will give $350 mln to help mine repay debts

* But 7.5 bln-tonne project likely to face further delays (Adds statement from Chalco, detail)

By Terrence Edwards

ULAN BATOR, Jan 24 (Reuters) - Mongolia's giant Tavan Tolgoi coal project is facing financial problems and an up to $3 billion initial public offering for the mine will not go ahead this year as originally scheduled, the chief executive of the company in charge of the deposit said on Thursday.

Erdenes Tavan Tolgoi, the state-owned firm running the much-delayed 7.5 billion-tonne development, is shelving the issue until the mine has more infrastructure in place, chief executive Batsuuri Yaichil told Reuters.

The company will receive government funds of $350 million to help repay its debts and will also seek to renegotiate a supply contract with the Aluminium Corporation of China (Chalco) , he said.

But it is unlikely to be enough to develop the mine's huge potential as well as build all the infrastructure required to deliver coal to market from the treacherous South Gobi, and the project is likely to face further delays.

The company's problems have already forced it to suspend deliveries to China.

"E-TT (Erdenes Tavan Tolgoi) is facing ... financial difficulties. That's why we stopped our coal transportation and export," Batsuuri said.

The much coveted project, situated around 300 kilometres from the Chinese border, was part of a mining boom expected to transform the landlocked country's fortunes, but it has faced a host of financing problems and bureaucratic hold-ups, as well as disquiet about the role to be played by foreign investors.

A big investment agreement for the mine's western block involving China's Shenhua Group Corp Ltd, the U.S.-based Peabody Energy Corp and a Russian-Mongolian consortium was shelved in 2011 after being branded unfair by Japanese and South Korean rivals, and little progress has been made since.

"This is a classic example of how an enterprise can be used as a cash cow by government to advance political goals," said Dale Choi, analyst with investors Origo Partners.

Last year, Batsuuri's predecessor complained publicly that a government decision to make the company pay 937 billion tugrik ($669 million) into the country's Human Development Fund had held back progress on the mine. Batsuuri said the government had now agreed to help the company pay its debts.

"We asked for $500 million to bail out our debts and finance our operations before we start our infrastructure, wash plant and water-supply project," he said.

"The prime minister said the government is going to provide us $350 million. It's very timely, important financial assistance."

Mongolia was planning to raise up to $3 billion in funds by listing the eastern Tsankhi section of the mine on foreign stock markets this year, but Batsuuri said such plans were now suspended.

"Not this year," he said. "We decided to wait until the market recovers, the price of coal increases, and until E-TT starts regular construction of its wash plant. Plus we need to increase our exports."

The IPO, hotly anticipated because of its size and expected fees, has already been delayed several times and the further postponement is a blow to BNP Paribas, Deutsche Bank , Goldman Sachs and Macquarie, which were hired to handle the listing.


Batsuuri said Mongolia would also seek to renegotiate a coal sales deal with Chalco to bring prices in line with international levels.

In a deal signed in July 2011, Tavan Tolgoi originally agreed to sell $250 million worth of coal to Chalco, but it did not reveal the volumes involved.

Analysts have said the price could be as much as $20 per tonne cheaper than the average prices of Mongolian coal delivered into China, which are already much lower than international rates.

Batsuuri said Tavan Tolgoi had received a $350 million loan from the Chinese company and had paid almost half of the money back in the form of coal.

"Paying by coal is not profitable for the company. We are losing on coal trade. That's why the government made the decision to pay out the remainder. We will pay the remaining $180 million in cash."

He said Mongolia wanted to sell the coal at standard global prices, and was also seeking buyers other than China.

In a statement issued to Reuters on Thursday, Chalco ruled out the prospect of renegotiating.

It said it held discussions on prices with the management of Erdenes Tavan Tolgoi in November last year, and while it understood the difficulties facing the company and was willing to provide assistance, it would not change the July 2011 contract.

"We hope Erdenes TT will strictly comply with all the rules of the agreement, including confidentiality clauses," it said. "The foundation stone of mutual cooperation is to respect the solemnity of the contract."

Link to article


Australia's Macmahon faces possible funding hitch in Mongolia

MELBOURNE, January 25 (Reuters via Mining Weekly) - Australia's Macmahon Holdings , the mining contractor at Mongolia's giant Tavan Tolgoi coal mine, may face a problem there after April if its client Erdenes Tavan Tolgoi does not sort out funding problems, a senior executive said on Friday.

Erdenes-Tavan Tolgoi has run into issues managing its debt and is looking to renegotiate a supply contract with its main customer, Aluminium Corporation of China (Chalco) .

"We're not too concerned at the moment, but it has the potential, if it's not resolved, to cause problems," Ashley Mason, Macmahon's general manager of strategy and business development, told Reuters.

Mason said Macmahon was still mining as normal at Tavan Tolgoi and is still being paid as normal.

"We have money in an escrow account, so we're guaranteed payment until at least April," he said, adding that Macmahon had been through issues like this before in Mongolia and was confident Erdenes Tavan Tolgoi would resolve its financing problem with the Mongolian government.

Link to article


Baganuur to mine 3.5 Million tons of coal in 2013

January 24 ( The Baganuur Joint Stock Company (BAN:MO) is a strategically important mine, located in 130 kilometers east of Ulaanbaatar, supplying over 70% of the coal required for the Central regional electric system.  It is considered as one of the biggest open coal mines in Mongolia, equipped the world's leading machinery and technology. The mine contains 599,818 million tons of coal and has the capacity to extract 3 million tons of coal annually.

Baganuur mine currently supplies most of the coal, consumed by the five combined heat and power plants in Ulaanbaatar, Darkhan, and Erdenet as well as by the country's main industries and small consumers.

Although Baganuur was planning to mine 3.3 Million tons of coal in 2012, it produced 3.54 Million tons in total. It plans to mine 3.5 Million metric tons of coal in 2013.

The mine is located next Baganuur city, established in 1980, following the launch of the open pit coal mine. With a population of 27,000, the city plays an important economic role in the region. Baganuur railway station has the capacity of handling 4 Million tons of freight. Its power plant supplies electricity to thousands of household in the central region.

Mongolia is estimated to have potential reserves of 125 billion metric tons. Much of the coal found in Mongolia, and near the Baganuur mine contains only small quantities of ash and sulfur making it ideal for thermal power generation.

Link to article


Mongolian Prime Minister speaks to the media

January 25 ( Prime Minister Altankhuyag Norov was interviewed by journalists of the Mongolian press media on Wednesday. 

The Prime Minister stated that transparent action, hearing the public and providing feedback on results to the public are the main principles of the reformist Government. 

The Prime Minister also said that he received civilian complaints and proposals on every subject via the "11-11" center every day, the "Solve problems in a new way-222" meeting once a month and met sectors and agencies in order to hear urgent  issues from  8:40 to 11:00 am every day. 

Reporters and journalists from every press media operating in Mongolia turned out to the lecture Hall at the National University of Mongolia in order to question the country`s political and economic stance and its business and social circumstances. 

-Consumer product prices are increasing this time of the year. The Government promised to hold back on consumer products prices surges. Can the Government meet expectations?

-One of the priority targets of the Government is to freeze consumer product price increases and not let prices surge. Foremost we keep a policy to restrict price surges on products such as meat, flour, transportation, building materials, oil and fuel; the most needed by civilians. 

We started taking certain measures to stabilize prices on the most needed consumer products working with Mongol Bank. The results are now being seen.

Due to Tsagaan Sar consumer products are formally increased every year. 

But we could not watch the prices increase without doing anything. As a result 5 programs by the Government this year are working on making sure the price surge is less than previous years. 

Currently consumer prices have been increased by 20 to 30 MNT in contrast to 100 and 200 MNT increases in past years. 

We will keep working on the price restrictions. The Government gave directions to implementing agencies to launch a sale of reserved meat in the market. Therefore meat prices will be stabilized. 

-The President commissioned to the Government to hasten the proposed development projects on the railway, V Power Plant, Industrial Park and the Oil Refinery in Darkhan that are believed to be significant to the country`s economic growth. 

-What is the proposed time to start these projects?

-The President heard reports about what has been done on reducing air pollution over the past two years and what will be done in the near future and gave directions to the Government. 

The Ministries and Implementing Agencies gave the report that there was a small reduction in air pollution and toxic substances.

The plan to provide households in ger district with energy efficient stoves and improved fuel failed. Therefore the reformist Government will keep focusing on reducing air pollution by 60-70 percent over 2-3 years. But this is not enough to fight against only smoke. We should consider air pollution reduction along with the  Master Plan to re-arrange ger districts.

-What is the current financial situation of Erdenes TT LLC. Reports say that the company has halted coal exports due to a debt with Tsagaan khad coal transport loading facility.  Is there any possibility to improve the terms of contract with CHALCO on coal export?  What measures have been taken?

-Tavan Tolgoi LLC is debt-ridden. The company has debts of 110 billion MNT to commercial banks. It also must pay interest to the banks every month. Erdenes TT LLC took 350 million US dollars from CHALCO in advance. Currently the company has a debt of 300 billion MNT. 

The interest rate for the loan is even higher than the Government bond. It will be hard for the company to make profit even after the debts are paid. 

The reason is the deal signed with CHALCO is fatal. According to the agreement that the Mongolia side signed, Mongolia must sell coal at 50-70 US dollars if the market price is 70-100 US dollar to China. 

We can withdraw from the agreement only after paying 50 million US dollars. 

At least the country will get out from this situation. 

-How are the proceedings of the Oil Refinery which is to be built in Darkhan. Is it true that the oil refinery will process imported oil from Russia?

-After hearing 10 company's presentation on the oil refinery project the Government decided to support the oil refinery in Darkhan. The issue has been raised at Government level numerous times but was left unsolved. 

-The Government reached a decision to build an oil refinery with the capacity to process 2 million tons of crude oil by 2015.  Japan is ready to finance the project with a lower interest rate loan than a bond interest. The Government hopes the agreement with Japan on the project finance will be signed in February. 

-Therefore the Government has given directions to the Minister for Economic Development to determine the Government and investor`s investment stake in the project. 

We hope the main options to take on the project will be obvious by February. 

One thing that experts and public raise concerns over is the import of crude oil. Some people say that we will stay dependent on Russia if we import crude oil to process so we will still be dependent on Russian imported fuel. They claim there would be no difference. Actually there is a difference. Mongolia currently produces 360,000 tons of crude oil a year. The production output will rise further. 

This year we are supposed to produce over 700,000 tons and even one million tons of crude oil in 2014. 

Mongolia will be no longer be dependent on one supplier. Instead we will produce it ourselves. The reason is that now we can explore for crude oil but we cannot process it. 

-There is dispute over rail track width. Do you agree with Enkhsaikhan Mendsaikhan on the rail policy?

-Altankhuyag Norov, Battulga Khaltmaa and Enkhsaikhan Mendsaikhan should not decide what width the rail track should be. The width of the rail is state policy. Parliament determined that rails should be laid 1,520 millimeters apart. But there is a sentence in the law that says the Government should submit a suggestion to parliament if it is to export coal directly. 

Therefore there should not be a dispute over rail width. The rail width is designated according to state policy and to a feasibility study. 

Link to article



January 22nd, 2013 (Origo Partners) --

Highlights of Events

-       The Office of the President of Mongolia hosted a discussion on the draft Minerals Law on January 18th, 2013. A draft of the proposed Law has been available on its website since December 7th, 2012 and the event was the first formal consultation with key stakeholders.

-       The President's Chief of Staff, Head of draft Minerals Law Working Group Mr. P. Tsagaan chaired the discussion. Mr. Tsagaan provided the opening and closing addresses in front of an audience of an estimated 250 people, including a significant local media presence. Members of the Working Group responsible for the draft Law presented key items of the proposed 145 Articles. Attendees were then splits into four groups: Civil Society/NGO's (30%); Mining Industry (30%); Academia (15%); and, State organizations representatives (15%), with the remaining 10% of attendees being the independent observers. Direct feedback and concerns from these groups was presented after which the floor was opened up to Q&A.

-       In his speech, Mr.Tsagaan said "It is needed to understand reality of Mongolia. We need to understand each other well on such issues such as geopolitics and location, fragile ecology, small population. It is needed to look at a reality and have a look at the draft from many angles."

-       Mr. Tsagaan and the Working Group went to repeated efforts to emphasize that business and politics are separate when it comes to the draft Law and that they are looking to engage in an active consultation process to refine and improve the draft. It was reiterated that the proposed Law is not connected in any way to the June 2013 Presidential election. It was highlighted by many that the new Minerals Laws will only be second to Mongolia's constitution in terms of importance to the economy and its people.

-       Timing of the implementation of the proposed Law would depend on the most appropriate and correct version of the Law (even if that takes years). It was widely acknowledged from many stakeholders that the current draft has significant areas of 'uncertainty' and key issues that would make it unworkable.

-       In his closing statement, Mr. Tsagaan, outlined that the President's Office Working Group will be expanded to incorporate members of various stakeholders, including the Mining Industry, to help refine the draft Law with the each of the four groups to nominate in the next 10 days 3-5 members to join the President's Office Working Group to help improve the draft Law. Further consultation via similar events is planned and the proposed process reflects the President's wish to follow a due democratic process to create a responsible and long-term mining framework.

-       Following the event the President's Office is welcoming feedback from stakeholders, particularly those in the mining industry and investors (in both cases both local and foreign), seeking constructive criticism and suggested improvements/revisions to the current draft.

-       Other notable developments during the previous week include:

              i.        Uncertainty reflected in Chinggis Bonds (refer to exhibit A) – Ahead of the President's Office meeting with stakeholders the recently issued US$1.5b Sovereign Bond issue fell from 100.21 on January 7th, 2013 to 97.95 as of January 22nd, 2013.  The price move again highlights the importance of the draft Law, the markets significant risk aversion to uncertainty and an increasing awareness of, and reaction to, Mongolian developments in the international markets.  Recent comments from Government officials are that Mongolia will look to issue more international debt in six to 12 months.

             ii.        Immediate future of TT in doubt – Erdenes Tavan Tolgoi ('TT') has halted exports to China after failing to pay a company that provides logistical support. Furthermore, TT is reportedly seeking a US$400-500m government loan to repay debt, fund working capital and build infrastructure. Current truck haulage operations are uneconomic with reported opex of $61/t relative to the current price of $53/t. It is believed TT is seeking to renegotiate the terms of its supply agreement with Chalco signed in July 2011, to increase the price and lower the volumes. TT's financial position, the funding requirements and the current coal environment raises significant queries regarding the Mongolian Federal 2013 budget and any medium term potential for an Initial Public Offering. It is widely viewed that if TT was to be subject to the draft Minerals Law that its economic viability and ability to IPO would be further significantly negatively impacted

            iii.        More funding needed for OT - Rio Tinto is said to be hosting a site visit to Oyu Tolgoi ('OT') in the last week of January for the various bankers and investors in connection with the anticipated project financing for the development of the underground operation. Commercial production from initial open pit operations remains on track for 2Q'13. According to OT estimates 80% of wealth generated from the mine will come from the yet unfunded underground operations in 2020.

            iv.        Proposed changes to professional services likely to significantly impact 'foreign' accountants and lawyers. For accountants tax and audit law has been hastily amended, effective January 29th, 2013, by recent draft Laws resulting in international audit companies such as PwC and others possibly no longer being permitted to conduct tax opinions and face other audit limitations. A draft Law on lawyers has been amended to enter into force on April 15th, 2013.  The likely effects of these proposed changes it to potentially significantly alter both local industries: deterring foreign investment; international and domestic financing; Mongolian companies' abilities to IPO or raise other forms of funding; anti-competitive measures etc.  We would expect there to be a significant impact to local skills and job training, and most likely result in having a negative impact on both domestic and foreign professionals and their Mongolian clients. The proposed changes are the latest potential shift towards a more state-centric system and away from free market principles. Such similar themes have been recently incorporated in SEFIL (legislated in May'12) and the proposed Draft Minerals Law (Dec'12).

-       There are ambitious proposals in place to amend other associated laws including: Mineral Exchange; Mineral Royalties; Sub-soils; Water; Nuclear; and Oil & Gas.

-       Following the event we believe a number of groups, such as Business Council of Mongolia, are accepting Mr. Tsagaan's invitation to provide more constructive feedback to assist engaging with the enlarged Working Group. We would expect the President's Office in the next month to resume revisions to the draft Law including both direct written feedback after the event and via discussions with new members of the enlarged group. After this, our understanding was that similar structure public discussion was expected in February.

Origo Partners View

-       While it was unrealistic that specific concerns regarding the proposed draft Minerals Law would be answered in such an initial public forum, the event was undoubtedly a first encouraging step forward in a much needed consultation, interaction and communication process.

-       The Office of the President went on public record stating its intent to actively seek consultation with the industry/stakeholders, that the draft Law is not motivated by the forthcoming election, and that there is no proposed timeline for finalization until concerns of all stakeholders are addressed.

-       From numerous discussions with Mongolian authorities prior to, at and after the event on January 18th, we appreciate the sincerity of the intent of the draft Law to try to solve challenges posed by development of minerals sector, protect the interests of Mongolia and its people from more higher national interests' point of view.

-       However, we note a significant "disconnect" and misunderstanding between positions, beliefs and convictions of the taskforce and Mongolian authorities and that of the exploration/mining industry and investors. We stress that this "disconnect" not only pertains to draft Minerals law, but to a wider debate in Mongolia about what constitutes 'fair business' with foreign investors in general, be it Oyu Tolgoi Investment Agreement or Boroo Stability Agreement. Tax/audit and Law on Lawyers issues illustrate that "disconnect" is reaching epidemic proportions in key sectors fundamental to the growth of the free market and investment in Mongolia. Without understanding each other, it is of no surprise that investors and industry in Mongolia are feeling as if they are being attacked from many angles.

-       We are getting more convinced the draft Minerals law in the essence is the Investment Agreement between state of Mongolia and all mining and exploration investors ex-OT with all the ramifications thereof.

-       Both the taskforce and the industry now face a substantial challenge to connect this significant "disconnects" and bring closer the positions. In our view, the industry now faces an unknown, and most likely prolonged, period of uncertainty that the major weaknesses, and specific Articles of concern, of the draft Law can and will be addressed. This will continue to impact immediate exploration, development and investment activities.

-       A particularly refreshing point worth noting was that active debate of the current draft was very much being led by Mongolian businessmen/entrepreneurs, industry groups and academics/past politicians. There have been various calls for a country wide social and economic impact study to help quantify the potential 'costs' of the law to local/foreign investors and across industry and this was again reiterated by local groups (from an ex-prime minister, academics to herders alike) on Friday.

-       We note that the proposed open consultative process will take great leadership from all stakeholders and there will be significant challenges facing both the process and ability to improve the current draft Law into workable framework for all stakeholders. However, we reiterate that the discussion is a first step in right direction in a long and uncertain journey.

Dale Choi (Чойнхорын Эрдэнэдалай),
Senior Associate – Market Intelligence

Link to Origo


Investors fear impact of Mongolia's new mining lawbne, January 25


Labor Ministry organizes discussions on PetroChina labor dispute

January 23 ( A joint meeting was held between the Ministry for Labor, the Petroleum Authority, the Mongolian Employer's Federation, the Ministry for Mining, the Mongolian Labor Union, the Union of Mongolian Transportation, the Refinery Trade Unions of Mongolia and the Trade Union of PetroChina. The meeting was held on Tuesday to discuss the issue between PetroChina LLC which runs the oil related operation in Tamsag area in Matad sum in Dornod aimag and its employees.

Employees of PetroChina Daqing Tamsag delivered the following requests via their Trade Union to the company authorities last August. 

The requirements included:

Workers wages to be increased by no less than 50 percent,
Re-scheduling of 40 working days and 20 days day off,
Improvements to working conditions and environment. 

Even the Prime Minister called on the company authorities because of circumstances and requirements when he visited October last year. But the company failed to follow through on the promises made, so Mongolian workers announced a strike. 

The Ministry for Labor managed to coordinate a meeting between both parties in order to hear both sides' opinions on the case. 

According to the Mongolian workers of PetroChina Daqing Tamsag the company tried to fool them by accounting overtime wage and bonuses onto the base pay as if it were an increase to the whole pay and that the company failed to adhere to the Prime Minister`s orders to increase wages by the 1st January in 2013. 

Some claim the company did not even increase wages at all. 

PetroChina Daqing Tamsag LLC claims that the company has increased wages by a certain percent and has changed its payroll. 

The Petroleum Authority requested both parties to cooperate and  to respect the related laws and regulations considering the sector itself is risky due to big investments and may give benefits for a long time.

At the end of the meeting, PetroChina Daqing Tamsag promised to negotiate with their directors in order to solve the problem and increase wages and improve working conditions according to the Government`s requirement and reply to the request. 

Link to article  



January 24 (InfoMongolia) The Government Regulatory Agency, Nuclear Energy Authority released an official statement titled "Uranium is not extracted in the territory of Mongolia" on January 21, 2013.

Accordingly, there 85 special licenses on radioactive minerals were issued to 16 entities, whereas 83 exploration and 2 special licenses.

In the statement, "In the territory of Dashbalbar sum of Dornod aimag (province) 2 exploration licenses were allocated to "Shin Shin" LLC (China) and "Hunboo" LLC (China), where this area reserves hybrid-metallic mine field. According to the Law on Nuclear Energy of Mongolia (enacted in 2009), on these territories Plumbum and Zinc are allowed and being extracted and processed. However, the reserve for uranium ore was determined in this area, the whole territory is protected under the control of the Agency. Thereby, the Nuclear Energy Authority is responsibly stating that nowhere in the territory of Mongolia, uranium is extracting nor exploring."

Link to article


413 billion Government Bonds sold since December 2012 so far

January 24 (Cover Mongolia) A story that's not being covered, but sounds like it really should be, is that Mongolia's Ministry of Finance has conducting regular government bond auctions since December 5, 2012. Bonds range in maturity of 12-week, 28-week, and 52-week. 10 auctions were conducted since December until January 23, with more scheduled until June 2013.

So far, ₮413 billion Government Bills have been sold so far with different maturities.

Link to trade summaries


Summary of the Government Bills Auction held on January 23rd, 2013

January 23 (Ministry of Finance, Mongolia) Total of 10.0 billion tugrik bills was announced to be sold on this auction, 10,000 quantities with  52 week maturity. Bids received totaled  20.0 billion tugriks and  10.0 billion tugrik bills were sold successfully at weighted average interest rate of 11.645.

Specific information can be found from the table below.

Auction result

Announced total amount


Total amount of bids received


Total of accepted bids


Weighted average of accepted interest rate


Highest accepted interest rate


Lowest accepted interest rate


Link to release


Eight suspects in MIAT money laundering case

January 24 ( The State Investigation Office's Economic Crime Investigation Department detained seven individuals as suspects in the money laundering case. The suspects include former CEO of MIAT Ts.Orkon with his wife, the vice director of MIAT, R.Bat-Erdene and the Director of Mongolian Airlines Group. Ch.Khorolsuren 

These suspects allegedly created a so called War Risk Insurance tax whereby they collected 5 US dollars from each passenger. It was revealed that the suspects failed to transfer the money to the insurance company's bank account and instead they transferred the money in their "West Wealth Al group" company bank account. 

It is estimated that they caused 6.9 US dollars in damages said a source close to the matter. A detailed investigation was underway but officials hesitated to give more details on the case. 

The information comes from the former vise director of MIAT, Ch.Khorolsuren, who worked in MIAT from 2005 to 2010. 

Local newspapers say that MAK LLC is also related to the case. It is unconfirmed, but officials speculate that the company is a victim of fraud. 

High-up officials of MIAT allegedly granted licenses in a day to MAK, the company that planned to establish an air freight company.  In return the investor company bought a plane for 40 million US dollars. 

The number of suspects involved in the case is likely to rise. 

Last Saturday Khan-Uul district Court made a decision to detain six suspects over the caseMore suspects have been detained in the last couple of days. Even some officials are among them needed to be questioned. 

For example the former CEO of MIAT, Ts.Orkon, his wife U.Tsetsegmaa, former vice director R.Bat-Erdene, director of Mongolain Airlines Group, Ch.Khorolsuren, his brother Ch.Suuritogtokh and the director of an unnamed company S.Batkhishig were detained as suspects last Saturday. 

N.Gantumur, Director of a non-bank financial institute was arrested on Tuesday. 

N.Gantumur is suspected of mobilizing the laundered money. B.Mandakhbayar was also detained around 7:00 pm on Wednesday. He is the brother of B.Erdenebileg, former director of MIAT. 

Local press reported that the former Chief of State Property Committee, D.Sugar was also being questioned but officials from  the Prosecutor`s Office claimed that "he is not suspected or being questioned for now" 

A source close to the matter says that one suspect, Ch.Khorolsuren, is highly connected to a Minister of the current Government. But the name of that Minister is being hidden. 

Link to article


The World Bank's IFC Investment Arm In Emerging And Frontier Markets: What We Can Learn

January 24 (Jon Springer via Seeking Alpha) Ralph Keitel works as Principal Investment Officer for the International Finance Corporation [IFC] of the World Bank Group, which concentrates on the private sector. I had the opportunity to meet Ralph at the Syneidesis Group conference in early December 2012 and listen to him present about the IFC's case for investing in Emerging (and Frontier) markets. The World Bank's Antoine van Agtamel is credited with coining "Emerging Markets" in the 1980s while the IFC's Farida Khambata is credited with coining the term "Frontier Markets" (as a subset of Emerging Markets) in the early 1990s.

Why do you care? Because the IFC, as the World Bank's investment arm, is among the most successful investment agencies in the world. Contradictory to popular belief about bureaucracy making business impossible, the IFC, with 184 member countries, is a large institution supported by 184 governments that has averaged a 19.7% return per year since the year 2000 on its portfolio of private equity funds in Emerging Markets.

On the one hand, we cannot all invest the way IFC does. On the other hand, we can all learn why IFC is so successful in Emerging Markets (EEM) and the Emerging Market subset of Frontier Markets (FM). Ralph Keitel graciously agreed to share his views and some IFC data for this interview.

Link to full article


Long queues at Chinese-Mongolian border points ahead of Tsagaan Sar

January 24 ( Due to the up-coming Mongolian National Holiday, Tsagaan Sar, a long queue of vehicles is lined-up at Chinese Border points. 

The Consulate of Mongolia at Ereen and the county-level city of China received complaints from the vehicle owners. They claimed that Chinese Border point staff were illegally demanding 50-100 Chinese Yuan in order to let them pass through the boarder which incited chaos among vehicle owners. 

Due to the complaints the Consulate of Mongolia at Ereen met with officials close to the Boarder Point and with them solved the conflict by arranging the vehicles "УАЗ- 469" that were waiting to pass at the border points. 

Link to article


Women stop hunger strike after Enkhbayar request

January 23 ( The women that were holding a hunger strike at the MPRP building, demanding that the former president Enkhbayar Nambar be transferred to hospital from prison, suspended their protest at 8:00 pm on Tuesday 22nd January. 

The protestors called a press conference with journalists at the MPRP building at 8:30 pm on Tuesday. 

Supporters of MPRP held a sit-in strike on Friday and refused to drink water, claiming Enkhbayar Nambar, the head of MPRP, and prisoners were not provided with sufficient medical treatment and services. These supporters were all women. During the press conference on Tuesday the protestors announced that they would stop the sit-in strike because Enkhbayar Nambar asked them to do so. But Kh.Temuujin, the Minister for Justice, also received their request. 

Three of the 17 protestors were taken to hospital in emergency circumstances due to worsening health conditions. 

Link to article


Kh.Temuujin: N.Enkhbayar is not the President of Mongolia, nor is he the Chairman of MPRP, he is now a convict

January 23 (UB Post) The mothers who are sitting in the hunger strike have requested better treatment for former President of Mongolia N.Enkhbayar. Moreover they have announced through the press conference that they are delivering a demand requesting the annulment of his imprisonment and his release him from jail. But, it is unclear to whom the hunger strikers addressed their demand. According to the mothers on hunger strike, they have addressed their demand to the Minister of Justice Kh.Temuujin. But, Kh.Temuujin said he has not received any official demand from the mothers. However, according to an official who is in charge of the 'court decision implementation', Justice Minister Kh.Temuujin called press conference on Monday regarding the current situation.

During the press conference he said "The legislative bodies have been in a bustle during the past10 days. Thus, I want to give a direct and factual statement to the public regarding the incidents that have happened in recent days. Recently, an examination has been conducted on our Ministry's affiliated organizations, upon the request from several members of Parliament. Accordingly, I thought it right to present this information, as the Minister for Justice of Mongolia. The mothers who are sitting in hunger strike have demanded better treatment for the convict N.Enkhbayar. But, I haven't received any such official demand.. Secondly, the mothers have demanded the release of the convict N.Enkhbayar, but that is impossible.. In other words, the Minister for Justice doesn't have right to change the court's decision. But, I have right to jail criminals through the 'due process' of the court's decision. Thus, I am not able to resolve the issue of the people calling for these this demands. There is no legal opportunity to release someone from imprisonment for the cause of a hunger strike. As long as the court decision is held as valid no one can change it, although the constitutional rights to plead the case are still valid. In terms the Ministry of Justice, I want to tell the mothers on hunger strike, that their demands are unconstitutional and that the court decision must be upheld. In 'the eyes of, the Law', is a criminal and as a convict N.Enkhbayar no extra rights than any other criminal. He is not the President of Mongolia, nor Chairman of the MPRP (Mongolian Peoples Revolutionary Party), he is now simply a convict with the same rights as the other 7000 convicts in Mongolia. Accordingly, the court decision directs officials to delivered N.Enkhbayar to the prison hospital".

Moreover, Minister Kh.Temuujin emphasized that the punishments related to money laundering have been increased. Thus, international experts have warned that Mongolia will be included in the 'money laundering black list' in the upcoming June listing if we won't fight against the crimes of money laundering.. Accordingly, it was decided to launch two new departments to investigate and combat such crimes and according to the Justice Minister, 6 people have laundered large sums of money through the Mongolian Civil Air Transportation Corporation (MIAT) aka 'Mongolian Airlines', have been detained. He was not prepared to detailed information at this time as the case is still under investigation.

After the press conference, Justice Minister Kh.Temuujin answered journalists' questions:.

-Is there any tendency from the political officials to pressure for the release of N.Enkhbayar?

-It is true that high ranking officials, besides the citizens, are creating pressure regarding the release of N.Enkhbayar. This is a case of 'conflict of interest' and abuse of power interfering with a criminal prosecution.

-Is there any opportunity for you to receive the mothers demand and to transfer N.Enkhbayar to the 'Policlinic for State Officials'?

-The detention centers have been examined several times upon the request of some members of the Parliament. Accordingly, the Parliamentary Sub Committee for Human Rights made conclusion that; "The General Authority for Implementing Court Decisions submitted to the Minister of Health a proposal to establish a special hospital to provide medical treatment for prisoners who have been sentenced for serious crimes". In response, the Minister suggested that the "Policlinic for State Officials" provide a 50-bed unit for 20 such prisoners who are in urgent need of medical treatment. Hospital management responded "that this would be impossible in terms of security and space". They have instead prepared two rooms in the hospital that will be designated for prisoners.

-So, does it mean N.Enkhbayar will be transferred to the Policlinic for state officials?

-Only days before, two rooms were furnished in accordance with prison hospital standards. Once the prosecutor has approved the rooms the two convicts will be transferred.

-What do you want to say to mothers on hunger strike?

-Their first demand has been fulfilled. Thus, I want them to stop their hunger strike.

-Could you please give more information about the case related to the money laundering through MIAT?

-I can't give information about this case as we don't want to reveal the method of investigation. Anyway, there is no way to privatize MIAT or withdrawing money from MIAT itself. It is an issue related to a few millions dollars. The suspects have intentionally blocked benefits due to the company, laundering a large sum of money. If the case proves well founded through the investigation, the suspects will be tightly monitored. We have requested the related organization to return the laundered money.. In the future, an investigative department will be launched to reveal crimes related to money laundering. In conclusion, I announce officially that Mongolia has taken new steps to combat the corruption and organized crime.

Link to article


President withdraws his own draft law on press freedom from parliament due

January 25 ( Plenary session meeting of parliament scheduled to discuss a draft law on press freedom and a draft law to vitiate law but submitters suggested to revoke it so the discussion on draft law suspended on Thursday. 

The draft law on press freedom was submitted by president Ts.Elbegdorj. A working group has worked on the draft law since it was submitted to parliament. 

There was a speculation high that the draft law might tighten press freedom. 

P.Tsagaan, the Head of the Office of the President, Senior Advisor to the President questioned over the revoking the draft law. 

-Why did the president revoke the draft law on press freedom ?

-President initiated the draft law purposing to guarantee press freedom and journalists freedom to speech freely in Mongolia. But the draft law became more likely to restrict press freedom, put political pressure and influence during the discussion. So the draft law has been revoked. 

Link to article


Mogi: disappointing. Intentional blind eye towards government mistakes?

How Mongolia will perform in 2013?

January 2013, Mandal Asset Management --

Around 5 percentage points decline in annual GDP growth might sound like a death sentence for some economies, however it is not the case for Mongolia. Even with this decline economy of Mongolia grew 12.3% in 2012 which places the country among top performers straight away. In these circumstances, rightful questions arise as to how solid this growth is, what factors influenced the downward move, and whether the economy can beat itself in 2013.

Global environment in 2012

The main question for passing 2012 was whether developing countries can stay resilient in declining environment of developed economies. Unfortunately, 2012 has shown that developing countries including China are not that immune to global slowdown, resulting less than expected growth in China, especially during summer months. Euro zone crisis, US fiscal cliff problems were not resolved, and solutions are not found fast enough resulting in a sluggish global growth at around 3 percent in average.

Forecast from major international and financial institutions is given in the table on the right.

Mongolia in 2012

Mongolia was able to stay fairly resilient to deteriorating external environment, however it couldn't stay totally intact in conditions of turbulent international markets.

While some setbacks can be attributed to global, and specifically to China-related factors, it can be concluded that most of downward moves pertain to domestic events.

Chart on the right shows a snapshot of the macroeconomic health by major six indicators on a scale of 7 points (7 being the best and 1 being the worst score with break even at 4) for last quarters of 2011 and 2012.

Based on Q4 2012 preliminary estimates, health score stands at 3.7 points in average which is a decline compared to 5.2 of the same period last year. Out of six indicators, 4 have declined and 2 have performed slightly better yoy.

Huge fiscal deficit as an outcome of election and social welfare spending and trade deficit resulted by decreased export were the prime reasons that dragged the score down. In addition, inflation that spurred to 14% nationwide had a negative effect on the overall economic health.

Meanwhile banking sector has shown improvement measured by the level of NPLs and exchange rate stability.

What are main factors that will shape the economy in 2013?

There are several factors that will have a major influence on the economy in 2013. One of those will be political stability in the country and the ability of the government to implement its platform continuously. The role of the government in the economy is growing as the government pursues a policy to increase the size of public investments from the state budget funds, and Government Eurobond proceeds is about to be allocated to major infrastructure and development projects boosting growth in those sectors. 

Another key factor in 2013 will be obviously the Oyu Tolgoi mine and its operations. There will be a drag on the performance of the economy if unsettled issues continue to trigger uncertainty around this mine. The difference of the full impact from Oyu Tolgoi on the economy may account to almost 7 percent of the economy.

In addition, unless enforcement is made clearer, the Strategic Sector Investment Law is likely to curb FDI in mining sector, having most impact on new exploration projects. This decrease in FDI might erase the spillover effect mining sector previously had on the private sector.

What are key trends?

We expect that GDP growth in 2013 will remain at similar to 2012 levels. While OT production will contribute substantially to GDP, other mining especially junior mining and exploration projects may shrink with a few exceptions. However, growth in infrastructure and infrastructure logistics sectors will have a replacement effect. In agricultural sector some decrease may be observed due to harsh winter conditions and consequential livestock loss. Overall, there will be a shift from mining and exploration to infrastructure, logistics and, construction sectors. There are number of mega infrastructure projects lined up to start in 2013.

Monetary policy announced by the new Governor of the Bank of Mongolia is likely to have a positive impact on the economy through subsiding inflation rate. In 2013, it is believed that it may get closer to reaching its target rate. The reason is that the monetary policy coordinated with government action is directed at restricting budget expenditure by capping non-investment expenditures at 40% of the GDP and budget deficit at 2% of GDP respectively. Also, the Bank of Mongolia has initiated and started to implement several actions directed at smoothing imported inflation specifically related with fuel, construction and consumer goods.

While tight monetary policy will help to reduce inflation, it may not have a positive impact on financing conditions, as it reduces opportunity for loan rates to go down in general.

But those sectors that receive policy loans most likely will be able to benefit through decreased financing costs.

The ever increasing trade deficit is unlikely to have a steep reversal. Although imports of heavy mining machinery will decrease, it might be replaced by increasing imports of construction materials and road equipment and machinery. Imports will be supported by increased fuel consumption.

It is possible that trade deficit to stay at 2012 level, even though coal export volumes remain the same and copper concentrate volumes almost double, which will be supported by Oyu Tolgoi production offsetting potential decrease in commodity prices.

Although FDI decreased during recent months, reducing inflow of foreign currency, recent Government bond proceeds of USD 1.5 billion has set the trend once and for all. As a result, it is expected that throughout 2013, national currency will appreciate slowly and USDMNT rates will balance at around 1250 by the end of the year.

Also credit lines Mongolbank offered to fuel importers, has smoothened sudden foreign currency demand hikes commercial banks used to experience previously.


2012 has reminded us once again how incredible growth potentials are for Mongolia, but at the same time how fragile the economy is. It is not immune to external shocks and doesn't have thick enough buffer to ease or navigate through cyclical or populist policy movements.

It seems that 2013 will mark a higher growth triggered primarily by public funds investments in infrastructure and construction and, of course, by Oyu Tolgoi. If not carefully managed, this may result in crowd-out effect of the private sector by the government.

Substantial shifts are likely to occur, from private sector to increased public sector role, from mining sector growth to larger share of infrastructure, logistics and construction, from predominantly FDI and IFI financed economy to commercial bond funded economy.

Main macroeconomic risks in 2013

Link to article


Public smoking ban from March 1

January 25 ( According the amendments made to the Tobacco Control Law of Mongolia in October 2012, smoking will be banned in all public areas, including bars, restaurants, office buildings, playgrounds, parks, trains, airport and train stations, and apartment stairwells from March 01, 2013.

Schools, kindergartens and dormitories, and the surrounding areas will also have to be smoke free. In addition, the law prohibits sales of cigarettes within 500 meters from schools and dormitories. Anyone under the age of 21 years old will no be able to buy tobacco too.

The new regulation applies to common areas in hotels, too, although some hotel floors will still allow smoking.

Violators of the law will be required to pay a MNT 50,000 fine. Businesses that allow smoking will be hit with an amount equal to 25-50 times the official minimum wage, while officials receive a fine equal to 10-25 times the minimum wage.

Smoking habits in Mongolia are a growing problem, according to World Health Organization. As stated in the WHO data collected in 2009, 48 per cent of Mongolian men and seven per cent of Mongolian women smoke regularly.

Link to article


Mongolian parliament debates use of Chinggis Khan Name and Image

January 24 ( Mongolia's legislature began debating a law on regulating the use of Chinggis Khan's name in a bid to prevent the memory of the legendary conqueror from being cheapened. The draft was submitted by The Authority for Fair Competition and Consumer Protection (AFCCP) and MP G. Bayarsaikhan, G. Uyanga, J. Batzandan. Under the provisions of the new law, use of the name Chinggis Khan for commercial purposes would be granted only by the government, which would set fees for its licensing. Furthermore, it would forbid the Chinggis Khan name or portrait to be employed on vodka bottles or cigarette boxes.

According to the law, Chinggis Khan name and official portrait, Soyombo-national emblem can be used for given name for a person and for propose of art and cultural work, except as otherwise prohibited by law and it shall not cover government organization`s use of Soyombo-national emblem. As the law was supported by the Cabinet meeting, it will now be discussed at and finally approved by the Parliament in the near future.

Link to article


Authorities hold off raising bus fares till after Tsagaan Sar

January 23 ( The Association of Labor Unions of the Mongolian Transportation and Refinery Trade and the Bus Operating Union announced on January 10th about a bus fare increase. 

The Unions delivered a notice about the increase of bus fares up to 600 MNT and trolley fares to 400 MNT to the related authorities. 

The Association of Labor Unions of the Mongolian Transportation and Refinery Trade and the Bus Operating Union claim that if there are no measure taken by the Ministry for Road, Transportation and Urban Development by January 23rd, the Unions will increase bus fares . 

Our journalist asked about it from the Bus Operating Union:

"The related agencies replied that they had conducted estimations on the issue about whether or not to increase bus fares. We will follow the current tariffs for the moment because the National holiday Tsagaan Sar is coming. We will not increase bus fares  until March 1st to avoid a spark amongst the public. 

Link to article


Tsagaan Sar: The most pleasant time of the year, for business

January 23 (UB Post) The most pleasant time of the year for most Mongolians is Tsagaan Sar (Traditional Mongolian Lunar New Year). It is particularly pleasant for our domestic food manufacturers as they are busiest at this time. Food manufacturing businesses are generally successful in our country as there are many celebrations and holidays that revolve around food. Singers and bands also earn good amounts during the New Year celebrations.

Tsagaan Sar is the holiday on which Mongolian citizens spend the most money. According to rough estimates, we Mongolians spend approximately 716 billion MNT (around 511 million USD) for this holiday, which is around 5.7 % of the Mongolian Gross Domestic Product (GDP). Many have been critical in the past of the massive imports from China of goods as gifts for the holiday, but in recent years Tsaagan Sar has brought greater economic advantages to domestic manufacturers and enterprises.

Though there is much discussion about whether it is right to celebrate Tsagaan Sar winter or not, the holiday spirit has already filled the air of Mongolia. The elderly are lining up at the banks to get pension loans while the youth are working hard to get overtime pay so they can afford to prepare well and celebrate this traditional national holiday. The average household spends at least 1 million MNT for the holiday, which lasts for four days.

Below is a "Household Budget" that lists the major things Mongolians buy before Tsagaan Sar or use during the holidays, and the prices of these items.


A journalist from Unuudur newspaper went to Huchit Shonhor Market, where a wide range of meat is sold, to find the general prices for mutton rump and other meat used for buuz (traditional Mongolian dumplings that are always served for Tsagaan Sar). The journalist observed that there were many vehicles from the countryside at the market, judging by their number plates, so it was clear that there was a large supply of meat coming in from the countryside. Beef with bone cost 6,100 MNT, without bone cost 6,800-7,000 MNT, mutton with bone cost 5,200 MNT and mutton without bone cost 6,700 MNT, while goat meat with bone cost 5,000 MNT and without bone cost 5,600 MNT. A mutton rump is currently being sold for between 180,000 and 400,000 MNT depending on its weight. Some customers claimed that the price of sheep rump is very high, given that many livestock have died this winter. The average brisket with bone weighs 21 kg and costs 160,000 MNT. The price per kg is between 7,000 and 8,000 MNT.


Tailor shops make many traditional Mongolian deel, hat, boots and waistcoats as a set for the holiday. Buying just a deel is possible too. A men's deel costs between 80,000 and 800,000 MNT, while a women's deel costs upward of 70,000 MNT. The price of a child's deel starts at 20,000 MNT while the cost of a set with deel, hat, boots and waistcoat can cost around 100,000 MNT. At Narantuul Market, a set including a deel, hat, boots and waistcoat for an adult costs as much as 1 million MNT. While a cotton deel costs 50,000 MNT, a deel with lamb skin lining may cost as much as 750,000 MNT.

Kheviin Boov

The price of Kheviin Boov (traditional pastry molded in a particular shape for special occasions) has increased significantly this year in comparison with last year's Tsagaan Sar when it cost 1,500-1,700 MNT depending on the taste and quality. This year, each kheviin boov produced by Uguuj costs 2,100, while Suman Gun's kheviin boov costs 2,200 MNT and Atar Urgoo's kheviin boov costs 2,000 MNT. Double and round pastry for the top of the kheviin boov are provided for free when a whole set of 15 or 21 kheviin boovs is purchased. But a single round pastry alone costs 10,000 MNT.

General groceries

"Premium" flour manufactured by Altan Taria costs 950 MNT per kilogram. At Bars Market Mongolian potatoes costs 1,100 MNT, carrots cost 1,500 MNT, and onions 1,500 MNT per kg. Tea packed in two kg packages costs 4,500 MNT while milk costs 1,500-2,700 MNT per liter. Khorkhoi curd costs 9,000 MNT, clarified butter costs 12,000 MNT, clotted cream 6,000 MNT while khailmag (clarified butter mixed with flour and raisins) costs more.


A wide variety of gifts are available for reasonable prices at the "Tsagaan Sar-2013" Fair, and at Narantuul and Bumbugur Markets. Salespeople at the markets and fair claimed that people are buying mostly minor kitchen equipment, cups, wallets, gloves, socks, scarves, key chains and cell phone units as gifts. Customers at the market noted that they wanted to buy gifts that are useful to the recipients, and they were spending between 3,000 and 10,000 MNT per item.


Transportation costs generally increase when Tsagaan Sar draws closer. As of January 20, it cost 23,000 MNT to travel from Ulaanbaatar to Arkhangai via a microbus, while a shared taxi to Darkhan cost 15,000 MNT. The same trip by microbus cost 7,000 MNT, and by bus cost 8,000 MNT. A shared taxi to Erdenet cost 20,000 MNT, a microbus 14,000 MNT, a bus 15,000. It costs 45,000 MNT to travel to Khuvsgul via a Phurgon (Russian vehicle).

Call taxi and driver service

The call taxi services in Ulaanbaatar such as Noyon Zuuch-1950 and Ulaanbaatar Taxi-1991 charge an additional 1,000 MNT on top of the fare for being called and for providing fast service. Call taxis charge 1,000 MNT for the first kilometer and charge 600 MNT from the second kilometer onwards. City Taxi-300000 charges no additional fare for extra service. It charges 1,000 MNT for the first km and 700 MNT from the second km. An on-call driver service has been implemented by several companies recently. An on-call driver charges 15,000 per hour and charges 5,000 MNT for every 20 minutes after the ordered hour.

Carpet cleaning service

The companies that provide carpet cleaning services, such as Express Service, Bolor, Chanar Service and Tansag Urgo Service have been very busy lately. For households in the suburbs, the service is not provided in the home but they may have their carpets cleaned at the businesses' premises. If the households that order the service reside near the city centre, the carpets are cleaned in the home but an additional 4,000 MNT is charged. Special brushes and vacuum cleaners are used for cleaning carpets and one square meter of carpet cleaning costs 2,500-3,500 MNT. People can also have their carpets washed with special washing machines, which costs 6,000-7,000 MNT per m2.

Link to article


Polish President: The Polish Embassy should reopen in Ulaanbaatar

January 23 (UB Post) The Mongolian delegation led by the president of Mongolia Ts.Elbegdorj, who is paying a two day state visit to Poland, was welcomed in Warsaw on Monday by his Polish counterpart Bronislaw Komorowski.

The chief purpose of President Ts.Elbegdorj's visit is to strengthen economic ties between the two countries and his delegation included 60 prominent Mongolian businessmen.

The President of Mongolia Elbegdorj Tsakhia and the President of Poland Bronislaw Komorowski signed agreements on; bilateral economic relations, defense and education cooperation on Monday in Warsaw. Also, bilateral agreements concerning the international fight against organised crime were signed.

On Monday, President Elbegdorj Tsakhia met with Poland's; PM Donald Tusk and Sejm lower house speakers Ewa Kopacz, and made a speech during a Mongolian-Polish business meeting. Representatives of the mining and construction industries are among those who took part in thiseconomic forum.

President Ts.Elbegdorj also attended the opening ceremony for the establishment of a Mongolian language department at the University of Warsaw. Gdansk, in northern Poland, was visited, in tribute for the support shown by Poland's former Solidarity Trade Union activists during the change to democracy in Mongolia during the early 1990s.

"The Polish embassy should reopen in Ulaanbaatar, as a very significant move to strengthen Polish-Mongolian cooperation", said President Bronislaw Komorowski during a joint press conference with Mongolian President Tsakhiagiin Elbegdorj. President Bronislaw Komorowski expressed hope that the two countries would find ways to strengthen bilateral economic and political cooperation. Komorowski praised Mongolia as an undoubted leader of progress towards democracy in Central Asia.

Concluding the State visit to Poland, President Ts.Elbegdorj will attend the World Economic Forum Annual Meeting in Davos Switzerland on January 23-26.

Promoting measures to assist the global economy to come out of crisis mode will be the focal point of the World Economic Forum Annual Meeting 2013. During the forum, President Elbegdorj is expected to attend the meetings on; global economic outlook, democracy, fighting corruption, water and green development. Also, President Elbegdorj is scheduled to have bilateral talks with the heads of state and officials during informal meetings, and organize a traditional "Mongolian Day" event ,in order to introduce Mongolia.

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Mongolian president pays tribute to, January 23

President of Mongolia in official visit to Poland, GdanskDemotix, January 2



In Japan, National Sport Is Dominated by Foreigners

TOKYO, January 24 (The New York Times) — On the first day of the New Year Grand Sumo Tournament, Japanese fans were hopeful that 2013 might bring some change: an end to the protracted losing streak by Japanese wrestlers. But if anyone needed a reminder of how unlikely that was, all they had to do was look up at the giant portraits hanging around the upper part of the Ryogoku Kokugikan arena, showing the winners of the past 32 tournaments around the country.

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Mogi: warning, this one is a veeeery long one, but a good read nonetheless


A Florida man's curious trade in Mongolian dinosaurs

January 28 (The New Yorker) Natural history goes to auction five or six times a year in America, and one Sunday last May a big sale took place in Chelsea, at the onetime home of the Dia Center for the Arts. The bidding, organized by a company called Heritage Auctions, began with two amethyst geodes that, when paired, resembled the ears of an alert rabbit. Then came meteorites, petrified wood, and elephant tusks; centipedes, scorpions, and spiders preserved in amber; rare quartzes, crystals, and fossils. The fossils ranged from small Eocene swimmers imprinted on rock to the remains of late-Cretaceous dinosaurs. That day, the articulated toe and claw of a Moroccan dinosaur sold for sixty-three hundred dollars. A tyrannosaur tooth—ten and a half inches from root to spike—went for nearly forty thousand.

Along one wall, behind ropes, loomed the skeleton of a Tarbosaurus bataar. T. bataar, as it is known, was a Tyrannosaurus rex cousin that lived some seventy million years ago, in what is now the Gobi Desert of southern Mongolia. Eight feet tall and twenty-four feet long, the specimen had been mounted in a predatory running position, with its arms out and its jaws open, as if determined to eat Lot No. 49220—a cast Komodo dragon, crouching ten yards away, on blue velvet.

After a German sea-lily fossil sold to a live bidder, for forty thousand dollars, Greg Rohan, Heritage's president, who had been standing near the lectern, handed the auctioneer a note. The auctioneer announced, "The sale of this next lot will be contingent upon a satisfactory resolution of a court proceeding." He was talking about the dinosaur, which he called the auction's "signature item." Largely intact dinosaur skeletons are not easily found, and this specimen had been advertised as seventy-five per cent complete. "It can fit in all rooms ten feet high," the auctioneer added. "So it's also a great decorative piece."

As the bidding opened, at eight hundred and seventy-five thousand dollars, Robert Painter, an attorney from Houston, stood up, a BlackBerry in his hand. Painter is six feet three and forty-two, with dark hair, rimless eyeglasses, and a deep voice. "I hate to interrupt this," he told the room. "But I have the judge on the phone." The previous day, Carlos Cortez—a state district judge in Dallas, where Heritage has its headquarters—had signed a temporary restraining order forbidding the company to auction the T. bataar, on the ground that the dinosaur was believed to have been stolen from Mongolia. The judge, defied, was not pleased.

The auction had come to the attention of the Mongolian government the preceding Friday, after Bolortsetseg Minjin, a Mongolian paleontologist who lives in New York, saw a television report about the auction and suspected that the dinosaur had been taken from her country. Bolor, as she is called, discovered that the online auction catalogue listed the item's provenance as "Central Asia"—a vague term often considered code for Mongolia and China, both of which forbid the commercial export of fossils found within their borders. Other catalogue items, such as the tyrannosaur tooth, openly referred to the Nemegt Formation, a fossil-rich expanse of sandstone and mudstone in the Mongolian Gobi.

Bolor e-mailed Oyungerel Tsedevdamba, an aide to President Tsakhia Elbegdorj. Mongolian dinosaur fossils had appeared on the black market for years, but there had been few, if any, organized efforts to stop their sale. Even though the Mongolians had only two days to intervene in the auction, they decided to try. Bolor enlisted two of the world's top experts in Mongolian dinosaurs—Mark Norell, the head of the American Museum of Natural History's paleontology division, and Phil Currie, of the University of Alberta—who wrote open letters of protest. Norell argued, "These specimens are the patrimony of the Mongolian people and should be in a museum in Mongolia." The letters were distributed to reporters. Online, paleontologists, geologists, students, and Mongolians signed a petition against the auction, adding comments: "Fossils belong in museums where everyone can see and learn from them, not in some rich, fat douchebag's mansion or in some Wall Street office"; "Mongolian fossils are spectacular . . . selling them as mantelpieces is akin to using the Mona Lisa as a placemat."

Bolor wrote to Heritage: Where had the T. bataar come from? Did it possess provenance papers? Heritage's attorney replied, "Although we appreciate your concerns . . . it is our conclusion that no impropriety exists." He added, "Mongolia won its independence in 1921 and this specimen is quite a bit older than that."

The Mongolian government lawyered up, retaining Painter, the Houston attorney. He had experience representing Western mining interests in Mongolia, whose vast, untapped reserves of copper, gold, and coal are at the center of an international scramble. Like most lawyers, he had never handled a case involving a dinosaur, but he drafted the restraining order, got Judge Cortez to sign it, and boarded a plane for New York.

As Painter interrupted the auction, his BlackBerry aloft, the auctioneer eyed him but never broke patter. He called for a bid of nine hundred thousand dollars.

Rohan, Heritage's president, met Painter in the aisle, and for five seconds they squared off in a quiet little dance, four arms waving. A security guard stepped in. Painter repeated that he had Judge Cortez on the phone. "O.K.—well, you need to walk," the guard said, escorting Painter to the rear of the auction floor. Outside, on the sidewalk, a small, pro-Mongolia protest had formed, with banners reading "National Heritage Is Not for Sale" and "Return Our Stolen Treasure."

An attorney for Heritage approached Painter, who handed him his BlackBerry. While the attorney was having an awkward discussion with Judge Cortez, the dinosaur sold to an anonymous phone bidder, for nearly a million dollars.

Heritage brokered the T. bataar on behalf of a thirty-seven-year-old bone hunter named Eric Prokopi, who lives in Florida, a great state for fossils. For roughly the first half of the past fifty million years, the region lay beneath a warm, shallow sea. As land repeatedly surfaced and receded, the remains of marine creatures got mixed up with those of terrestrials, forming one big Ice Age graveyard: sea cows, prehistoric sharks, spike-tailed armadillos the size of refrigerators.

Shark teeth attract kids to fossil hunting because they're so easy to find. Sharks shed thousands of teeth per year, and have been doing so for eons. The teeth, exposed by erosion and tides, can be as big as a human hand. The largest look like the arrowheads of giants, and can sell for thousands of dollars.

Prokopi, who grew up outside Tampa, is the son of a music teacher and a homemaker. He found his first shark tooth as a small boy, in the late seventies, at nearby Venice Beach. By age ten, he had a diving license. His mother, a competitive swimmer, accompanied him on river expeditions. As he explored underwater, holding a rope, she rode in a canoe, tugging the line if she saw an alligator.

Through fossil clubs and field trips to quarries, Prokopi got to know older hunters who spent their lives beachcombing or standing chest deep in muck, searching for bone. Paleontology books explained what he'd found and taught him what to look for next. When he was in high school, fossils began to take over the family's house, and around 1990 he started selling them, making eight hundred dollars at his first trade show, in Lakeland. At such events, he bartered with other hunters, who often brought entire trailers filled with specimens. Some fossils were still sheathed in "field jackets"—the lumpy white plaster encasements that excavators apply at dig sites, for safe transport, making the artifacts look like misshapen mummies.

Although some countries had fossil-trade restrictions, or were enacting them, certain dealers proceeded as though there were no rules; they justified their trade, in part, with the idea that exposed fossils, if not collected, disintegrate. Prokopi quickly learned that, when he found something good, someone would buy it. If the business sometimes resembled a black market, it was a small one: nobody seriously imagined getting rich digging up prehistoric bones.

Then, the day before Prokopi turned sixteen, a magnificent T. rex was found weathering out of a cliff near Faith, South Dakota. An amber hunter named Sue Hendrickson, working with the Black Hills Institute of Geological Research, a company that collects and prepares fossils, had wandered off to explore a bluff as her crew changed a flat tire, and came back with a handful of dinosaur. The team named the T. rex Sue.

A legal fight followed, centering on the Sioux rancher who, for five thousand dollars, had sold Black Hills the right to dig out the dinosaur but whose land, part of an Indian reservation, was being held in federal trust. As the case unfolded in the courts, the movie "Jurassic Park" came out, rebooting dinosaurs in the popular imagination. The rancher eventually won the right to sell Tyrannosaurus Sue. On October 4, 1997, Sotheby's, in New York, auctioned the fossil; Chicago's Field Museum of Natural History bought it, with sponsorship from Disney and McDonald's, for an unprecedented $8.4 million.

Hendrickson had found her T. rex the way hunters have always found fossils: by walking around and looking down. In America, the most spectacular dinosaur discoveries have been made in the West, in a swath of exposures from the Canadian border to New Mexico. During the infamous nineteenth-century "bone wars," between the East Coast paleontologists Edward Drinker Cope and O. C. Marsh, scientists encountered dinosaur skeletons "exposed like corpses on a deserted battlefield," Michael Novacek writes in "Dinosaurs of the Flaming Cliffs."

Today in the United States, only approved researchers may collect vertebrates on public land, but a hunter who finds a fossil on his property, or on private land where he has permission to dig, can sell it, exhibit it, export it—whatever. After the sale of Tyrannosaurus Sue, a modern gold rush began, and it has not let up. In the summers, the Western snows have barely receded before prospectors arrive, often with private clients who pay to hunt with guides.

Ranchers who had once allowed scientists to explore their land for free began leasing it to the highest bidder. Paleontologists lost out to amateurs with more money, and they lost specimens to vandals and thieves, some of whom went after fossils with sledgehammers. Federal agents have tracked stolen American dinosaurs as far away as Japan. The paleontologist Kirk Johnson, the director of the Smithsonian's National Museum of Natural History, says, "The day Sue got auctioned is the day fossils became money."

Prokopi continued selling fossils through high school and college. He won an academic scholarship to the University of Florida, in Gainesville, where he joined the swim team and earned a degree in engineering, a subject that interested him only insofar as it illuminated the mechanics of, say, how to level a structural foundation or gut-renovate a house. After graduation, he stayed in Gainesville and started his life as a full-time fossil hunter, calling himself a "commercial paleontologist." He named his company Florida Fossils.

At twenty-eight, he married a SeaWorld dolphin trainer named Amanda Graham—a native Virginian he met through their shared love of diving. For extra income, they "flipped" houses near the college campus. Amanda started an interior-decorating business that sometimes showcased natural-history objects, featuring Eric's finds and other fossils that they had imported or come across at the two big U.S. trade shows, in Tucson and Denver. They also began using eBay, which allowed merchandise to be moved faster, and, if the participants so chose, with greater anonymity.

If you were mapping the geographic evolution of Prokopi's inventory, you'd pin Florida to start, then move on to Alabama, Texas, China, Japan, Peru, Morocco, Argentina, Kazakhstan, and elsewhere. He sold sloth claws, elephant jaws, wolf molars, dinosaur ribs—a wide range of anatomical fragments that went, mostly, for between ten and fifty dollars. Increasingly, Florida Fossils got into triple digits, especially when Prokopi started selling dinosaur parts. In the fall of 2011, he sold two Mongolian oviraptor nests for more than three hundred and fifty dollars each, a tyrannosaurus ileum for five hundred and sixty-one dollars, a tyrannosaurus tooth for three hundred and twenty-five dollars, and a tyrannosaurus tail vertebra for four hundred and ten dollars. He built up a 99.7-per-cent-positive rating with eBay customers, who praised his wares as "unusual" and "exquisite."

By 2010, the Prokopis had a toddler son, Grey, and an infant daughter, Rivers, to support. It was no longer enough to peddle a bone here, a bone there, even as Prokopi supplemented his income by "prepping out" fossils—cleaning and restoring them—and selling the results to small museums and nature centers. His best shot at big money was dinosaurs. The top sites in the American West were largely tied up in federal boundaries and, on the private side, in existing contracts that usually required sizable cuts to ranchers. Only one place on Earth holds big, beautiful T. rex-like dinosaurs in relatively soft sand, in a vast, remote landscape that all but insures privacy.

Mongolia, which is more than twice the size of Texas, borders Russia to the north and China everywhere else. Thirty per cent of Mongolia's three million people live in or around the capital, Ulaanbaatar, and, despite flashes of new-economy wealth (Hummers, a Louis Vuitton shop), much of the nation subsists in poverty.

The Gobi Desert cuts across southern Mongolia and extends into northern China. The primary locus of dinosaur hunting is the Nemegt Formation. Phil Currie, the Canadian paleontologist, says, "Right now, the Nemegt represents one of the top two dinosaur sites in the world, in terms of diversity of specimens."

T. bataar, a carnivorous, bipedal dinosaur, lived around seventy million years ago; Russian and Mongolian scientists discovered it in 1946, during an expedition to the Nemegt. The species closely resembles T. rex, which lived at the same time but has been found only in North America. Both had long tails to counterbalance large skulls, and, proportionally, they had the smallest forelimbs of any apex predator. T. bataar was slightly smaller than T. rex, which is like drawing a distinction between a city bus and a school bus: the largest known T. bataar stood ten feet high, was up to forty feet long, and had nearly six dozen huge, spiky teeth, with jaws of crushing torque. T. bataar fed on other dinosaurs—big ones.

We know this because of the fossil record, which exists thanks to all types of hunters but is vetted by scientists, many of whom loathe the sale of fossils but don't necessarily want to discourage the popular fascination with them, either. "Great ones have yet to be found, so we want people looking for them," Johnson, the Smithsonian director, says. "But we want a path for the really important ones to loop into science. Right now, that path doesn't exist. Plenty of collectors say, 'You're more than welcome to come to my house and study my fossils.' But it's an empty promise. Even if they let you look at something, if they sell it, it might as well not exist."

Unlike the U.S., most other nations with rich dinosaur deposits—including Argentina, Canada, and China—consider fossils part of their national heritage and oppose or restrict their entry into the private market. Mongolia outlawed the trade in 1924, but bone runners have always operated from the Gobi, because they have found outsiders willing to buy fossils. "The Gobi's getting hammered," Mark Norell told me in July, just before leaving for Mongolia. He helped reopen the Gobi to Westerners after Communist rule ended, in the early nineteen-nineties, and since then has dug there at least twenty-two times. "My sites in Mongolia have been clobbered by these slimeballs," he said of poachers, adding, "People follow you. There's nomads living out there. You'll see guys on motorcycles, and guys a kilometre away, looking at you through binoculars."

Currie, who has worked in Mongolia since 1996, recognizes poached sites by their trash: cigarette wrappers, vodka bottles, junked cars, Super Glue bottles, graffiti. Poachers often mark their sites by carving the date on rocks, and they frequently leave Mongolian money tucked beneath stones—alms to the gods.

Many poachers take teeth and claws first, because they're the easiest to transport. Other thieves hack their way up the vertebral column in pursuit of the skull, the most prized body part. A fossil that has been separated from its geological context—such as location and stratigraphic position, which poachers do not document—becomes far less significant to science.

Once a smuggler gets fossils out of the country, the shipment need only make it past customs. Smugglers don't always succeed. A few years ago in Chicago, agents X-rayed an express-mail shipment of "shoes," with a declared value of fifty dollars, that turned out to be the skulls of Chinese dinosaurs. In Los Angeles, agents seized the fossil of a Chinese oviraptor nest after it sold, via the English auction house Bonhams & Butterfields, for more than four hundred thousand dollars. (The buyer cancelled his bid.) The nest had been advertised as featuring visible, preserved embryos, but it actually was a composite: the seller had bought the eggs separately, then implanted them in a slab of imported red sandstone. In late 2011, the U.S. repatriated the eggs.

The T. bataar skull entered the country, amid other fossils, via U.P.S., on March 27, 2010. By then, Prokopi had established a business arrangement with Chris Moore, a hunter on the famed Jurassic Coast of England and a well-known dealer at the Tucson and Denver shows. Moore had shipped these component fossils to Prokopi in three crates weighing nearly three thousand pounds. The customs forms listed the shipment's country of origin as Great Britain, its over-all value as fifteen thousand dollars, and, on an invoice, its contents as "2 large rough (unprepared) fossil reptile heads, 6 boxes of broken fossil bones, 3 rough (unprepared) fossil reptiles, 1 fossil lizard, 3 rough (unprepared) fossil reptiles," and "1 fossil reptile skull." Customs sent it on through.

Prokopi spent the next year and a half cleaning the T. bataar fossils, gluing them together, fabricating bones out of resin to replace missing pieces (an accepted practice, even in museums), and building a custom-welded frame. For years, the Prokopis had prepped fossils on their kitchen floor and in their garage, but in May, 2011, they built a five-thousand-square-foot workshop in their back yard, and they assembled the T. bataar there. In early 2012, they laid the bones in formation on the workshop floor and shot a photograph from overhead: a large dinosaur curled in a loose fetal position, with Eric kneeling beside it, hands on hips, smiling up at the camera. The photograph was posted on the Facebook page of Amanda's home-design business, Everything Earth ("Where nature is art"); prospective buyers were urged to e-mail for more information.

In February, Prokopi took the T. bataar to the Tucson show and displayed the legs and skull, along with the photograph of the full skeleton on the workshop floor. When the dinosaur failed to sell, he turned to auction houses that handled natural-history specimens. He had relationships with I. M. Chait, Heritage, Sotheby's, and Bonhams. At least one house rejected the T. bataar, but Heritage took it. To make the spring-auction deadline, Prokopi stayed up for ninety hours straight to finish the prep work and the mounting. The specimen was shipped to Texas, to be photographed for the Heritage catalogue, and then to New York.

Other Prokopi projects, meanwhile, were acquired for other auctions. A saurolophus, a duck-billed dinosaur that, like T. bataar, has been found only in Mongolia, went to I. M. Chait, in Beverly Hills, with a listed provenance of Central Asia. The catalogue copy noted, "To this day, barely more than 10 skulls are known, and this is one of only a handful of complete skeletons ever found or mounted." The estimated gavel price was between a hundred and fifty and two hundred thousand dollars. The saurolophus didn't sell. Two weeks later, the T. bataar sold to the anonymous phone bidder.

The Mongolians began preparing for a courtroom battle. Commercial hunters, meanwhile, couldn't believe that anyone had so openly tried to sell a major Mongolian dinosaur. At the Denver fossil show, in September, I stopped by the booth of Mike Triebold, a veteran Colorado hunter who has been working with the Society of Vertebrate Paleontologists to find a way for academics and legitimate commercial hunters to collaborate. "I've got about thirty employees and millions of dollars invested in my business," he said. "The last thing I'm gonna do is bring in an illegal fossil."

Bob Detrich, another hunter, was at Triebold's booth, and he said, "My first question when I saw it in the catalogue was 'How is this even possible?' "

Triebold noted that Mongolian dinosaur bones had been on the market for years, but added, "It's been up to and including skulls. There's never been a big, whole T. rex-y skeleton. This is a big, sexy dinosaur. It's so over the top that somebody finally said, 'All right, wait a minute. You guys gotta stop this.' "

The price of the T. bataar, with Heritage's premium, came to $1,052,500. The transaction was put on hold until the provenance could be worked out. Dismantled and crated, the fossil was trucked to the Cadogan Tate Fine Art storage facility, in Sunnyside, Queens. President Elbegdorj, meanwhile, formally asked the United States to investigate. The Americans—mindful, perhaps, of staying in the good graces of a country poised to become a mining giant—granted Mongolia's request.

Although Heritage continued to defend the sale, it coöperated with the investigation by allowing a team of paleontologists to assess the dinosaur. On the morning of June 5th, three scientists met at the warehouse in Queens: Bolor Minjin, Phil Currie, and Khishigjav Tsogtbaatar, of the Mongolian Academy of Sciences, in Ulaanbaatar. The scientists found more than two hundred bones in open crates or laid out neatly on tables, like the pieces of a jigsaw puzzle.

It was something of a miracle that the dinosaur existed at all. Nature heavily skews the odds against an animal becoming a fossil—most simply decompose. But this T. bataar had somehow been buried quickly in sediment, which then turned into rock. Fossils absorb ground minerals specific to their location, giving them a geochemical signature. Mongolian dinosaurs are slightly radioactive, owing to the presence of uranium in the Gobi; the bones, which have a distinctive off-white color, resemble those of the freshly dead.

Dozens of T. bataar skeletons have been exhumed, but there's still much to learn about the species and how it lived. Why, for instance, was T. bataar so tremendously overrepresented in the Gobi? "It makes no sense," Currie says. "You can't have an ecosystem where there are more carnivores than herbivores." And there are anatomical mysteries: just what evolutionary purpose did those tiny arms serve?

Paleontologists usually handle fossils bare-handed, but at the warehouse the scientists were given purple synthetic gloves to wear as they worked. Currie and the others spent the day examining the T. bataar, piece by piece, comparing the bones' size, color, and condition with what they knew about the species from other fossils. They determined that seventy-five per cent of the dinosaur was composed of original bone, as advertised. The creature was two-thirds grown. The ivory coloration matched that of other Nemegt fossils. The scientists concurred: the dinosaur was Mongolian.

Two weeks later, in downtown Manhattan, the U.S. attorney for the Southern District of New York sued for custody of the specimen, on behalf of the nation of Mongolia. Procedure required that an arrest warrant be issued against the dinosaur itself, so the action became known as United States of America v. One Tyrannosaurus Bataar Skeleton.

On June 22nd, U.S. Immigration and Customs Enforcement sent a cargo truck to the warehouse in Queens and confiscated the dinosaur. As Bolor Minjin, Robert Painter, and the rest of the Mongolia contingent watched, elated, from behind a chain-link fence, Homeland Security Investigations agents loaded four large crates onto the truck. They then took the bones to an undisclosed location.

Prokopi hired a pair of attorneys who have represented dealers of contested antiquities: Michael McCullough, in New York, and Peter Tompa, in Washington. Prokopi had sixty days to decide whether to surrender the dinosaur or make a legal claim for it. If the deal went through, he stood to make about three hundred and fifty thousand dollars, after the other parties took their share, and he was clearly reluctant to give this up. Indeed, Prokopi had entertained the idea of brokering a quiet deal with the Mongolians. Four days after the auction, in an e-mail conversation with a Heritage employee, he wrote, "Although I am sure that everything with this specimen is legal as far back as I can tell, I do know just about all of the people involved in the business of central asian fossils, and could offer ideas and help to make permanent changes that would nearly eliminate the black market and benefit all sides. If the mongolian president is indeed only interested in getting to the bottom of the sources, and wants to look good for his people, I think I can help him do that if he is willing to cooperate and compromise. If he only wants to take the skeleton and try to put an end to the black market, he will have a fight and will only drive the black market deeper underground."

Publicly, Prokopi said nothing about how he had acquired the dinosaur, or how it had wound up in England before coming to the U.S. He insisted that he was not a thief. "I'm just a guy . . . trying to support my family—not some international bone smuggler," he said, in his sole statement to the media. "If I believed it wasn't legal for me to have or sell this dinosaur, why would I have offered it in such a public format? The lost sale of this dinosaur has irreparably devastated my family financially, it has cost several people their jobs, taken an emotional toll on my wife and two young children and damaged my reputation as a commercial paleontologist. . . . What will we tell our kids? How will we keep going? I'm headed toward total financial ruin."

In Gainesville, the Prokopis live in a historic, plantation-style house called Serenola. Built in 1935, it is white clapboard, with black shutters and four Corinthian columns. The Prokopis got the house for free six years ago, as a derelict property; it was in such bad repair, and so full of filth and feces, that when Amanda first toured it she had to step outside to vomit. But the Prokopis saw money in it. They loaded the house onto flatbeds and moved it a mile down the road to nine acres that they owned, and then restored it themselves, foundation to roof, adding a Viking stove and a fifty-thousand-gallon saltwater pool. They wound up with a showplace and decided to keep it.

We met there one Wednesday in August. The property faced a four-lane highway, but Serenola was tucked behind a brick wall and a modest electric gate. The surrounding marsh, shrieking cicadas, and Spanish moss—hanging like frayed gray scarves, not a breeze to stir it—made the property feel almost secluded. Clouds that had blackened a far quadrant of the sky pulsed with lightning.

The Prokopis answered the door together. Amanda, a shiny-haired blonde, wore black from head to toe, her wrists roped in silver bracelets. Eric, who is tall, dark-haired, and deeply tanned, with a swimmer's shoulders, was dressed casually—polo shirt, camouflage cargo shorts, and flip-flops. He said little, which, Amanda explained, was typical. Once, during a dive trip to Mexico, someone asked Eric what he did for a living. When he said, "I sell fossils," the person answered, "You sell faucets?" and proceeded to talk about faucets. Prokopi let it go. "I have to pull things out of him sometimes," Amanda told me.

Their two children, both towheads, came downstairs. Their son, who is five, led everyone to the family room, opened the deep drawers of a reproduction Colonial bureau, and showed off his toys—dinosaurs, jumbled together, snout upon tail, in a plastic mass grave. "Guess what this one is," he said several times, blurting out the species. How do you know all the names? I asked. "Because I'm a scientist," he said.

We sat at the dining-room table, which the Prokopis had made from the slats of champagne barrels. The house was filled with vintage objects: repurposed corbels and bricks, bone-white corals alongside mercury glass. Amanda adheres to a decorating principle of "big mirrors, lots of lamps, and something sparkly" in every room. "Global Chic Meets Plantation Elegance," the Gainesville Sun put it, in a 2010 article about Serenola. (Eric "likes to do laps" in the Olympic-size pool, the paper reported, "when he's not diving Florida's rivers or setting off on business trips to Bali or Mongolia.")

About three weeks before my visit, Prokopi had made an official claim for the T. bataar. To win the case, he would have to prove legal ownership. Although people in paleontology circles had been speculating about how the fossil had been taken out of Mongolia—I had been hearing that some fossils crossed the border hidden inside shipments of coal—Prokopi declined, on the advice of his attorneys, to discuss specifics. He told me that he had gone into the fossil business because he was drawn to "the treasure-hunting mentality" and to "the thrill." He added, "I used to keep everything. Now I don't keep anything. I enjoy having it for a time and then move on."

So far, no evidence had emerged proving that Prokopi had spent time in Mongolia digging for the T. bataar or other dinosaurs, although his eBay account featured more than a hundred items from the country, and he had sold higher-end Gobi pieces at auction. His connection to Mongolia had "started with Tucson," he said, referring to the trade fair, which takes place every February. "And that's probably as far as I can go with that right now."

Amanda genially jumped in: "People come around at the shows and want to trade for stuff, just like baseball cards. So your inventory evolves that way."

"There's always a lot of unprepared stuff available," Eric said. "I was getting better at mounting specimens and doing big projects, and that's where a lot of the money is. When you buy it, it's not necessarily worth that much. It's the work that you put into it that creates the value."

"It's like the paint in the 'Mona Lisa,' " Amanda said. "It's really the same thing." She then compared fossil preparation to renovating houses. The T. bataar looked "awesome now, but it took years. And it took being up all night and being broke all the time to get to this point."

A major fossil is "a good investment," Eric said. "You can get a good return in the end, and it's interesting and fun." But when "you're struggling to make the sale, and then it doesn't happen when you're expecting it, it's difficult."

"It's like rebuilding a house and watching it burn down," Amanda said.

"Renovating a house and putting tons of money into it, and the government coming and seizing it before you can sell it," Eric said.

They offered a tour of the property. In the back yard, where the T. bataar had been assembled, the workshop bays stood open. Huge industrial fans rearranged the soupy air. An employee, a University of Florida archeology student, was using a pneumatic tool to clean a chunk of Wyoming stegosaurus. There were boxes full of bone fragments and dim old bottles fished from rivers, and a flat-bottomed military boat that, Eric said, "doesn't get used much anymore."

Inside the house was a tall antique case that, according to Amanda, once displayed wedding gowns at Sears. It now held an ankylosaurid skull and other fossils. "Mostly casts," Eric said. Brilliant corals were arranged in glass-fronted cabinets, in the manner of an apothecary shop. "This is all inventory," Amanda said. "These are from all around the world." On an end table was a tortoiseshell with an elaborate pattern. "This is what?" Amanda asked Eric. "A radiated tortoise?" The radiated tortoise is most commonly found in Madagascar, I subsequently discovered, and is an endangered species. (Prokopi later told me that he'd bought his from someone who works at an American zoo, but he declined to elaborate.)

"The stuff in our house evolves all the time," Eric said.

Upstairs, in one of the children's rooms, was the framed auction photo of a tyrannosaurus skull, dated March, 2007. The skull closely resembled that of T. bataar, but Amanda didn't want to talk about it, except to say that their son was conceived on the weekend of that auction. "We were celebrating," she said. (I. M. Chait sold a T. bataar skull that month, to a private collector, for nearly three hundred thousand dollars.)

A while later, after a walk in a nearby nature preserve, we were back at the champagne-barrel table. Eric asked a surprising question: "One thing I was wondering is if any of these paleontologists you've talked to have given their argument of why paleontology is important." Fossils are "just basically rocks," he said. "It's not like antiquities, where it's somebody's heritage and culture and all that."

Amanda changed the subject to a television program she had liked, on the Discovery Channel, about whether mermaids exist. But Eric persisted. "Where do you draw the line?" he said. "I don't think it can ever be black and white. You can't legislate every single species or fossil." He had been twisting a scrap of paper and shoving it through the slats of the table. Amanda took it away from him.

Heritage Auctions was founded in Dallas, in 1976, by a pair of rare-coin dealers. With satellite offices in Beverly Hills, San Francisco, Manhattan, and Europe, Heritage bills itself as the world's largest collectibles auctioneer, and over the decades it has branched into comics, movie posters, jewelry, books, fine art, and wine, among other things. Last year, the company sold more than eight hundred million dollars' worth of items.

Heritage got online early, in 1996. Rohan, its president, told me, "We thought, Oh, the Internet: interesting. We don't think anybody will ever do any real business on it, but maybe we should spend a couple million dollars and build a whammy-jammy Web site and load it full of content for coin collectors." That venture led to online auctions, which coincided with the explosive popularity of eBay. Rohan said that eBay "did for auctions what Fidelity did for stocks—took it down to the Everyman."

Rohan was telling me this in late July, in a parlor of a Southampton bed-and-breakfast where he was vacationing with his wife. He had bumped into Matt Rubinger, who heads Heritage's luxury-accessories division, and brought him along to our meeting. Rohan is fifty-one, lean, and six feet one; in khakis, a navy Izod, blue leather loafers, and a canvas belt embroidered with sailboats, he appeared ready to tack. Rubinger, twenty-four, had a Gatsby look: a summer suit with a white, open-collared shirt. I asked him what his clients collect. Rohan answered for him: "Two-hundred-thousand-dollar handbags." Rubinger added that vintage Hermès bags were the most popular items. "It's a new, new market," he said.

Natural history accounts for "very little" of Heritage's sales, Rohan told me. Still, the T. bataar deal would have yielded a six-figure commission. Heritage was now "out of it," in any case. "It really is an issue between the consigner and Mongolia," Rohan said. "We've extricated ourselves."

It had been that easy. Black-market fossils have regularly been sold through some of the world's finest auction houses, but auctioneers, including eBay, have not been held accountable for their role. When I asked Rohan why Heritage had accepted the T. bataar, he said, "Because the person who consigned it had a good reputation over decades, and because he warrantied, in writing, that he had clear title. It was his to do with as he saw fit." Did he have any regrets? "It's annoying that I had to spend a lot of money on legal fees, dealing with the issue," he said. A few minutes later, he thought of one more thing: Mongolia's interference had scared away buyers. Without the controversy, he said, the dinosaur "would've brought a much, much higher price."

The head of Heritage's natural-history division was David Herskowitz, a well-known broker in the mineral and fossil world. In 2011, I called Herskowitz about a Dallas auction that featured a "fighting pair" of Jurassic dinosaurs from Wyoming. When I asked him how natural-history objects had entered the American fine-arts auction market, Herskowitz credited himself. "It all started by chance," he said. "I was importing and exporting gemstones, going down to South America and buying emeralds, when the Soviet Union fell apart and we had a free market. I heard there were good gemstones to be had in Russia, so I went there and bought topaz and emeralds and amber." An appraiser in New York helped him grade the stones, one of which encased a prehistoric fly. "I said, 'How could a fly get inside a gemstone?' I didn't realize amber was actually fossilized tree resin. The appraiser said, 'Some people actually collect this.' " A jeweller sold the amber on Herskowitz's behalf, for three hundred and twenty-five dollars. "And I thought, O.K., wow, I'm gonna load up the truck." He returned to Russia and paid a hundred and seventy-five dollars for a load of amber pieces with insects embedded in them. Bonhams later sold the amber, he said, for more than seven thousand dollars. "Fossils are perfect for auction because auctions are there for treasures and things you don't see in a store every day," he told me. "If you're a fossil collector, where are you gonna buy your fossils? If you find a T. rex, where are you gonna sell it?"

Museums feed the market, up to a point. Established institutions discriminate among sources when acquiring fossils, but newer ones sometimes don't. Natural-history museums that are popping up in China, Japan, and the Middle East have been accused of being willing to buy from anyone. They want dinosaurs and mammals, Herskowitz told me, while individual collectors prefer smaller pieces. "Not many people have a house big enough for a dinosaur," he explained. "The most popular stuff is the stuff you can put on your shelf, like meteorites, trilobites, dinosaur eggs, and dinosaur bones. Like a nice vertebra—you can put it on your shelf and say, 'Look, that's a T. rex vertebra.' "

The man who was prepared to pay more than a million dollars for the T. bataar is Coleman Burke, a Manhattan real-estate developer and lawyer in his seventies. His friends call him Coley. He is tall and trim, with wispy white hair, and on the day we met (reluctantly, on his part—his bid, after all, had been anonymous) he had on khakis, Topsiders, a checked shirt, and a brown leather belt studded with silver fish. It was late August, and he had recently returned from the midsummer encampment of the Bohemian Club, in California; he was now getting ready to go fly-fishing in Idaho—a trip that he and friends have taken annually for the past forty-five years. Burke mentioned his service on various environmental boards and his role as a trustee of the natural-history museum at Yale, his alma mater, but he kept returning to the topics of geology and rivers. "I've been going down rivers all my life," he said.

In 1995, he and a five-member crew rafted down the Santa Cruz River, in Patagonia, inspired by a journey that Charles Darwin had tried to make in 1834. Had Darwin not turned back, he might have reached Argentina's spectacular bone beds, a sight that captivated Burke. During the Santa Cruz trip, and others to Patagonia and the American West, Burke's interest in dinosaur fossils intensified. He began hunting fossils and funding expeditions, to the extent that his friends kidded him about it. Six years ago, at a party for his twenty-fifth wedding anniversary (theme: "Joy and Mischief"), a tuxedoed pianist jokingly serenaded him about dinosaurs, with lyrics set to the tune of "Puff, the Magic Dragon." Burke told me, "People say, 'How's the archeology going?,' and I say, 'Oh, that's not my bag.' If it's not a hundred million years old, I don't do it. I call it the ultimate antiquing."

Burke's company, Waterfront New York, occupies a city block at Twelfth Avenue and West Twenty-eighth Street. An operator-run elevator cage delivered me to the seventh floor, and then Burke and I climbed a tight spiral staircase to a window-walled office reminiscent of a crow's nest, with views of the Hudson and New Jersey, where Burke grew up. On the observation deck was a tarp-covered signal light, which Burke, an ex-Navy lieutenant, likes to flash at passing ships. His walls held framed photos of Western badlands, vintage maps of South America, and an Explorers Club membership certificate. A Giganotosaurus carolinii skull—a cast, he quickly pointed out—occupied half the eastern wall, dwarfing an upright piano that he often plays.

"I'm a complete amateur," he kept saying, but his fossil hobby has not been fruitless. A decade ago in Argentina, a Burke crew found a new dinosaur species that is now considered one of the southernmost carnivores on record. The creature was named Orkoraptor burkei, in his honor. A few years later, the Explorers Club honored him and a Drexel University geologist for finding, also in Argentina, the largest dinosaur femur ever discovered.

Burke, for all his hunting, has never owned a major fossil. "I've got a couple of bones lying around, but nothing big," he told me. In May, he saw a newspaper item about the upcoming T. bataar auction. He went to the preview, and the moment he saw the dinosaur he wanted to buy it. Maybe the T. bataar could be displayed on the ground floor of his company's headquarters; later, perhaps, it could be in a museum. He did not notice where the specimen was from, he told me. "Could've been the jungles of Sarawak," he said. "I wasn't focussed on that at all. It was a well-prepared specimen. They said it was seventy-five to eighty per cent complete." He added, "I can assure you, I'd have called in some experts long before I parted with one thin dime, to go down there and check each bone, and make sure I could get to seventy-five or eighty per cent."

On the day of the auction, Burke bid by phone from his house in Westchester County; to his surprise, he won. "It was a lark," he said. He has since withdrawn his bid.

United States of America v. One Tyrannosaurus Bataar Skeleton went to court in early September, in lower Manhattan, with U.S. District Judge Kevin Castel presiding. Castel has adjudicated cases involving accused mobsters (John Gotti, Jr.) and cases involving rappers (Kanye West) but never one with a party from the late Cretaceous. "I stand to be educated," he said. "I'm not going to claim that I have dinosaur arrests presented to me with any frequency."

Prokopi was not present. The purpose of the hearing was to set deadlines for determining whether the case would go to trial, and it went on for about an hour. Castel wanted to know who Prokopi was. A commercial paleontologist, one of Prokopi's attorneys answered, adding, "He collects fossils and he builds dinosaurs out of them."

"How did he acquire it?" the judge said, meaning the T. bataar.

"He purchased it," the attorney said.

"Where did he purchase it?"

Multiple sources.

"What sources?"

"From dealers who sell dinosaur parts."

"Where are they located?"

"Some of them are in Japan, I believe," the attorney said. "I don't know where all of them are."

Prokopi's team had claimed that the T. bataar had come into the country in three separate shipments. Now they were saying four—and that the specimen had been assembled from the bones of a number of dinosaurs.

"You're telling me that what was being auctioned did not come from one once-upon-a-time living creature?" the judge said at one point.

"That's exactly what I'm saying," the attorney said. The dinosaur was soon being referred to as a "Frankenstein model."

The prosecutors, who had said that they were "loath to take" Prokopi's word on anything at this point, informed the judge that a team of paleontologists had examined the bones and concluded that they had derived mostly from one creature. But this didn't matter much, anyway, since all the bones in question were certainly T. bataar and, therefore, certainly Mongolian.

Isn't it possible, the judge had asked, that T. bataar lived elsewhere on Earth? Aren't scientific discoveries made all the time?

One of the assistant U.S. attorneys, Martin Bell, assured Castel that the scientific evidence all but confirmed that the bones were Mongolian.

At one point, the judge asked, "Any idea how large this dinosaur is, when fully assembled?"

About twenty-four feet long and eight feet high, Bell answered.

"So it would fit nicely in my courtroom," the judge said.

A few weeks later, at the annual fossil show in Denver, everybody was talking about the T. bataar case. Dealers were hoping that the drama wouldn't lead to new legislation making all U.S. fossils off-limits to commercial hunters. Paleontologists, meanwhile, hoped for stronger, clearer regulations or formalized collaboration between scientists and dealers. Johnson, the Smithsonian director, was attending the fair, and over breakfast he told me, "The commercial guys range from people who couldn't give a shit about what they're selling and the people who really would've been scientists if they'd had a good education."

We went over to the Merchandise Mart, the show's main venue. Johnson has always kept amicable relationships with both the academic and the commercial side of the fossil world, and he wanted to stop by the booths of friends. Though shady deals have been known to go down in back rooms or parking lots, I wanted to see if anyone was openly selling dinosaur fossils from countries that forbid their export.

On one dealer's table lay three raptors from China. Bones and beaks and claws were folded in red and brown sandstone, as in a bas-relief. One was priced at twelve thousand dollars, the two others at twenty-five thousand apiece. The dealer said that he had collected them ten years ago, when it was legal. ("Classic answer," Johnson said.) At another booth, we saw fossilized pinecones from Argentina. ("Those have always been illegal.") At another: sabre-toothed-cat skulls. ("Chinese.") The legal and the illicit were all jumbled together. Johnson compared the situation to finding marijuana nestled among parsley and cilantro at the grocery store. "That's the caveat-emptor part that I don't like," he said. "What's colliding here is the potential for kids to get excited about science and the weird spectre of some of this stuff being tainted."

I stopped at a booth selling Chinese and Mongolian fossils and casts, and asked the dealer how he got them. "As long as you go through the proper channels, you're fine," he said. "Grease the right politicians' palms and stuff comes out. You gotta pay off the right guys."

Overhearing this, a woman browsing at his table said, "I know all about that—I'm from New Jersey."

As I browsed at the booth of a man selling fossils that had been quarried in Germany, I overheard him say that someone "who works about fourteen hours a day might, once in his lifetime, find something." Some quarry owners, he went on, "don't pay well. If a worker finds something, he can get ten times more on the black market."

Chris Moore, who had shipped Prokopi the T. bataar fossils, was listed in the show's directory as a vender. But Moore didn't show up. He was digging fossil fish in Scotland, an associate of his told me, and had "hit big."

The Prokopis are not fond of New York—"We don't get it," Amanda says—but on the day that the paleontological team inspected the T. bataar Eric flew there to unpack and repack the bones, rather than entrust the job to others. He and some of the Mongolians happened to be staying at the same La Quinta Inn, in Queens. The Mongolians didn't know what Prokopi looked like, but, when one of them overheard a man in the hotel lobby talking on his cell phone about a dinosaur, he quietly took a photograph. It showed Prokopi, in jeans and boots, sitting on a sofa and holding a paper cup.

Over the summer, the photograph was passed around in Mongolia as investigators there looked into whether Prokopi had ever visited the country. A Mongolian paleontologist gave a sworn police statement saying that, in June, 2009, Prokopi had paid him fifty dollars a day to help him dig dinosaurs for a week or so in the Gobi. They travelled into the desert in a Land Cruiser, with a guide, following a map that Prokopi had of known dinosaur sites. A search of customs and hotel registries indicated that Prokopi had also visited Mongolia in 2008 and 2011. On at least one of the trips, a Mongolian source told me, he shared a hotel room in Ulaanbaatar with Chris Moore. (Moore, through his New York attorney, declined to comment for this article.)

Investigators focussed on the Gobi guide, who, according to the Mongolian paleontologist's statement, owned an "antique museum, a private museum," and had bragged that he had hung out with Prokopi in the States. Investigators searched the guide's home and confiscated a computer, on which they found a 2008 letter to a fossil buyer in Japan. The letter, which was incomplete, began, "Dear Butts." It continued, in part, "I told people that I would buy a head of Tarbosaur"—a T. bataar—"and I offered high price for any size. . . . Following my offer many expeditions went to countryside." The letter included a price list: forty thousand dollars for the head of a velociraptor, forty thousand for the head of a T. bataar, five thousand for the claws of a T. bataar. The letter informed "Butts" that he owed thirty-seven thousand six hundred dollars and would need to pay fifty per cent up front before receiving any more shipments. "People are getting more and more cautions [sic] here," the letter continued. "In Mongolia the price [of] everything is rising." The letter-writer added, "We have been in business cooperation for many years. You know that I don't do temporary business. I do see the future when dealing with people."

If the letter's author was indeed the Gobi guide, there is no more future to speak of. He died in 2011—of illness, a source in the fossil trade told me.

There is a fossil dealer living in Japan named Hollis Butts. He would communicate with me only by e-mail, and he denied any connection with the T. bataar bones, though he said that he had done other work with Prokopi. Butts identified the Gobi guide as a fossil supplier with whom he had done business, but he said that their relationship had "finished well before 2007." When asked about the 2008 letter to "Butts," he said, "I suspect it was a letter to someone else, with 'Mr. Butts' written on top."

By fall, federal authorities in New York had fattened their case. They had discovered that, on one fossil shipment, Prokopi had changed the country of origin from Mongolia to Japan. Scientists from a host of nations had issued statements saying that the T. bataar could have come only from Mongolia. An inspection of customs records revealed that the specimen was not Prokopi's first contested dinosaur. In May, 2010, the Department of Homeland Security had stopped a shipment described first as a "sample of craft rock," and then as a "fossil replica," which turned out to be a Chinese microraptor. When the government seized the fossils, Prokopi had complained, in a letter, that he had "$1,000 invested in this item" and claimed that the mixup could likely be attributed to the shipper's poor English.

Federal agents in the T. bataar investigation obtained access to Prokopi's AOL account, and found numerous e-mail exchanges with business associates that centered on the buying, selling, and prepping of "Tarbos" and "Mongol fossils." The agents also confiscated the saurolophus—the duck-billed dinosaur that had failed to sell at the Chait auction in early May. Prokopi's civil attorneys advised him to get a criminal lawyer.

Meanwhile, in Mongolia, several suspects were detained, including one of the Gobi guide's relatives. Interpol was now involved. The Mongolian public had taken a strong interest in the T. bataar. When Robert Painter, the Houston attorney, travelled to Ulaanbaatar to meet with President Elbegdorj, a TV station interviewed him for half an hour—the segment aired live, without commercial breaks.

Oyungerel Tsedevdamba, one of the Mongolians who had helped launch the campaign to save the fossil, told me over Skype that government officials in Ulaanbaatar were thinking of the T. bataar case "as a way to clean out our house." She noted, "T. bataar is actually fighting for our democracy. We're going to use it to fight corruption. T. bataar will change lots of things in Mongolia if it comes back."

And if it doesn't?

"Even if it doesn't, we will hunt down the pipeline."

Over the summer, she had been elected to Parliament and named minister of culture. Dinosaur tourism, as yet only a concept in Mongolia, now fell within her jurisdiction.

"People said, 'Why do you need to study dinosaurs?' " she told me. "I said, 'There's so much mining going on in the Mongolian Gobi, and there are so many dinosaurs. You need proper policies.' I needed to know how to protect them and make museums for them."

Mongolians have never been widely exposed to paleontology, despite the rich bone beds. The country's only natural-history museum, in Ulaanbaatar, is an unattractive, poorly kept, Soviet-era tomb. Bolor Minjin can imagine the T. bataar inaugurating a new scientific era. She told me, "I hope the return of the T. bataar skeleton will generate enthusiasm among Mongolians, and that they will urge the government to build new museums and train the next generation of paleontologists."

Early on the morning of October 17th, a Wednesday, about two dozen federal agents and sheriff's deputies arrived at Serenola, got Prokopi out of bed, and arrested him on three counts involving smuggling. Amanda and the children were kept upstairs as he was handcuffed and led away. Then she drove the kids to school.

The agents spent the day searching the house and the workshop. They packed fossils, electronics, business papers, and other items into cardboard boxes stamped "evidence." Late in the morning, a U.P.S. truck happened to arrive, and for Prokopi the timing could not have been worse. The four-hundred-pound delivery was from I. M. Chait, and contained the bones of another dinosaur: a Mongolian oviraptor.

Eric and Amanda put up Serenola as collateral to free him on bond, and by late afternoon he was home. He had surrendered his passport. On Sunday night, he flew to New York and checked into the Fairfield Inn & Suites, in Times Square. The next morning, he dressed in a dark suit, a white shirt, and a red tie, and went downtown, to Duane Street, to meet with his criminal lawyer, Georges Lederman. At two o'clock, they entered a fifth-floor magistrate's courtroom, Prokopi carrying a soft-sided briefcase and looking distressed.

When his case was called, he took a seat next to Lederman at the defense's table, in a high-backed leather chair. His crow's-feet crinkled whenever he murmured a response to one of Lederman's whispered questions. Martin Bell, the lead prosecutor in the criminal case, asked the judge to raise the bond to six hundred thousand dollars. The judge looked at the pretrial-services forms and noted that Prokopi had fifteen hundred dollars in his checking account and seven hundred in cash. A background search had turned up two traffic citations. Prokopi had been married for a decade and had a stable residence and two young children. "Is there really a risk that he'll leave the country?" the judge asked.

Bell said that Prokopi was sitting on about "half a million dollars' worth of dinosaur fossils" and had powerful connections overseas. The judge asked if there was some sort of underground market in dinosaurs that he wasn't aware of. "I thought they were sold at auction," he said. Bell told him that the international black market in fossils has been able to "hide in plain sight," and that trafficking "far exceeds" the current efforts of law enforcement.

They went back and forth for nearly an hour. The judge ordered that Amanda also surrender her passport. He ordered Prokopi not to travel beyond northern Florida once he got home, and he raised the bond to two hundred and fifty thousand dollars.

Two months later, on December 27th, Prokopi returned to New York and pleaded guilty to customs-related crimes that carried a maximum seventeen-year sentence and hundreds of thousands of dollars in fines. The plea agreement required that he abandon all claims on the T. bataar and the duck-billed dinosaur, and on four more Mongolian and Chinese dinosaurs to which federal prosecutors could now connect him: two oviraptors and two more T. bataars, one of them believed to be somewhere in Great Britain.

"Tell me what you did," the judge said to Prokopi.

Prokopi responded that he had instructed an associate in China to undervalue one shipment, and had imported fossils with "vague" and "misleading" labels.

"So you mislabelled it to make sure it would be imported?" the judge said.

"Right," Prokopi said.

Nothing more was revealed about how his dinosaur business worked: about who had dug the original T. bataar, or when, or how it had been removed from Mongolia. The judge set the sentencing hearing for April, and court was adjourned.

"My client is radioactive when it comes to being able to earn a living in his business," Lederman had told the court at Prokopi's arraignment. In fact, a dealer, once tarnished, is not necessarily finished. Convicted hunters have been known to return directly to the field. In Prokopi's case, Mongolia will be out of the question. But the Florida waters and quarries are still full of Ice Age bones. At the start of 2013, eBay alone had more than forty thousand fossils, rocks, and minerals for sale.

Heritage Auctions, for its part, has reorganized its natural-history department. Greg Rohan, the company president, told me that it plans to continue selling fossils, but added, "We're going to want to see a lot more proof of origin." On August 28th, Heritage notified David Herskowitz that his contract would not be renewed. He hopes to open a new natural-history department at another auction house.

In December, the Prokopis put Serenola on the market for eight hundred and thirty-five thousand dollars. They had been offering various other items on eBay—their first sales since June—including a slab of Florida cypress salvaged from the Suwannee River, and Amanda's 2002 Lexus S.U.V., which sold for ninety-one hundred dollars.

By January, when I visited them again, the Prokopis had decided to sell as many belongings as they could—from pool furniture to prints on the walls—and move in temporarily with Amanda's mother, in Virginia. Instead of the Lexus, Amanda told me, they now had two "smaller, dumpier" cars. They had no savings. "It was all in the dinosaurs," she said.

In Virginia, Amanda hopes to continue working as an interior decorator. Eric plans to revive his fossil business, by doing prep work and making casts. He recently canvassed some ranch land in Wyoming, looking for prime fossil-hunting spots, and hopes to open a dinosaur quarry nearby. "It's competitive," he said. "It takes a while to get in on something."

"And it's a lot of time away," Amanda said. "Every time he goes out West, it's months of time that he's not with his kids."

"Yeah, the Mongolian stuff basically just arrived here and didn't require me to be gone a lot," Eric said.

Amanda said, "What kills me is that we watch these clips from the news and people are laughing about it. People think it's funny. It's not. It's our life. It's pretty much over." She began crying, for the second or third time.

"It's not over," Eric told her. "But we're gonna start over."

It's over "as we know it," Amanda said. "And for what? For bones? No one's been murdered. We restored a dinosaur. You know?"

Eric had photocopied two texts for me to take home. In one, he had highlighted a passage about the relative commonness of T. bataar, which, he believed, underscored his point that his specimens were scientifically unimportant. The other was a German magazine article about a Hamburg dealer of Mongolian fossils. Prokopi suggested that the article offered proof that the Mongolians have sanctioned some commercial exports. I pressed him: had this happened with the T. bataar? Prokopi said only that he had heard of exportation permits being granted in the past, and initially believed that such permits would be issued for the T. bataar. When the dinosaur reached Great Britain, he discovered that there were no permits, and imported the fossils anyway. I asked for copies of the past permits, and for the names of those who provided them. He declined, saying, "There's details about my dealings and associations in Mongolia that I'd like to talk about, but I don't think I can."

Painter, President Elbegdorj's attorney, said, "Prokopi's story evolves every time there's a new hurdle. If Prokopi believes he was duped, the Mongolian government would love to know about that. All we want is a name, and the government will aggressively investigate."

Prokopi, meanwhile, is getting ready for the Tucson show, in February, by restoring a giraffe skeleton and "low-end bulk stuff." Lederman has asked federal authorities to release the Prokopis' seized possessions. Among them is a cast that Prokopi made of the T. bataar. He hopes to sell it in Tucson, for at least thirty thousand dollars.

The real T. bataar will go home in the spring. The Mongolian government recently decided to turn an old Lenin museum into a new dinosaur museum. A national Mongol Bataar Day has been suggested for May 18th, to commemorate the date when President Elbegdorj acted on news of the Heritage auction. The Prokopis had given the T. bataar the distinctly American nickname Ty. The dinosaur will now be known as Mongol Baatar—"Mongolian hero." (Mogi: mmm, not really true, baatar is hero, bataar is dinosaur)

Link to article


Ty, the Tyrannosaurus Sold by Dallas-Based Heritage Auctions, Gets the New Yorker TreatmentDallas Observer, January 23

How (Not) to Smuggle a Dinosaur: The weird story of one Tyrannosaurus' journey from Mongolia to a Manhattan courtroom – Pacific Standard, January 23



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