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Monday, January 21, 2013

[Guildford MD resigns, Winsway expects 2012 loss, and Mongolia is "free"]

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Blue Wolf Mongolia Countdown to Liquidation: 2 months, 30 days

 

Guildford: Resignation of Managing Director

January 21 -- Guildford Coal Limited (Guildford, ASX:GUF)  announces that Michael Avery has resigned from the position of Managing Director (MD) with immediate effect due to ill health. Regrettably, the Guildford board has accepted Michael's resignation and wish him a speedy recovery and all the best for the future.

The Board is currently in advanced discussions with a number of highly regarded candidates to fill the role of Managing Director. In the meantime, Craig Ransley, founder of Guildford and current  Non-executive Director has been appointed to the  role of  Executive  Deputy Chairman with the full support of the Guildford Board until the appointment of the new MD.

Guildford remains on its exciting path  transitioning  from explorer to  coking  coal  producer from the South Gobi Project.

Link to release

 

Modun Resources to secure mining approval for Mongolian coal soon

January 18 (Proactive Investors) Modun Resources (ASX: MOU) is on the road to securing a mining licence for its Nuurst Coal Project in Mongolia with the granting of the licence expected in the current March quarter.

The application is currently under review by the Mongolian Minerals Resource Council after it passed the initial Minerals Resources Authority of Mongolia review process.

A JORC Reserve is also on the cards this quarter and is due for release in February.

The Nuusrt Project hosts a 478 million tonne sub-bituminous coal Resource, of which 430 million tonnes is already in the higher confidence Measured and Indicated categories. 

The project is located close to infrastructure, just 6 kilometres from existing rail. 

The Mongolian Government plans to increase the rail capacity to 50 million tonnes per annum, up from the current 20 million tonnes per annum, in the next eight years.

Modun is aiming to begin production at Nuurst within 12 to 18 months at an initial rate of 3 million tonnes per annum, with 2 million tonnes per annum for export and 1 million tonnes per annum for domestic sale. 

Growing demand 

The demand for thermal coal in China continues to grow with the fastest growing segments of the market being imports of sub-bituminous and lignite coal.

This is primarily due to the lower prices of sub-bituminous and lignite coal and the power stations ability to process the lower grade coal. 

Coal mining costs in China continue to significantly increase year on year. 

Labour costs continue to rise and have increased considerably over the last five years, while the average costs of production for Chinese coal mines have increased to US$43 per tonne according to China Securities.

Chinese power suppliers are actively looking to source lower cost thermal coal.

This provides an opportunity for Nuurst coal to offer a more competitive product for the Chinese market as the Nuurst operating and transport costs are expected to be very competitive.

Modun has received several enquiries from potential customers on the back of a recent presentation to the China Steam Coal Supply and Demand Forum, and the company has begun follow up discussions.

Increased foreign investment

In November 2012, the Mongolian Government successfully raised $US1.5 billion in funds from a bond issue. 

The bond issue was heavily over-subscribed by foreign investors in a positive sign for foreign investment into Mongolia. 

The funds raised will be reportedly used to further develop rail and road infrastructure, for mining investment and electricity production. 

Link to article

Link to MOU release

 

Newera: Analytical results continue to indicate a high ranking black coal at the Shanagan East Coal Project in Mongolia

January 18 -- Newera Resources Limited (ASX: NRU) is pleased to provide an update on the analytical results received for Newera's phase 2 drilling program at the  Shanagan East  Coal  ("Shanagan Project") Project in Mongolia.

HIGHLIGHTS

·         Recently received analytical results for batch 5 of samples lodged with SGS Mongolia for analysis continue to indicate a high ranking black coal with low moisture, low volatiles,  low sulphur and relatively high ash at the Shanagan Project.

·         The full coal analysis results from drill holes SHDH26, 27 and 28 are generally in line with previous analytical results from the Shanagan drilling sample batches 1 through to 4 from the earlier phase 1 drilling program.

Link to article

 

Altan Rio Intersects 1.77 g/t gold over 8.05 m at Chandman-Yol, Mongolia

VANCOUVER, Jan. 18, 2013 /CNW/ - Altan Rio Minerals Limited, (TSXV: AMO) ("Altan Rio" or the "Company") is pleased to announce results from the recently completed drilling program at the Company's 1,402 km2 100%-owned Chandman-Yol copper-gold porphyry project ("Chandman-Yol") in western Mongolia, including 8.05 m at 1.77 g/t gold only 16.30 m from surface, at the recently discovered Takhilt target.

Highlights:

·         Completion of seven diamond core holes for 3,030.35 m under a contract that allows the Company to pay for approximately 60% of the invoice cost in shares (subject to TSX.V approval).

·         Two main target areas were tested: the large concealed Ovoot IP anomaly and the extensive partly-exposed mineral system at Takhilt.

·         At Takhilt, 17 km NNW of the major KY copper-gold porphyry system, five moderately wide spaced holes were completed and several new zones of gold and copper mineralization were intersected, including a shallow intercept beginning at 16.30 m from surface of 8.05 m at 1.77 g/t gold, including 2.5 m @ 5.38 g/t gold. These zones are open down dip and along strike and warrant follow-up drilling along the entire 1.5 km extent of the Takhilt structure.

Link to release

 

Mongolia Growth Group Ltd. Announces the Appointment of a New Director

Ulaanbaatar, MONGOLIA, January 17, 2013 /FSC/ - Mongolia Growth Group Ltd.   (YAK - TSXV)

Mongolia Growth Group ("MGG" or "The Company") is pleased to announce the appointment of John M. Shaw to the board of directors of MGG.  John's career in real estate spans over 4 decades. During this time John has overseen the development and management of over 20 million square feet (2 million meters) of commercial and residential space with an inflation adjusted construction cost in excess of USD $50 billion dollars.

Most recently, John was Senior Vice President / General Manager of Opus Northwest, LLC of Denver Colorado with additional operations in Kansas City. During his 13 years in this position, he was responsible for all development work and oversaw the construction of approximately 9.5 million square feet (950,000 meters) of commercial and residential space.

Currently, John is President of McWhinney where he oversees the entire McWhinney portfolio of commercial and community development projects along the front range of Colorado.

John has also supervised development projects for Rancon Financial Corporation, The Colorado Denver Technological Center, Crestone Investment Company, Victorio Realty Group, Price Development Company, General Growth Development, US Navy Civil Engineer Corps in Japan as the Officer In Charge Of Construction in the Republic of Vietnam from 1969-1970.

"It is a great honor to have someone with John's experience in development join the board of MGG," said Harris Kupperman, Chairman and CEO of Mongolia Growth Group. "As our company moves forward into the construction of international standard properties in Mongolia, John's insights will be invaluable."

"I am genuinely excited to have the opportunity to be involved in so dynamic an organization as Mongolia Growth Group and I look forward to assisting in the real estate program execution," said Mr. Shaw.

Link to release

 

announcement made after Friday's trading hours

Winsway: PROFIT WARNING AND CLARIFICATION REGARDING MONGOLIAN COAL PRODUCER

January 18 -- The board of directors (the "Board") of Winsway Coking Coal Holdings Limited (the "Company", together with its subsidiaries, the "Group") wishes to inform shareholders and potential investors of the Company that after a preliminary review of the Group's unaudited consolidated management accounts for the financial year ended 31 December 2012, the Group is expected to record a consolidated loss for the fi nancial year ended 31 December 2012 as compared to a consolidated profit recorded for the financial year ended 31 December 2011. The Board has considered the market conditions and other factors that impacted the Group's results compared to the financial year ended 31 December 2011, and believes that the performance is primarily attributable to:

1.    a decrease in the price of and a fall in demand for coking coal in the Company's principal market, the People's Republic of China, in 2012 as a result of a decline in demand from steel mills and coke plants under sluggish economic conditions;

2.    an increase in the Group's finance costs due to the issue of senior notes in April 2011; and

3.    an increase in the Group's finance costs and transaction expenses due to the acquisition of Grand Cache Coal Corporation in March 2012.

Whilst the above factors have impacted the financial results of the Company for the financial year ended 31 December 2012, the Board continues to believe that Company is currently well funded with strong cash position and the business operations and financial position of the Group remain sound.

The Company is still in the process of finalizing the annual results of the Group for the financial year ended 31 December 2012. The information contained in this announcement is based on a preliminary assessment by the Board solely on the basis of the unaudited consolidated management accounts of the Group and the current information available, which have not yet been reviewed nor audited by the independent external auditors of the Company. Further details of the Group's performance will be disclosed in the annual results for the financial year ended 31 December 2012 to be published by the Company.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

The Board also notes the recent press release in relation to the interruption of coal supply by a certain producer in Mongolia. The Board wishes to clarify that the producer mentioned is not one of the Group's suppliers and such interruption is not expected to have any adverse impact on the Group.

Link to release

 

Winsway: RESIGNATION OF NON-EXECUTIVE DIRECTOR, APPOINTMENT OF NON-EXECUTIVE DIRECTOR AND CHANGE IN COMPOSITION OF THE HEALTH AND SAFETY AND ENVIRONMENTAL COMMITTEE

January 17, Winsway Coking Coal Holdings Limited --

The Board announces the resignation of Mr. Delbert Lee Lobb, Jr. as a non-executive director of the Company and the appointment of Mr. Daniel J. Miller as a non-executive director of the Company and the chairman of the Health and Safety and Environmental Committee of the Company with effect from 16 January 2013.

Link to release

 

Khan Investment Management Update (01/16/2013)

January 16 (Khan Investment Management) Throughout 2012 Mongolia assets suffered significant losses on a mark-to-market basis due in part to populist political posturing and a number of global uncertainties facing investors. The 4 year general parliamentary election cycle in June as well as adoption of a hastily drafted Foreign Investment Law (FIL) in May eroded investor confidence. Mongolian mining companies listed on international exchanges were sold off in droves (some over 80%) and remain near 52 week lows on the loss of support from local marginal retail investors – many who flocked to IPOs in 2010 in expectation of quick returns. The selloff was largely due to falling commodity prices and the perceived slowdown in China. What investors fail to recognise is that Mongolian mineral exports are not correlated to global markets and are not driven by Chinese growth (expected to be >8% this year) but rather a China supply story. Mongolia will supply China with ever increasing commodities at vastly cheaper acquisition and transportation prices than current suppliers as infrastructure comes online. 

Annual GPD growth moderated to 12.30% for 2012 (from 17.30% in 2011) on the back of a mid-year decline in the price of coal and reduced foreign investment due to legislative and political uncertainties and a weaker external economic environment. The Mongolian Stock Exchange (MSE) Top 20 closed December up 16.41%, although finished the year -16.50%. Introduction of a new trading and settlements system on the MSE initially collapsed trading volumes as brokers and investors struggled with excessive documentation requirements to adapt to the new system. In light of 15% inflation (and up to 50% food inflation), many domestic shareholders sold out of legacy positions. Although there were some volatile fluctuations throughout the year, the MNT finished 2012 at 1,392.10 - practically flat

Recent moves for stability and a recognized importance of foreign investment is prompting encouraging comments from political leaders and driving renewed optimism. On December 26, President Elbegdorj publicly announced that Mongolia needs to respect the Oyu Tolgoi (OT) Investment Agreement and underlined the importance of creating a better financial environment for foreign investors, expressing disapproval with the FIL enacted by Parliament – which has stifled investment. The FIL is currently slated for review. 

It is all too easy for foreigners to paraphrase issues and propose quick-fire solutions without taking into consideration local political and cultural contexts. Mongolia is a functioning (albeit fledgling) parliamentary democracy with a nascent capital market that is trying to balance its dependence on foreign investment and expertise with local interests. 

We believe that Mongolian stocks have bottomed and we remain pleased with the progress of portfolio companies and are confident of their growth prospects. 

December was a positive month for the Khan Mongolia Equity Fund (KMEF) resulting in a net performance of over 8%. Of the 15 positions in the portfolio, 10 gained, 3 remained unchanged, and 2 lost ground. The portfolio's MSE listed stocks all performed well. Gobi JSC rallied 60.68%, APU JSC rose 23.00% and Remikon JSC finished the month up 11.18%. FeOre Ltd (FEO:AU) recovered 26.98% and Erdenes Resource Development Corp (ERD:CN) gained 25.00% following a successful placement of CAD 1M @ CAD 0.17 on December 12. 

The Khan Mongolia Equity Fund performance for December was +8.20%.

The Net Asset Value as at 31 December 2012 was USD 44.68

The December Factsheet can be downloaded by registered users of the Khan Investment Management website – www.Khan-Management.com

According to the latest estimates from the Economist Intelligence Unit, Mongolia will be the second fastest growing economy in the world in 2013 (for the second year in a row). Resilient economic data from the US and China in December spurred a New Year rally in equity markets and there is heightened optimism for renewed China growth in 2013 – a year where commodities and emerging markets are expected to fare well. According to emerging market specialist Mark Mobius "2013 will be a fantastic year". The road to progress and development for Mongolia will not be smooth. The country is still at the beginning of a long journey – one that will see GDP per capita multiply over 20 times to 2032. Mongolia has a very bright future. Investors who remain steadfast are sure to profit in the long term. 

As of close of business 14 January 2013, the portfolio is up a further 13.16% month-to-date. 

I thank our investors for their continued support and I look forward to updating you further of our developments next month. 

Wishing you a Happy New Year and all the very best for 2013, 

Travis Hamilton

Managing Director

KHAN INVESTMENT MANAGEMENT LIMITED

Link to Khan

 

Mongolia's Erdenes TT Halts Coal Exports to Biggest Buyer China

January 17 (Bloomberg) Erdenes Tavan Tolgoi LLC, Mongolia's largest-state owned coal company, halted deliveries to China after failing to pay a company that provides logistical support amid a cash crunch, its chief executive officer said.

Exports to customers including Aluminum Corp. of China Ltd. stopped on Jan. 11 as Erdenes TT couldn't pay Altangovi, said Yaichil Batsuuri, who has led the company since October. Altangovi provides warehousing services at the border with China, the biggest buyer of Mongolia's steelmaking coal.

The halt comes as Erdenes TT seeks a government loan for as much as $500 million to repay debts and fund infrastructure construction, Batsuuri said last week. The mining company wants to raise prices and cut shipments, changing the terms of the $250 million contract it signed in July 2011 to supply companies including Chalco, as Aluminum Corp. is known.

"The government made a resolution to make a new agreement with Chalco," Batsuuri said in a phone interview from Ulan Bator this week. "We have to amend it," to change the price and cut the volume, he said.

Erdenes TT supplies coal to Chalco at $53 a metric ton, less than the $61 it costs to move it to the Tsagaan Khaad border station, he said.

Yuan Li, spokesman of Aluminum Corp. of China, known as Chinalco, the parent company of Chalco, could not be reached for comment.

Government Loan

Erdenes TT owes 4 billion tugrik ($2.9 million) to 5 billion tugrik to Altangovi, said Batsuuri. That's stopped Altangovi from being able to buy the diesel it needs for warehousing operations, he said.

Batsuuri said that the government had yet to respond to the company's request for a loan.

Erdenes TT is developing part of the Tavan Tolgoi coal field, Mongolia's largest. The coal field is located 150 miles north of the Chinese border in the heart of the Gobi Desert and more than 70 percent of the field is coking coal.

Mongolia, the largest exporter of coking coal to China, shipped 16.8 million tons in the first 11 months of 2012, accounting for more than a third of all coking-coal imports by China, according to customs data. The monthly average supply in 2011 was 1.7 million tons.

Link to article

 

Mongolia stops coking coal exports to China in pricing scrap

January 20 (MINING.com) Mysteel reports Ya Batsuuri, CEO of Mongolian coking coal miner Tavan Tolgoi, said last week the state-owned company had suspended all coal exports to China starting on January 11.

The bulk of China's coking coal imports from Mongolia are from Tavan Tolgoi – mined since the 60s – in the South Gobi desert which is the world's largest high-quality coking coal used in steelmaking.

China imported 16.8 million tonnes of metallurgical coal from Mongolia in the first 11 months of 2012, comprising over one third of total imports.

The reason behind the suspension is that Mongolia wants to raise coking coal export prices for China. (Mogi: looks like the Chinese side sees it a little different from what was said)

From levels above $300 a tonne in the first half of 2011 coking coal prices have steadily declined to the $160 a tonne level it is trading at today.

Mongolia's dealings with China over resources have been testy of late.

Last year Mongolia blocked the sale of coal miner Southgobi Resources to China's state-owned Chalco and wrangling over an electricity supply deal with China also held up the start of operations at Oyu Tolgoi, a massive copper-gold project near the Chinese border.

Both Southgobi and Oyu Tolgoi are majority-owned by Canada's Turquoise Hill which is controlled by Rio Tinto.

Mongolia last year put on ice plans to publicly list Tavan Tolgoi which boasts a 6 billion tonne resource and could have raised $3 billion.

The country also stopped all talks with international miners on developing the western Tsankhi block of Tavan Tolgoi which on its own holds 1.2 billion tonnes.

Mongolia's National Security Council rejected a development deal struck with US giant Peabody Energy, Shenhua and a Russian-Mongolian consortium mid-September 2011, just two months after they were announced as winners.

Mongolia is walking a diplomatic tightrope with Tavan Tolgoi. Aside from from closer ties with China it wants to use the project to strengthen its longtime political and cultural links with Russia and at the same time make room for the US as a geopolitical balancer in Asia.

Link to article

 

Mongolia Minerals targets 2014 for first production

"Potential to produce much higher grade than Bor-Ondor" says managing director

January 17 (Industrial Metals) Fluorspar developer Mongolia Minerals told IM today that it is targeting a production date of late 2014 for its Dai Uul project in Central Mongolia.

The project, which is situated near the town of Airag, Dornogovi, has mineralization similar to fluorspar hub Bor-Ondor, managing director James Rodriguez de Castro told IM. Fluorspar from Bor-Ondor is presently exported to Russia, via Ukraine.

"Our indications are that this will be an interesting and higher grade product," Rodgriquez de Castro said.

Historical assays suggest a grade of 30%, which means the company will look to produce acidspar. This will be marketed globally, out of Tianjin, China, he added.

The company recently completed a drilling project on one of the five fluorspar projects in its portfolio.  This was to infill between previous exploration holes and increase the current level of approved reserves. It is working towards establishing a JORC compliant report.

"We were initially planning a work programme of 2,500 meters of diamond core drilling, but we kept hitting wide, easily visible intercepts and just kept going late into the season," Rodriguez de Castro told IM.

"We ended up drilling 38 holes totaling up to over 6,000 metres of diamond core, on a roughly 50-60 metre grid, and we are very pleased with the early visual indications, which are very encouraging. The core is currently at the lab and we expect to have more accurate grades, widths, and an updated tonnage estimate in about a month or two," he added.

"The project is located less than 30km from the existing Ulaanbaatar-Tianjin railway line, which is a significant advantage given the current level of infrastructure development in Mongolia. Many other fluorspar projects are not so fortunate and are stranded quite some distance from transport infrastructure, which can make their development more challenging," he explained.

Rodriguez de Castro added that there a few other, private, Chinese producers working in the area.

Link to article

 

Workers of PetroChina Daqing Tamsag to go on strike again

January 18 (news.mn) Workers of PetroChina Daqing Tamsag LLC that runs the petroleum operations in Dornod aimag are planning to strike from January 25th. 

Over 250 Mongolian workers of the 100 percent Chinese owned petroleum company have delivered a petition in order to have their wages increased by 50 percent. 

Ch.Vladimir, the head of the Labor Union for PetroChina Daqing Tamsag spoke to our journalist about the circumstances leading to the strike. 

-What is the reason behind the strike being called?

-We called a strike demanding wages to be increase only a year ago. At this time PetroChina Daqing Tamsag LLC authorities promised to grant us compensation for the previous months wages in January. 

But they have accounted overtime pay, food and longevity bonus with the basic pay. 

They are trying to fool workers into thinking they have increased the wages by by doing the accounting like this. 

-How is the current workers` average pay?

-A worker`s average pay is 300 US dollars. Service and security workers earn only 100 US dollars per month. 

But Chinese workers earn 2500 US dollars per month. 

Therefore we insist that such unfairness is stopped and for wages of Mongolian workers to increase up to 50 percent. 

-Have you made the announcement about calling a strike to the company?

-We delivered the notice but have not received any reply. 

Link to article

 

Mongolia Draft Mining Law Threatens Investment Climate -Business Group

January 16 (Dow Jones Newswires) Proposed changes to Mongolia's mining law threaten to undermine the economic viability of its fledgling mining sector, with negative consequences for the entire economy and future investment in the country, business leaders and investors warned.

The legislation, which includes a requirement for existing miners to relinquish stakes in projects to indigenous groups (Mogi: haha, indigenous? Makes us sound like Indians or aborigines), marks a departure from the free-market principles that have benefited the country since the 1990s (Mogi: benefit is not exactly the word I would have chosen), The Business Council of Mongolia, the country's largest business group, said in a four-page open letter to Mongolia's president last week.

Mongolia has seen foreign investment in mining wane after it introduced a new law last year that restricts foreign ownership in strategic sectors such as mining. Politicians have also made at least two unsuccessful attempts (Mogi: wouldn't call them "attempts" either)  to change the terms of a mining agreement signed in 2009 to develop the massive $6 billion Oyu Tolgoi gold and copper project. The project is expected to account for about a third of the country's economy by 2020.

The legislation, if approved in its current form, will "halt current minerals exploration and development in Mongolia and greatly discourage any future investment," The Business Council of Mongolia, which has more than 250 members, said in its open letter. It also threatens the development of the nation's largest coal reserves, Tavan Tolgoi, the council said. Mongolian state-owned Erdenes-Tavan Tolgoi Co. owns rights to develop those reserves and has been seeking to raise up to $3 billion via a public share offering that has already been delayed several times.

The draft law, which would replace the one signed in 2006, proposes several measures that would give the Mongolian government a firmer grip over its mineral resources while raising concerns about ownership rights and possibly lead to higher taxation. The legislation would require that mining companies hand over a stake of at least 34% in their existing projects to indigenous groups (Mogi: again with the conquistador type description of locals). It would also require companies to mine lower ore grades even if they're not profitable, said Luke Lesley (Mogi: Leslie), head of mining at London-listed Origo Partners PLC (OPP.LN), a private equity group that owns stakes in various Mongolian mining companies.

The draft law also raises concerns about security of license tenure and fails to identify a dispute resolution process or body given overlapping powers between different ministries and local government, Mr. Lesley said. The Council also said was unclear whether the government may be able to apply the draft law retroactively to existing projects. Mining companies that currently operate in Mongolia include globally diversified miner Rio Tinto PLC (RIO), operator and major shareholder of the Oyu Tolgoi project through Turquoise Hill Resources Ltd. (TRQ.T), Peabody Energy Corp. (BTU), and Erdene Resource Development Corp. (ERD.T). None of them were immediately available or able to comment.

"Both domestic and foreign investors have unanimously and unambiguously responded negatively to these amendments," the U.S. embassy in Mongolia said in a report about investment climate published Tuesday. "They argue that the amendments grant the government broad and vague discretionary authority to revoke exploration and mining rights without meaningful checks on these powers; and impose taxes and fees, development obligations, and production, management, and employment practices that may render commercial mining impossible in Mongolia," it noted.

"It makes it very hard to raise money for any of these projects with all of this lack of clarity," Mr. Lesley said.

Businessmen and investors are also concerned that the draft law may fall foul of political posturing ahead of the presidential elections in May (Mogi: June). The draft legislation is "almost certainly politically motivated," said Mr. Lesley. "Both of the main parties are looking at popular measures that could be put to the electorate."

Last year, politicians pushed through a law that restricts foreign ownership in key strategic sectors such as mining. The law was passed just before parliamentary elections in June in response to voter concerns that Mongolia may be compromising its sovereignty by giving foreigners too large of a stake in its key sectors. But since the elections, the government has been considering relaxing some of those rules in order to make it more business friendly.

The draft legislation on mining is currently open to consultation until Jan. 18, according to Origo. Both the Business Council of Mongolia and Origo said they have submitted comments.

Origo expects the draft law will be submitted to parliament for a vote in April in order to approve the law ahead of the presidential elections.

"Passage of the Draft Law in its current form is likely to damage Mongolia's brand as an investment destination," the Business Council said, noting that it would lead investors in all sectors of Mongolia's economy to re-evaluate the country's sovereign risk profile. The end result could repel rather than attract foreign direct investment, the Council said.

Link to article

 

Mongolia Defends Draft Mining Law Branded as Bad for Investment

January 19 (Bloomberg) Mongolian officials held a briefing yesterday to defend proposed changes to a mining law that the country's biggest business association says would deter investment.

Puntsag Tsagaan, the mineral policy adviser to President Tsakhia Elbegdorj (Mogi: he's the head of the president's office) who led the legislation's drafting, said the proposed law would strengthen the economy, better protect the environment and ensure Mongolians benefit from the country's mining boom, according to James Liotta, a partner at Mahoney Liotta LLC, who attended the meeting in the capital Ulan Bator. Representatives of Peabody Energy Corp. (BTU), Aspire Mining Ltd. (AKM) and Centerra Gold Inc. (CG) were among the attendees, Liotta said.

The briefing was held after the Business Council of Mongolia sent Elbegdorj a letter on Jan. 7 saying the proposed law would halt current minerals exploration and discourage investment. Private-equity firm Origo Partners (OPP), which owns more than $100 million of mining assets in Mongolia, said this past week the president may have drafted the law to bolster his popularity before elections in June.

"The president showed some courage to open this up," said Liotta, who has represented companies including Rio Tinto Group (RIO) and Peabody. "Now we wait to see if he shows leadership to get a proper draft law that is acceptable." Elbegdorj didn't attend yesterday's event, Liotta said by e-mail.

Sukhbaatar Erdenebold, Elbegdorj's spokesman, didn't immediately answer calls to his office and mobile phone after normal business hours yesterday. Baatar Bulganbayar, an assistant to Tsagaan, the mineral policy adviser, confirmed Liotta's account of the briefing.

Minerals Law

Mongolia's current minerals law was passed in 2006 and is the basis for the Oyu Tolgoi investment agreement between Rio Tinto, the owner of 66 percent of the project, and Mongolia, which has the rest, according to Mongolia International Capital Corp., an Ulan Bator-based investment bank.

The proposed legislation, which will give the state the right to a free stake in many mineral projects (Mogi: actually free stake in just the 15 strategic deposits, no more), will take the country away from the free-market principles practiced there since the early 1990s, the Mongolian business council said in a Jan. 7 letter to Elbegdorj's office. The group has 250 members including Rio Tinto, Peabody, General Electric Co. and Mitsubishi Corp. (8058)

Dash Bat-Erdene, head of geology at Ulan Bator-based Biluut Mining and a member of the group that drafted the proposed law, said Mongolia's earlier laws were designed to attract foreign investment. In addition to creating jobs and bringing in foreign capital and technology, they also led to speculation, tensions with local communities and corruption, he said. The proposed law seeks to fix that, Bat-Erdene said at the meeting yesterday, according to Liotta.

Investor Note

Origo Partners, in a Jan. 14 note to investors, said it expected that a final draft of the law will be submitted to the spring session of parliament in April. Mongolia passed legislation ahead of parliamentary elections last year increasing the government's ability to regulate foreign companies.

Presidential adviser Tsagaan said yesterday that the proposed law isn't politically motivated and that there's no hurry to approve it before presidential elections scheduled for June, according Liotta.

Link to article

 

Minerals export fell 9.1% in 2012

January 17 (Business-Mongolia) Mongolia's exports are largely dominated by minerals and agricultural products. The nation exported goods worth USD 4.38 Billion in 2012 according to the latest figures released by National Statistics Office (www.nso.mn). 89.2% of this amount is represented by exports of various minerals.

Total exports in 2012 fell 8.99%. It means that the exports decreased by USD 430 Million from that of the year 2011. The main factor for this fall was largely due to the fact that minerals export was dropped by USD 390 Million in 2012.

The following minerals featured prominently in Mongolia's exports in 2012: 20.9 Million tons of coal, 574,000 tons of copper concentrate, 6.4 Million tons of iron ores, 3,570 barrels of crude oil, 2.8 tons of semi-processed and unprocessed gold, and 140,000 tons of zinc concentrate.

Coal represented 43.2% of exports in the country, copper concentrate 19.1% and iron ore 12.1%. It should be noted that the amount of iron ore exports increased by 10% and crude oil exports grew by 40%. At the same time, exports of iron ores in 2012 grew substantially with the production reaching 7.56 Million tons.

Link to article

 

BoM issues 1-week bills

January 16 (Bank of Mongolia) BoM issues 1 week bills worth MNT 306.85 billion at a weighted interest rate of 13.25 percent per annum /For previous auctions click here/

Link to release

 

BoM holds FX auction

January 17 (Bank of Mongolia) On the Foreign Exchange Auction held on January 17th, 2013 the BOM received from local commercials banks total bid offers of 11.8 million USD and 47 million CNY and ask offers of 8 million USD. BOM has refused for the bid and ask оffers as considering the demand and supply of USD and CNY is balanced.

Link to article

 

China disappointed with Mongolia's legal environment

January 17 (news.mn) Chinese representatives expressed their disappointment during the third meeting of the China-Mongolia cooperation commission on mineral resources and energy on Tuesday. Their point is that the legal regime is uncertain and regulations passed by the Government keep changing

At present the mining sector produces 20.2 percent of the GDP, 88.2 percent of export, 67.7 percent of industrial enterprises. 

Over 50,000 employees make their earnings in 400 mining companies proving that this sector has become a big support of Mongolian economy. 

But the Mongolian mining sector is heavily reliant on China, therefore only one buyer is big risk for Mongolia. 

There were high expectations among Mongolians as to how Chinese representatives would negotiate in a mutually beneficial manner on big issues. 

Unfortunately the meeting was held behind closed doors and left the press without answers about whether China would buy quality coal with a reasonable price, help with solutions for the transport network and oil. 

The meeting was expected to be open to public, but it was held behind closed door on the request of the Chinese representatives. 

During the break of the meeting the Minister for Mining, D.Gankhuyag and the Deputy Director of China's National Development and Reform Commission, Zhang Xiaoqiang made a joint statement without answering any questions to journalists. In the statement the Minister for Mining, D.Gankhuyag, said the trade cycle between the two countries reached 6.6 billion US dollars last year. China invested 2.3 billion US dollars in Mongolia. They further stated they are in negotiation on infrastructure and railroad projects and that the countries will cooperate in the oil sector in the near future. PetroChina invested 1.4 billion US dollars in Mongolia alone which makes this company the biggest investor in Mongolia. They also stated that they are also negotiating with China on fuel supplies.

The Deputy Director of China's National Development and Reform Commission, Zhang Xiaoqiang highlighted the need of developing a legal regime in Mongolia to strengthen development of a highly connected railroad and coal transport border between the two countries. According to a study by the Mineral Resource Authority Mongolian coal export will surge up by 32 percent this year. 

However, the bad news is that China will buy unprocessed coal for less than 70 US dollars per ton. 

This means Mongolian export coal price is 30 US dollar lower than the market price. Importing high quality coal from Mongolia is a big advantage for China. 

The Chinese Vice-Premier Li Keqiang assisted in the support of the Mongolian coal transport to third parties via Chinese territory when he met the President of Mongolia, Ts.Elbegorj last year. But many questions are still left without answers. 

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India wants to further trade ties with Mongolia

January 17 (Press Trust of India) India and Mongolia should build on trade ties and historical legacy for mutual benefits, President Pranab Mukherjee has said.

During a meeting with Mongolian Foreign Minister Lu Bold here yesterday, the President noted cooperation between Mongolia and India in the United Nations and other international fora.

Mukherjee referred to the ancient civilisational ties that link India and Mongolia as also shared democratic values, a Rashtrapatati Bhavan press release said.

He recalled that over the centuries, our people have had close ties in trade and close intellectual discourse.

"President stressed that both nations should build on this historical legacy for their mutual benefit," it said.

The Mongolian Foreign Minister warmly reciprocated the President's words and described India as a long standing friend and partner of Mongolia both in bilateral cooperation as well as in multilateral fora.

He appreciated India's assistance over the decades and said that Mongolia considers India the 'spiritual home' of the Mongolians and as a valued third neighbour that has stood by it in its developmental efforts, the release added.

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Toyo Engineering and partners to build first oil refinery in Mongolia for $600m

January 17 (EBR) Japan-based Toyo Engineering and other unnamed local companies will be building Mongolia's first oil refinery by 2015 at a cost of $600m.

The country's first refinery to be constructed in the Darkhan city, in Darkhan-Uul Province is expected to have a capacity to process two million metric tons of oil per year.

Mongolia is undertaking the project with the intention to reduce the country's dependency on Russian imports for gasoline and other oil products, reported Bloomberg.

In February 2013, the companies are scheduled to discuss the funding aspect of the project with some Japanese banks. The investment in the facility can reportedly be reimbursed in four years.

Construction of the refinery is anticipated to be completed in three years, and the domestic production is expected to reduce the gasoline prices by 6% to 8%.

With no domestic refining facility, almost all of Mongolia's gasoline and oil products are imported from Russia.

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Mongolia: Fast growing economy, evolving investment climate

Leo Liu is a private investor and currently holds the position of Investor Relations Officer with Prophecy Coal Corp.

January 16 (Seeking Alpha) --

High economic growth driven by mining activity

Mongolia, entirely flanked to the north and south by Russia and China, is the most sparsely populated country in the world. However, the country has vast natural resources with more than 6,000 known mineral deposits of 80 different minerals. It has the potential to become a major player in global commodity markets with its rich gold, copper, zinc, uranium, coal, molybdenum and oil reserves.

Economic activity in Mongolia has traditionally been based on agriculture and the breeding of livestock. The economy underwent significant structural changes in the past and has since become increasingly reliant on the mineral sector. Ever since the early 1990s Mongolia has been on a steady upward path recording real GDP growth every year except for 2009.

Figure 1: Structure change in Economy

There are two world-class mines that hold the key to economic success in Mongolia, namely Tavan Tolgoi, one of the world's largest coking coal deposits, and Oyu Tolgoi, the largest underdeveloped copper/gold project. The IMF estimated that export proceeds from these two mines could total US$2 billion in 2013, rising to US$7 billion by 2020, while Mongolia's GDP in 2011 was only $8.8 billion.

With the expected $3 billion Tavan Tolgoi IPO this year and commercial production of Oyu Tolgoi to commence in first half 2013, it appears the Mongolia economy is poised to maintain good momentum. Mongolia's average real GDP growth is projected to be 13.4% annually over the coming five years due to mining initiatives, according to IMF's World Economic Outlook 2012.

Figure 2: Real GDP growth rate: Mongolia vs. BRIC countries

Source:IMF-World Economic Outlook Oct 2012

Foreign direct investment - the lifeblood of Mongolian economy

Driven by the mining boom, Mongolia hit another historical peak in attracting foreign direct investments (FDI) in 2011. Total FDI to Mongolia amounted US$4.7bn, of which over 80% went to the mining sector, according to World Bank data. China, Canada, and Netherlands, are the top three investor countries by FDI amount in Mongolia.

Figure 3: FDI net inflows in Mongolia (US$ Billion)

Source: World Bank data Note: data are in current US dollars

Besides its attractive mineral resource, Mongolia's very competitive raw material prices, low operating cost, low tax rate, favorable tax credit and cheap labour provides a favorable investment environment for foreign businesses. Mongolia's regulatory environment is more conducive to the starting and operation of a local firm than its neighbors China and Russia, as Mongolia is continuing its positive run in the World Bank's Ease of Doing Business 2012 ranking, moving from 88 to 76 out of 185 economies.

Figure 4: Ranking of Mongolia in ease of doing business - Compared with good practice and selected economies

Source: The World bank- Doing Business 2012 rankings

Key factors for accessing investment climate

Market confidence is turning around, as the Mongolia stock exchange Top 20 index has increased 20 percent from the bottom reached on December 1, 2012. It is important to review some of key factors for investment climate to get a better understanding of the Mongolia market performance.

Figure 5. One-year Mongolia Stock Exchange Top 20 Index

Source: Bloomberg

Geopolitical stability

From an historical prospective, 20 years ago Mongolia made a transition from a one party political system into a democratic system. The United States Agency for International Development (USAID) praised Mongolia for its contribution to stability in a volatile part of the world, as well as its positive example in Asia in promoting economic reform and democracy.

In recent years, Mongolia has good standing across several governance indicators in comparison with other transitional and developing countries. The Economist Political Stability Index suggests that Mongolia fares above the average in the world. Mongolia ranks 75th of 177 countries in 2013 Economic Freedom Index published by The Wall Street Journal. The Index evaluates countries in four areas of economic freedom: rule of law, regulatory efficiency, limited government and open markets. Mongolia improved its ranking on the list of most corrupt countries, recently ranked 94th out of 174 countries around the world, according to 2012 Corruption Perception Index, published by Transparency International.

With an expected increase in the mining sector and corresponding GDP growth, there is a growing concern about future political stability in Mongolia. Politically driven events in 2012, in particular the suspension of South Gobi Sands mining licenses in April and the request from government to renegotiate the Oyu Tolgoi investment agreement in October, have undermined the investment climate in Mongolia in the short term.

Frontier securities points out that political shock cast a shadow of negative sentiment on the Mongolia market, that manifest itself in the significant drop in Mongolian share prices, but the real economic engine is not much hindered. The rising political risk premium is not meant to discourage FDI; but investors should be cautious about the investment timing.

Country credit rating

Constrained by the country's susceptibility by virtue of an undiversified economy and inflationary monetary and fiscal policy, Mongolia's sovereign credit rating is in Speculative Grade, rated B1 by Moody's , BB by Standard & Poor's, and 6/9 by SINOSURE, an Chinese state-funded policy-oriented insurance company.

But with a dearth of sovereign paper in Asia, Mongolian bonds offer a chance for investors to diversify into one of the most attractive among emerging-market countries' bonds. In November 2012, Mongolia sold $1.5 billion in debt in its first government bond offering, after raking in $15 billion of orders. The sale was equal to nearly one-fifth of the size of Mongolia's economy and orders were roughly twice the size of the economy.

Mining Policy

According to the 2010/2011 Fraser Institute Annual Survey, Mongolia ranks 54th out of 79 districts in the world regarding the government mining policy index, higher than Russia (69/79), China (62/79), and is the second highest in Asia.

Figure 6: Mongolia's mining index ranking compared with other Asian countries

Source: Fraser Institute 2010/2011 Survey of Mining Policy Index Ranking

Mongolia is collecting comments on draft revised minerals Law proposed in December 2012, which deviates from its 2006 Minerals Law in many areas and seeks to introduce a new regulatory regime including:

The draft law defines water, oil, gas, radioactive minerals and rare earth elements as strategic minerals. Investors in its defined 15 strategically important deposits will need to establish an accord with the government and set up a "special regime" for mining such minerals.

The Draft Law does impose requirements for local equity participation of mining license holders.

There are extensive regulations on environmental protection, mine closures, public consultations, agreements with local authorities, local content requirements, mandatory insurance policies, prohibitions on high-grading and feasibility studies.

The draft law, under fire from a number of sources and on a number of fronts, will likely undergo some significant amendments before it will be passed into law by Mongolia's parliament.

The Strategic Entities Foreign Investment Law passed in May 2012 specifically limits the amount of FDI in the resource, media, and financial sectors respectively; and subjects these investments to government and parliamentary scrutiny. It undeniably prompted concerns among foreign investors about a more nationalistic approach to mining policy. The U.S. embassy warned in its July Mongolia Investment Climate Statement that "investors can and should expect that investments, particularly in the resource sector, will be subject to volatile legal and regulatory regimes." While The Economist Intelligence Unit points out the new government is unlikely to be able to alter the substance of recent resource deals.

Conclusion

Canada is the second largest foreign investor in Mongolia, with companies like Turquoise Hill Resource (TRQ), South Gobi (SGQRF.PK) and Centerra Gold (CAGDF.PK) contributing heavily to the local economy. Unlike Canada, stability in the regulatory regime has not been a strong suit of the Mongolian mining environment.

On the way to developing into a country with a stable and fast growing economy and stable political and environmental conditions, Mongolia has been undergoing drastic socio-economic changes. It is important for the government to revise and update its policy stance to provide better protection to investors, the economy and its citizens. It is equally important for investors to review the investment climate in their decision-making before getting involved in the mining boom in Mongolia, while keeping in mind the idea that there is seldom reward without risk.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Prophecy Coal Corp. Neither Prophecy Coal Corp. nor the author can guarantee accuracy of all information provided. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Prophecy Coal Corp. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication

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The Name is Bond, Chinggis Bond

January 15 (The Mongolist) Mongolia's international debt-instrument of mystery made its debut at the end of 2012 raising USD 1.5 billion for the government without even breaking a sweat. The "Chinggis bonds," which bond traders and the media dubbed the initial offering, appeared to be a tremendous success by not only reaching its targeted revenue amount but also for being "10 times oversubscribed," which simply means there was 10 times more demand than supply for the bonds. There seems to be a rather dubious implication that springs from that last point which is that if there was 10 times more demand, that in theory the government could have raised as much as USD 15 billion if additional bonds had been available. Although I have a mild sense of pride in the Mongolian government's achievement, as an observer I am still trying to unravel the mystery and understand the real implications of the Chinggis bonds.

The shear size of the international market for stocks and bonds is hard to fathom. One measure put the value of the world's equity market capitalization and outstanding bonds and loans at USD 212 trillion in 2010.1 That is truly an astounding number (212,000,000,000,000), and when you compare it to the USD 1.5 billion the Mongolian government raised (1,500,000,000), the Chinggis bond could easily be a rounding error. The numbers are hard to truly comprehend, and it makes it easy to overlook how difficult it is in practice to successfully manage large amounts of capital. Plopping the funds into a savings account at your local bank is really not an option, and the people who are responsible for maintaining these funds have to be able to consistently find relatively low-risk, high-return ways to invest them.

In theory, at least, that is what is supposed to happen, but imperfect information, poor choices, and willful blindness may cause individual traders and sometimes entire markets to channel capital into high-risk, zero-to-low-return assets. In Michael Lewis's 2010 book "The Big Short," he describes in great detail how a binge in investments in mortgage backed securities imploded the entire US economy. In his account Lewis offers a rather unflattering description of bond traders and financiers as individuals driven by hubris and arrogance which seem to be essential character traits for anyone to manage billions of dollars of assets, but that necessary overconfidence often makes them blind to their own weaknesses and susceptibility to hype and to herding behavior. In the case of traders of mortgage backed securities, the hype of phenomenal annual returns trumped the substance of how risky those investments really were given the housing market's ever increasing reliance on borrowers with questionable credit histories. Not everyone was fooled, and the "odd-balls" who anticipated the eventual collapse and made millions as a result are the protagonists of Lewis's story.

At the risk of sounding like I fancy myself as one of Lewis's odd-balls and know more than the market, there is a sense of something similar going on in Mongolia. I can't figure out if the Mongolian government, the bond market, or both are being fooled by hype or are making savvy investment choices. International traders desperate for new high-return places to invest capital seem to have convinced themselves that Mongolia is a relatively safer bet than other more established places in the world.2 This confidence strikes me as odd for a few reasons.

The first is that the market panicked in December when the Mongolian People's Revolutionary Party (MPRP) threatened to quit the coalition government due to the row over former president Enkhbayar's appeal of his criminal conviction on corruption charges.3 The market seemed to take this political theater as a direct threat to Mongolia's credit worthiness, which to me was a surprising reaction given that MPRP's participation in the government is more beneficial to MPRP than to the ruling Democratic Party (DP). There are more independent members of parliament than seats needed for the DP to form a government and it is hard to perceive any political upside for MPRP to move into the minority opposition, so the threat was hallow to say the least. This reaction made it seem as if the traders in these bonds are literally learning about Mongolia as they go along or their confidence in Mongolia is extremely fragile.

Fragile confidence seems like the better explanation because the ratings agencies Standard & Poor's and Moody's issued cautious valuations of the bonds rating them BB- and B1 respectively which essentially means the bonds come with a significant risk of default.4, 5 Moody's sums it up best by pointing out to investors that political considerations such as MPRP's theatrics are not material to Mongolia's credit worthiness at this point (something they wrote in a special release after the panic) and fundamentals like successful development of the Oyu Tolgoi and Tavan Tolgoi mines, more transparent and consistent investment laws, and an economy diversified away from mining are more important factors to consider in extending the government credit.6, 7

The second reason is that the Mongolian government also seems to be either figuring things out as they go along or demonstrating overconfidence in the country's political institutions. The government has been criticized by the opposition Mongolian People's Party (MPP) for not having a clear plan on how to spend the funds now that the government has received them.8 Prime Minister Altankhuyag has responded on behalf of his government that there is a plan in the works and a "Policy Council," which he will chair, has been formed to ensure proper use of the funds.9 To me this is a far more frightening bit of news than the market scare brought on by MPRP. In the highly partisan and depressingly opaque environment of the Mongolian parliament, the current government has introduced USD 1.5 billion of revenue without a binding and clear statutory authority for how it should be spent. The government of Mongolia seems to have a tremendous amount of faith in the political system's ability to produce a good outcome here. Moreover, the list of proposed projects for the revenue, which includes development of an industrial complex in Sainshand, expansion of the railroad, development of Tavan Tolgoi, and a potential subway system in Ulaanbaatar among other things,10 is shockingly broad when viewed in the context of reality. Just take the fact that Oyu Tolgoi (a single project) has required about USD 6 billion in financing thus far and it still has not begun full commercial production, and it is hard to imagine USD 1.5 billion going very far on the government's wish list.

I keep thinking of James Bond as being the model for policy here. In the movie Casino Royale, MI6 agent James Bond finds himself in a high stakes Texas Hold'em game attempting to take terrorist financier Mr. Le Chiffre to the proverbial cleaners. If Bond can take the pot, then maybe MI6 can blackmail Le Chiffre into giving up his clients. The game is full of suspense and cinematic mainstays such as bluffs, lucky hands, and reading an opponent's "tells." James Bond is cool. He's in control. The one thing Bond most definitely is not, because it is totally uncool, is a planner. He's a visceral in the moment kind of guy with impeccable instincts. Paperwork? Yeah, right. Let the nerds back in London handle that. Bond acts in the moment and he acts big. When you watch James Bond in action you always have confidence he'll emerge victorious.

The Mongolian government made its own high stakes gamble with the Chinggis bond offering, and the fly by the seat of the pants approach the government seems to be taking with the bond offering gives the impression that we're all supposed suspend our disbelief and have similar confidence in the Chinggis bonds as we do in James Bond. The government's track record with managing large investment projects is not encouraging thus far (consider Tavan Tolgoi and the "100 Thousand Neighbors" project just to name two), and it is not entirely clear there are nerds competent enough back in Ulaanbaatar to establish effective plans and clean up if things go terribly wrong.

Returning to Michael Lewis's book, one of the factors that contributed to the housing market bubble was that lenders began relaxing their standards to lend money to borrowers previously viewed as too risky. The basic process that allowed this to work for a time was that new borrowers drove up demand for housing which drove up prices so that even bad credit risks could always borrow or sell their way out of a loan due to the increased value of their home. It all began to crumble when new borrowers became harder to find, demand for overpriced housing began to drop, and borrowers began defaulting in historically large numbers on loans that they could no longer refinance their way out of. The lenders who offered these loans have been described as "predatory" because in retrospect it appears they worked to convince people who were bad credit risks to take on loans they weren't prepared to pay back. But, in fairness, it is also arguable that both sides of the transaction had deluded themselves into thinking the loans were not risky at all because housing prices would always go up.

I am left wondering if the success of Mongolia's initial offering is true success or it carries a healthy portion of delusion along with a sprinkle of Bond-esque bravado. In other words, I am trying to understand whether Mongolia is a good bet because the government and bond traders have faith in Mongolia's ability to get the fundamentals right or whether the government and traders have more faith in their own ability to outmaneuver the suckers at the table and to be holding a winning hand when the game ends. As long as Mongolia's economy continues to grow, then it seems to be a game too tempting for both sides not to play. But, what about the country of Mongolia? There is no doubt that Mongolia has the mineral wealth in theory to make good on a its loans, but there is still considerable doubt it has the institutions and leadership to leverage that wealth effectively. It's great in theory that the government could raise so much money in one go, but whether it is great in practice remains to be seen.

The one thing that is essential is for the public and opposition parties to keep the pressure on the government to get things right. The government has decided to play a risky game, and they shouldn't be allowed to forget about their responsibility to make good policy. After all, it isn't really a game but rather people's lives and livelihoods they are responsible for.

Footnotes
1. "Mappying Global Capital Markets 2011", McKinsey & Company,
http://www.mckinsey.com/insights/mgi/research/financial_markets/mapping_global_capital_markets_2011, (accessed January 14, 2013).
2. Alex Frangos & Prabna Natarajan, "Mongolia Binges on Bond Bonanza", Wall Street Journal Online,
http://online.wsj.com/article/SB10001424127887324020804578147014152179412.html, November 28, 2012.
3. B. Khash-Erdene, "Mongolian Bonds Rebounds after Taking a Hit due Political Uncertainty", UB Post,
 http://ubpost.mongolnews.mn/?p=2165, December 10, 2013.
4. See "Mongolia's Global Medium-Term Note Program And Proposed Medium-Term Note Rated 'BB-'",
http://www.standardandpoors.com/prot/ratings/articles/en/us/?articleType=HTML&assetID=1245343678131, (Accessed January 14, 2013).
5. See "Moody's assigns definitive B1 rating to bonds issued under Mongolia's Medium Term Note Program,"
http://www.moodys.com/research/Moodys-assigns-definitive-B1-rating-to-bonds-issued-under-Mongolias--PR_261327, (Accessed January 14, 2013).
6. Ibid.
7. "Mongolian bonds: It's laws, not lawmakers, that matter, says Moody's", Business Council of Mongolia,
http://www.bcmongolia.org/news/2560--mongolian-bonds-its-laws-not-lawmakers-that-matter-says-moodys, December 13, 2012.
8. B. Khash-Erdene, "Prime Minister's Bond Policy Criticised", UB Post,
 http://ubpost.mongolnews.mn/?p=2422, January 9, 2013.
9. Alexandre Gelbard, "Mongolia's Infrastructure Priorities", Frontiers Capital,
 http://www.frontiers-capital.com/2013/01/08/mongolias-infrastructure-priorities/, January 8, 2013.
10. Ibid.

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Mongolia Jumps to Higher Category in Freedom House Political Rights

January 16 (Julian Dierkes, Mongolia Today) Mongolia has always been evaluated as "free" by the Freedom House Freedom in the World report.

[Disclosure: I acted as a consultant to Freedom House on the report.]

With a focus on political rights and civil liberties, this status has acknowledged Mongolia's democratization all along.

Now, the rating for Mongolian political rights has been upgraded from 2 to 1 on a seven-point scale ("Countries and territories with a rating of 1 enjoy a wide range of political rights, including free and fair elections."), even though this has no impact on the overall "free" evaluation.

As the Freedom House report specifies, this change in score is largely motivated by the 2012 parliamentary election where registration and polling procedures have been upgraded significantly. "Among the [Asia-Pacific's] notable improvements, Mongolia conducted parliamentary elections that were deemed more competitive and fair than in the past." (http://www.freedomhouse.org/sites/default/files/FIW%202013%20Booklet%20-%20for%20Web.pdf, p. 9) Further details will come when the Mongolia country report is released.

While this change in the score is obviously entirely symbolic, it's significant in the year that Mongolia will be hosting and chairing a major meeting of the Community of Democracies.

Comparison

Other free countries that are judged 1 on political rights and 2 on civil rights like Mongolia are: Belize, Croatia, Ghana, Grenada, Hungary, Israel, Japan, Mauritius, Panama, South Korea, Taiwan.

Some scores in Mongolia's neighbourhood:

Cambodia PR 6 CR 5 = not free, China 7 6 = not free, Japan 1 2 = free, Kazakhstan 6 5 = not free (downward trend), Kyrgyzstan 5 5 = partly free, North Korea 7 7 = not free, Russia 6 5 = not free, South Korea 1 2 = free, Taiwan 1 2 = free, Tajikistan 6 6 = not free (downward trend), Turkmenistan 7 7 = not free, Uzbekistan 7 7 = not free

Methods

The Freedom House in the World Report draws on expert opinions in evaluating countries, rather than surveys or other indices. It is thus formally independent of the many global indices that I have listed for Mongolia as a "scorecard", but it is also self-avowedly more subjective. The narrative report that accompanies the scores does spell out the context in which any changes to scores have been made.

More on methodology.

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Link to Freedom in the World 2013 report

 

Mongolia: The situation of human rights defenders working on mining issues

December 5 (Forum-Asia) An international fact-finding mission was organised by Asian Forum for Human Rights and Development (FORUM-ASIA) and its member organization in Mongolia, Centre for Human Rights and Development (CHRD), on 30 July-5 August 2012 to investigate the situation of human rights defenders (HRDs) working on human rights violations in relation to mining activities in Mongolia, with the view to address the restrictions, violations and abuses imposed against HRDs by State and non-State actors. The fact-finding mission spent two days in Airag soum, a fluorspar mining settlement in Dornogovi province, and four days in the Mongolian capital Ulaanbaatar.

Please click here to download the PDF file.

For further information or inquiries, please contact:
Asian Forum for Human Rights and Development (FORUM-ASIA)
Ms. Saartje Baes (HRD Programme Associate)

Email: hrd@forum-asia.org

Centre for Human Rights and Development (CHRD)
Ms. Erdenechimeg Dashdorg (Human Rights Strategic Advocacy Programme Coordinator)

Email: chrd@mongolnet.mn

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U.S. media brings glitz to increasingly urbane Mongolia

January 16 (AFP) Every time a new Mongolian-language edition of Cosmopolitan magazine is released, Tselmeg Erdenkhuu sits down with a friend to explore a monthly dose of Hollywood gossip, glitzy fashion and scintillating sex.

"They talk about sex a lot in this magazine, like what position is healthy or how to make men go crazy," said the 28-year-old businesswoman, a single mother.

The titillating revelations are just part of a US media invasion of the once remote country, which has ridden a globalisation wave since shaking off communism two decades ago.

Mongolians are avid readers and the country's literacy rate is over 97 percent, a legacy of the Soviet-era education system which saw village boarding schools set up for nomads' children.

Even in the vast nation's distant grasslands herdsmen are to be found reading crumpled two-week-old newspapers inside their felt-covered yurts.

With its economy roaring on the back of a mining boom that fuelled 11 percent growth last year publishers now see opportunities from targeting newly wealthy Mongolians with premium-priced, Western-linked products.

Launched in December 2010, Cosmopolitan has built a circulation of 5,000 copies. National Geographic and, most recently, Playboy have since followed in its wake.

The US financial news agency Bloomberg set up a joint-venture television station in Ulan Bator in October, aimed at the city's emerging financial kingpins and ordinary people looking for advice on what to do with their free government-issued shares in state-owned mining companies.

With the rapidly shifting economy, fast urbanisation, major infrastructure projects and environmental threats, the Mongolian-language National Geographic is also making an impact, despite its steep cover price of MNT20,000 ($14.40).

"Many people are concerned about nature and how it can be preserved while we simultaneously develop our economy," said Khaliun Tseven-Ochir, the general manager of Irmuun, which publishes both National Geographic and Cosmopolitan.

"Through National Geographic we can influence our country's leaders to avoid the mistakes that have been made in the past. Our readers expect us to raise these issues," she added.

The Mongolian version of Playboy has also found its way to supermarket checkout stands, selling some 3,000 copies of the inaugural October edition.

Racy images of Kim Kardashian and Mongolian model Sarnai Saranchimeg were the primary selling points and for those who buy it for the articles, there were interviews with Ulan Bator mayor Bat-Uul Erdene and actor Jack Nicholson, plus a profile of the late Steve Jobs.

"Before we launched most people thought that Playboy is just porn. But we are challenging that perception with intellectual articles that will help keep our Mongolian men informed," said editor-in-chief Bolormaa Natsagdorj.

Mongolia has 2.75 million people spread across an area half the size of India, and its media landscape is as wild as its physical one.

The new magazines compete with dozens of local publications, many of them trashy tabloids filled with sex scandals, soft porn and yellow journalism, often with unsourced facts.

Some owners of major daily newspapers — which do not do not reveal circulation figures, but are said to sell 5,000-8,000 copies — have family or friendship links to top politicians.

But the arrival of US media can only raise local reporting standards, said Khulan Jugder, a journalism instructor at the capital's University of the Humanities.

"Mongolian media stations are all private and politicians own many of them. So they can't inform in an unbiased way or make objective programmes," she said.

Cosmopolitan and Playboy split about 50-50 between locally produced and US content, while National Geographic is mostly translated. Around four hours a day of the Bloomberg television programming is local, and the rest translated from Hong Kong.

For now they are more emblematic of a social transformation that is already seeing young, upwardly mobile Mongolian women challenging traditional norms of dating, career choice and lifestyle.

Mongolia's Minister for Culture, Sport and Tourism, Oyungerel Tsedevdamba, 46, seems to epitomise the changes. A Stanford graduate and one of nine female members of the country's 76-seat parliament, the Great Hural, she has moved up the ranks of government with positive energy, a can-do attitude and an array of fashionable trouser suits.

Cosmopolitan "certainly helps our young ladies and girls gain confidence in themselves", she said. "Women need to share their secrets of success, beauty and strength. Sisterhood is a natural need of every woman."

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21 cable television channels fail inspections

January 16 (news.mn) The Information, Communication, Post and Technology Authority held a press conference on Mongolian cable TV channels on Tuesday. 

The Communication Regulatory Commission conducted inspections among 42 cable television channels on January 11th. The inspections were conducted jointly with the Information, Communication, Post and Technology Authority, the Communication Regulatory Commission, the Authority for Fair Competition and Consumer Protection (AFCCP) and the General Police Department. The Authorities took the decision to close 21 cable television channels based on the results of the inspection. 

According to law these cable television channels should have been closed or suspended, instead they were given warnings to amend their failures until March 1st. 

During the press conference officials of the authorities warned to the cable television authorities if there are no changes and corrective actions taken for the failures by March 1st, the channels will be closed down or activities suspended.

Officials refused to announce the 21 cable television channels. The conclusion of the inspection is based on the record of violations of law as follows: violating copyrights law, airing illegal advertisements, or airing programs with pornographic or criminal content. 

The inspectors also took into consideration whether the televisions main programs take up 80 percent of the total programming for a week. 

Currently 44 cable television channels are operating in the City, 21 out of these failed during the inspections. There are a further 40 channels that have been granted rights and want to have a license said B.Balgansuren, the Chief of Communication Regulatory Commission. 

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Speaker Enkhbold initiates discussion on adding Mongolian to Google Translate

January 16 (news.mn) Speaker Z.Enkhbold initiated a suggestion for Mongolian language to be included in "Google translate" by launching a poll via Twitter. 

To research the suggestion, on Wednesday, the Speaker met IT experts and exchanged views on the possibilities of Mongolian language being an option in Google translate.

At the start of the meeting the speaker read out mail by Battulga, Software engineer at Google. 

Battulga encouraged the speaker`s poll via Twitter and sent a mail exploring Mongolian language possibilities in Google translate. He said in the mail that Google Translate does not apply grammatical rules, since its algorithms are based on statistical analysis rather than traditional rule-based analysis.  

If Mongolian language is accepted in Google translate, it can help the reader to understand the general content in English, Russian and Japanese language text, but it does not always deliver accurate translations. 

Experts say the service requires the number of paragraphs, or range of data that will be translated into popular languages. 

Therefore officials exchanged their opinions on Mongolian language in Google translate using Bolor-toli.com and News.mn websites. 

T.Jadamba, the Head of the Information, Communications Technology and Post Authority of Mongolia (ICTPA) was given the duty to be in charge of holding a meeting with IT experts and establishing a working group to take action on the issue.

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Mogi: this law would require high ranking officials' spouses of foreign nationality to take up Mongolian citizenship. This might affect Culture Minister Oyungerel, her husband if not I'm mistaken is American

Draft anti-corruption law announced

January 16 (UB Post) Member of Parliament J.Batzandan announced yesterday that he has introduced a draft law that would restrict the rights of high-ranking state officials, in order to prevent corruption.

According to the draft law, state high-ranking officials, their spouses and children would not be permitted to have accounts in foreign banks, they would be restricted from investing in foreign companies, they would not be permitted to buy shares in foreign companies, and they would not be permitted to gamble. Moreover, the law would require high ranking officials who are married to foreigners to obtain Mongolian citizenship for their spouses.

J.Batzandan said in a statement, "This law would not be applied to all citizens. It would only apply to high ranking state officials. I am not requiring them to divorce, only to ensure their spouses obtain Mongolian citizenship. If these people can't meet such requirements, they can't dedicate themselves to Mongolia."

Mongolia currently has over 100 high-ranking state officials. These include the members of parliament and high-ranking civil servants. If the law is adopted, officials will be given a period of three months to comply with the requirements under the law.

The following is the interview with MP J.Batzandan.

-You intend to limit some rights of the high ranking state officials. What are the restrictions?

-Currently there are around 100 high ranking political officials in Mongolia countrywide. Majority of them are ministers and chairmen. The draft law I have initiated includes the provisions to prohibit the state high ranking officials to; possess real estate in foreign countries, to hold shares of foreign companies, to buy the stock and shares of foreign companies, to have a savings and bank accounts in foreign banks and to take loans from foreign companies. Moreover, the draft law prohibits high ranking state official to own; alcoholic beverage and cigarette producing companies under the name of family members or to hold shares of entities who import alcohol and tobacco. Gambling activities either domestically or in foreign casinos will also be prohibited as well.

-You said that for a high ranking political official to have a foreign wife or husband influences the national security of Mongolia. Does the draft law include a provision regarding that issue?

-In many foreign countries you have the right to serve in a high ranking position when you have a foreign wife or husband, in the case where their foreign wife or husband becomes a citizen of that country. For example it is demanded that a husband or a wife of a candidate in the election should be a citizen of that country also. Thus, I am conducting a public poll through Facebook and Twitter regarding this issue. Some people said that this is a violation of human rights of a citizen.

If sportsmen compete in international games under the name of the foreign country, he or she have to become the citizen of that country. Accordingly to fulfill that demand, the Mongolian shooting sportsmen G.Munkhbayar became the citizen of Germany. The draft law is not about dismissing him or her from the position. I just want high ranking state officials to respect their Mongolia.

In terms of a lawmaker, I think that the high ranking state officials should waive some of normal citizen's rights because they know state secrets of Mongolia. With this law I want to stop incidents of transferring capital and possessions that is earned in Mongolia overseas.

-The idea to have a foreign spouse is controversial and disputed among people?

-I am not demanding high ranking state officials who have a foreign spouse divorce, but I want them to become a citizen of Mongolia. If the draft law will be adopted it will be apply only to 100 people who are serving in high ranking state positions. The high ranking state official should understand that they are not an ordinary citizen.

-How many of that 100 high ranking state officials have foreign spouses and how many of them allocated their capital or assets overseas? Is there any survey on that matter?

-According to the information from citizens, high ranking officials of Mongolia have; private land in the United States, Ships in Jeju Island, houses in Hainan and have allocated great sums of capital in foreign banks. I won't reveal the private information to public but if the law is be adopted, these individuals will be given to these state officials to transfer money back to Mongolia.

-Are MPs promoting your draft bill?

-Many MPs are supporting the draft bill saying that it is correct in terms of the principle. Anyway, I received comments from the Independent Authority Against Corruption and I am waiting for comment from the Government. But, I face some attacks when I tell high ranking state public servants to stop casino gambling. High ranking state officials should enhance these standard of Mongolia.

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Former MP given suspended sentence for abusing officers during Enkhbayar's arrest

January 16 (news.mn) The trial for former MP Ts.Shinebayar, who is accused of causing abuse to state agents, was held at 9.00 am in Khan-Uul district court. Ts.Shinebayar was given the sentence by the judges panel. Former MP Ts.Shinebayar was given a one year suspended sentence for forcefully resistance or threatening to use force against state agents during and obstructing their duty, according to Criminal Law article 230.1.

The incident occurred during the arrest of former president N.Enkhbayar by the Anti Corruption Authority (ACA) last April.

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E. Bat-Uul: Convenient public transportation would solve many problems

January 16 (UB Post) Ulaanbaatar City Mayor E. Bat-Uul was interviewed recently regarding the actions he took in 2012, including the actions to improve traffic flow and improve safety in the city.

-You were credited as a Person of Note in 2012. This is believed to have been because of the actions you took as a Mayor in 2012. Tell us more about it.

-In 2012 there were definitely many things of note in Ulaanbaatar. For the first time in 22 years, the Democratic Party of Mongolia won the majority in UB. If we include the time of communism, it was the first time in 90 years that there had been a change, with a different political group finally seizing control of the government. Once we took up our duties, we wanted to do a lot in a short time. Among the numerous problems we could see, we first tackled UB's traffic congestion. This is not a problem of vehicles, it is a social issue. Now we are even taking a different approach to transporting children to school – we plan for school transportation to be united under one system.

When we talk about health and safety, the first topic we should discuss is children. It makes no sense to talk about public safety when we still haven't secured the safety of our children.

In Japan, students in elementary school are not taken to school by their parents – it is prohibited by law. When children go to school, they should not feel the differences in society. Here children are either ashamed or proud of their parents' vehicles when they are taken to school – but they should not be exposed to the harsh differences of life. So we decided to create one transport system for all school children.

-I remember that the idea to use buses to take children to school was not supported by the members of the State Great Khural.

-That's right. That was very unfortunate. I want to ask the members of parliament to please change their minds on this. They feel it is unnecessary because their generation did not travel on school buses. But we should all leave the lifestyle of the past behind and join the standards upheld by the majority of the world. As a mayor, I strongly stand by my view to transport elementary school children to school by bus. But when we calculated the costs of such an operations, it added up to a lot of money. Even if we decided to transport only a portion of the children, and only to schools that are located far away, it would cost 10 billion MNT each year. Of course, this money would come from the taxpayers. So we will decide this issue by taking a poll among the city residents. Around 80 percent of the city's budget comes from residents' taxes. So we plan to ask the residents whether the city should spend a certain amount of their money on transporting school children.

If it is accepted, a large part of UB's traffic congestion problem would be solved. Parents would also be able to work in peace. Recently the city government proposed that the Ministry of Education and Science give elementary school children a longer winter vacation. This is the reason that traffic in the UB streets has reduced greatly in the past few days. Parents were no longer taking their children to or from school.

We also have another idea. We believe it would be effective if we build kindergartens and schools near where young children live. Then children could simply leave their homes and immediately enter their schools just next door. To show a practical example of this we are about to build a kindergarten for city government officials. Parents will be able to take their children to kindergarten right before going to work, and then take them home with them when they go home from work. Having the kindergarten next door would mean they could even eat lunch with their children.

-Where will this be built?

-Just near here. We will repair and rebuild an old kindergarten. I don't think that only city government officials' children will attend this kindergarten. It will be built in such a way that parents could also eat with their children at the kindergarten. I will be making changes to certain regulations, such as special permissions and permits for kindergartens so that governments and private entities can build kindergartens under their ownership. The land will be issued by the city.

-It is a good idea.

-Yes. Another idea is that I don't think it makes sense to have primary, secondary and high school students attending the same school. Older students in high schools can often be generalized as "broken," meaning that they smoke and they fight. They are not great role models for the very young. They are a very bad example for young, innocent children and these young children can be led to do bad things.

Foreign countries have a system in which schools are separated depending on age. I think Mongolia should adopt this system as well. Additionally, a child's characteristics, success and future depends a lot on his or her teachers. In other words, a young child's teacher should be somebody with knowledge and skills specifically focused on younger children. So it is also correct to assume that we will need an education center to prepare teachers like these. I think their salary should be higher than that of high school teachers, to reflect their extra training. Then parents can do their jobs in peace, with the knowledge that their children are in safe hands.

-Is the restriction of buses to the first lane really helping to reduce traffic jams?

-In modern times, we have strong views about discrimination between the rich and poor. We should be avoiding discrimination. In Japan, even if you are a billionaire you still sit and travel in a public train just like other citizens. But in Mongolia we have this idea that only the rich live on the upper side of the river while the poor should live on the other side. This is a very poisonous idea and negatively affects our unity, so we should reject this kind of thought. When we thought up the idea to allow only buses to travel in the first lane, traffic congestion was not the only problem we had in mind; we also wanted to address the issue of unity. Wealth is purely for private desires. It should not be for showing off or making others feel bad.

We also plan to make sure that buses travel on a strict schedule so people don't need their own car to get to where they want to go. If buses are strictly scheduled and arrive right outside or very close to people's homes, people would happily take buses. In Paris, there are electronic cars that can read smart-IDs of people, so people can conveniently get to their destinations. It applies to bicycles there too. The public is strongly supportive of this.

It is not easy to manage cars anyway, there are many tasks involved, such as changing the oil, to say the least, in addition to many expenses. If public transportation becomes more convenient, all these concerns would be removed.

-When will the number of buses increase? It appears that there are so many complaints over waiting for buses in the winter cold.

-Yes, the number of buses is very low. We will increase the numbers. This year there will be 200 new Japanese-standard buses coming into the country. We plan to bring in more buses under the Japanese contract in the future.

-So we are no longer taking Korean buses?

-According to a survey conducted by the Public Transportation Authority, Korean buses seem to have a shorter lifespan. So we prefer Japanese buses. Also, Japan proposed that if we support their private companies, Mongolia could have funding to have auto parks renovated. Some companies have already begun such projects.

-There are talks of banning vehicles with steering wheels on the wrong side. Tell us about this.

-We conducted a poll on this. An overwhelming number of people were against this. But I proposed that we would restrict such vehicles only on Sundays. I think nearly everyone was against this because we did not make ourselves clearer and state our reasons for this. I think we need to explain this issue more.

The reason we wanted to ban vehicles with steering wheels on the right-hand side, was that we have too many traffic jams in UB. We have 200 new cars joining the traffic every day. This is enough to create a traffic jam long enough to reach the train station from the Ministry of Foreign Affairs. If we wanted to keep the level of traffic jams at a steady level, we would have to build a proportionate amount of roads every day to accommodate 200 more vehicles. Our driving regulations state that our vehicles' steering wheel should be located on the right side of the road (the left side of the vehicle). Drivers themselves wanted to "follow driving regulations," but according to the polls it seems that majority of them are against this. In this situation we do not have the authority to change the rules. The government intends to ban the import of right hand drive (RHD) vehicles – if people need to change their already owned RHD vehicles, they can be compensated. So we will probably have another poll on this matter.

Additionally, we want to change the way bus tickets function – for example, one would need only one type of ticket to travel in one particular direction. We are looking into this scheme at the moment.

-Why do we have to make this decision? Could this be some sort of business for someone?

-People tend to make up things when they hear something like this. There is nothing like that. This is nothing – some cities have a day when they are not allowed to drive any vehicles at all.

-About half of the Mongolian driving population drives RHD vehicles. They say that if a decision like this is made, the Democratic Party will not be in control of the government again after the next elections.

-I know it is a politically risky decision. I want to be a mayor just like any other mayor but being elected is not the only reason I took this office. I just want to improve UB, with better regulations and rules. In the past years we had been going on without any rules or boundaries and now we have forgotten what those are. I simply want to reorganize them.

-Isn't limiting vehicles by their license plates enough?

-The number of cars is increasing daily, so it is not as effective. The traffic jams are worse than we imagined – they are reducing the overall efficiency of our society.

-You tend to make huge decisions all of a sudden. What other decisions will you be making in the near future?

-With the help of the city, I will change the principals and presidents of the schools in UB. I will make this decision based on the opinions and votes of the parents of the students. The parents should evaluate the work of the schools their children attend. We need to change the heads of schools based on this.

-How will you choose the next ones?

-A special commission will be employed and will choose four to five teachers that can be elected to the top office of each particular school. The parents of the students will make the decisions. This is an initial plan, but we have not decided upon this yet.

-Generally, aren't school directors mostly in retirement or someone who has been in that school for many years?

-Yes. About 30 percent of school principals are of retirement age. Then there are people who are still employed by the school even if their initial contracts have expired. We will separate school administration from politics. We will no longer appoint school principals based on the political party that won the elections.

-Is the Minister of Education and Science supportive of this?

-This is just an initial idea. I will talk to the Minister of Education and Science once the regulations have been passed.

-I heard that ger district construction projects are starting soon. What can you tell us about this?

-Yes. We will begin work on six different areas that already have access to engineering lines (sewers, electricity, etc.)

-What locations are they?

-Places like Gandan, Zuragt and others. But the projects are not limited to these locations – any ger district location that wants to have an apartment building, we will reach them. Since ger district families own the land they live on, they have more rights. They propose what they want to us, and we will find the funding or the investor for that. The previous government did not treat them right – they forcefully took their land and built apartments on them. The people should not need to face that kind of pressure – they should decide what to build on their land, whether it is an apartment building or a house.

-Does that mean they will give up their land and buy an apartment?

-No. It means they will have a free apartment. This is the part where many get confused. Say I have a piece of land. An investment company comes and offers to buy this land off of me. So I tell them, "in return for this land, build me a house. Or give me three rooms in your new apartment building." If the company does not accept my terms, I do not have to give up my land.

-So how will the investor benefit from this?

-They can make a lot of profit. If they can manage to obtain some land from families, they can build a service center or office space that they could rent or sell. They can collect pieces of land from many families to get a larger one and once the building is built, whoever contributed to the territory gets a share of the completed building. I think people would like that. I think they will be prepared to give up some land for an apartment or a house.

Also, the State funds the construction or connection to the main sewer or power system to companies contributing to the renovation of ger districts. This is because that system will end up under the control of the State.

-Will there be tender bids then? When will this start?

-For example, if Jiguur Grand gets the right to construct buildings in a ger district, they will have the duty to build kindergartens and construction sewer lines from the center of the city too. So both the company and the people benefit from this. As a result, the city will benefit from this too. This project, which benefits all three parties, will begin very soon.

Recently we had a meeting with 40 large construction companies at which we discussed our plans. We are also talking to foreign investors. Before, construction companies simply wanted to build something for themselves – now they need to cooperate for better opportunities. If they want to help improve the ger districts, the city will support them as much as it can.

-What are the concerns over land?

-It is not easy to collect plots of land – but will we finish it. We are currently dealing with problems that have to do with land permits. We are separating and classifying construction projects based on the permits they have – heating, construction, electricity. We have nullified all the rights to buildings that did not have permits. We have one luxury building without a permit, but it would cost MNT 1.3 billion to take it down. So instead of taking it down, we are thinking that we could house nearby residents in it. There are also buildings without permits that need to be demolished. This is because these buildings do not meet standards for a safe building – they are falling down and collapsing by themselves.

-How many of them are there?

-We do not have the total number yet. We are officially warning residents about this issue – please be aware and don't buy any property that does not have a permit or and do not give loans to construction projects that have not acquired the necessary permits. We warn that if you do so, you will be responsible for your own expenses. If you're a bank trying to loan someone money for construction or a person buying property, please inquire with us about the situation and check with us whether the building project has permits, or if there are any problems at all. So yes, concerns over land permits are dire at this time.

-You don't sound confident about resolving these issues.

-We have seized over 40 properties. All these problems are escalating and now we are facing a lot of parties in court.

-There are warnings and threats against people who make rapid changes. Do you face such problems?

-Yes, there have been many threats against me. But I have been hearing these things since the 1990s so I have great tolerance for them now.

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Turkish schools are selected best high schools in Mongolia

January 14 (Ihlas Son Dakika via Hizmet News) Mongolia selected the bests of 2012. Turkish schools that have served in the country for 18 years took the first place among high schools. The world wide Turkish schools, which are founded by philanthropists, keep being popular. The Turkish schools in Mongolia were founded in 1994.  More than 3000 students have graduated so far. Students from all segments of the society get education at these schools.

On the occasion of the 850th birthday of Genghis Khan, the bests of 2012 were selected throughout the nation. The Turkish schools were selected as the best high schools.

There were 60 different categories and 650 institutions such as schools and hospitals competed in the contest. Turkish schools took the first place in the best high school category and took the second place among all institutions.

Turgut Karabulut, the director of the  Empathy Education Foundation, received the prize on behalf of Turkish schools at the award ceremony in Ulaanbaatar, the capital of Mongolia.

SourceIhlas Son Dakika January 14, 2013

DisclaimerThe original news is in Turkish. Slight deviations from the original meaning may have occurred due to the difficulties in translating phrases and idioms. PII volunteers translated the article.

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Misc

Mogi: the Rolling Stone Magazine journalist who spent some time playing pro basketball in Mongolia in the 90s, was head of Montsame's English division, thought was an interesting read

Matt Taibbi Interview

August 27, 2007 (A Tiny Revolution) --

A while back I spoke to Matt Taibbi by phone. Technical difficulties prevented me from getting to it immediately, but here it finally is. I can't claim it's timely now, but Taibbi was just as entertaining as you'd expect.

Taibbi's latest piece for Rolling Stone, "The Great Iraq Swindle," is here. His new book Smells Like Dead Elephants: Dispatches from a Rotting Empire, is coming out in October.

How did you start wanting to write?

Well, I was a real nerd growing up and moved around all the time, so I read a lot. I went through some really bad times. Books were my only friends.

Then sometime in high school teachers made me aware I had some ability writing-wise. And since I didn't really have anything else going for me personally, especially after high school, I basically locked myself up in my room in my late teens, doing nothing but writing fiction, plays, all kinds of crap, and all of it sucked. I was always really into funny writers. My heroes were mostly all Russian, although I was a big fan of guys like H.L. Mencken and Saki and Evelyn Waugh, too. But eventually I went to Russia to study Russian. That's how I ended up staying there.

I've pretty much wanted to be a writer since I was thirteen or fourteen, but mostly by default, since I was clearly not qualified to do much else.

What Russian writers in particular and what other funny writers did you like?

The books I read when I was really young were things like Catch-22, some Waugh books like Decline and Fall, then Fear and Loathing, all the Hunter Thompson stuff, Woody Allen, etc.

And then somebody turned me onto Nicholai Gogol when I was about seventeen -- the first thing I read was his story "The Nose," and then I read "Dead Souls" about forty times before I was twenty. He was my hero. For the longest time I just wanted to... well, not to be Nicholai Gogol, because he was an insane and miserable boot fetishist who ended up becoming an overbearing religious bore before starving and bleeding himself to death with leeches, but to write like that anyway. But you should see how pathetic it is when a modern American tries his style.

From then I started reading all the other Russians, guys like Bulgakov, Tolstoy, Leskov, Babel, Zoshenko, etc. Among the modern guys I liked Trofimov and Dovlatov, both of whom were really funny. The Russians have so many funny writers, a lot of people that don't really get read here in the states -- people have this image of Russian writers being these guys who write these huge, baggy, pretentious novels that you need 300-page Cliff's notes for, but it's not like that.

How did you get to Russia in the first place?

I left after my junior year at Bard. I basically finished my studies at the University of Leningrad. I went over there and I just didn't come home.

So you're now fluent in Russian?

Yes. I'm also trying, unsuccessfully, to learn Thai.

I don't know what Thai sounds like, but it's a real cool-looking language.

I can't pick it up at all. Their alphabet looks like noodles to me.

There's something about Russia that captures a certain kind of person from elsewhere. What is it?

It's really hard to put your finger on it. There's definitely a certain kind of person it agrees with. The Russian way of looking at life—there's a real what-the-fuck element to living there. Everything in America is so strict, the rules are ironclad, you know. There are always forms to fill out. If your credit card is overdue it won't work. Your life is regulated by these ironclad structures that are part of being part of a rule-based society where everything works.

Whereas Russia... Russia is completely dysfunctional. Everyone's sort of equally miserable at all times. There's a real carefree, completely chaotic atmosphere there that's appealing. They have this expression there, na avos, or avos prenesyet, which means "avos brings"; to do something na avos means to do it and just basically leave the matter of whether it will work out or not in the hands of fate. Roll the dice, avos brings the answer. Like once, for instance, I quit my job and moved to Mongolia na avos. Just didn't really think about it beforehand at all. The whole country is run na avos.

In the States, there's so much pressure on a person to succeed, to not fall behind, to not be a loser. Whereas in Russia, except for the very few super-rich, everybody's a loser. So you don't feel so bad.

Solzhenitsin said something about that after he came to America. He said that here, a person who has horrible dandruff or picks their nose constantly would be immediately sanctioned by society...but in the Soviet Union, he'd be part of the group. Everybody got to be part of the ongoing Russian enterprise.

Yeah, though that's changing now, especially in Moscow. But in the old days it was like: who has a cool car? Nobody has a cool car. Who has nice clothes? Nobody. Everyone is... the Russian expression is "v govne," which means "in shit."

There's an expression in Russian, "sovok" which roughly means a Soviet mentality. The literal translation of the word refers to a tiny shovel you use in a sandbox. There is a legend about a Soviet film director who was getting drunk in a sandbox with some friends of his in the seventies; completely wasted on vodka, he picked up the little shovel and said, "But all the same, gentlemen, we all of us live v sovke [in the shovel]." The story, of course, is total bullshit, means nothing, and certainly has nothing to do with the origin of the expression sovok. But placing so much stock in this long-winded, idiotic, totally fictional story is very sovok in itself. I'm not explaining myself very well, but whatever. Anyway, Putin is draining the life out of sovok a little, which is too bad.

That sounds like a relief, compared to America. I think of somebody like John McCain, who does the most incredible groveling at the feet of Bush. My friend Mike thinks the Bush people are blackmailing him with something, but I think what they have on him is just ambition. He wants to be president. If you have a certain kind of ambition it just destroys you. People will do humiliating, grotesque things for ambition.

They'll drink their own pee.

Whereas...

If you know everything's hopeless, you won't bother. Then you can just get on with enjoying being alive.

Do you know that thing Hunter Thompson wrote about the bull elk? He wrote this thing bout how it's normally the craftiest animal in the forest, and normally you can't get within 2,000 yards of it without it bolting. But when it's in heat, the town drunk can walk right up next to the fucking thing. It's just so horny that its judgment is completely clouded. That's how he described politicians. I always liked that.

How did you end up playing basketball in Mongolia?

I played basketball in Mongolia in 96. I'd been working in Moscow and I played a lot of street basketball and I ran into this Mongolian kid who told me there was a Mongolian basketball league called the MBA -- the Mongolian Basketball League.

So I just packed up my shit, na avos like I said, and got on a train and moved to Mongolia. I got a tryout and I ended up this team called Altain Burgid, which means "Mountain Eagles." I played there for a season.

The only reason I left is because I got sick. Otherwise I'd probably still be there. I got pneumonia and had to leave the country to be treated. Mongolia was great, but its health care system nearly killed me. At first their doctors thought I had bronchitis, and their idea of treatment was a sort of Buddhist acupressure thing. That didn't work. I started coughing up blood a few weeks later and ended up being airlifted out of the country.

Actually that wasn't the whole story. In the latter stages of my illness I continued to play in the basketball league, despite the fact that I was losing ten pounds a week or so. At one point I caught an elbow in the mouth and had three of my teeth shattered. Then in another game I got scratched in the eyeball, which left my left eye completely blood red. Meanwhile I had long before shaved my head and grown a goattee as part of this Dennis Rodman look I was trying for on the court. So by the time I left I had pointed fangs, a bald head, a bloody eyeball, and I weighed about 50 pounds below my usual weight. When I finally got off the plane at JFK I looked like Nosferatu. Incidentally the one tooth the Mongolians did fix, they fixed using cement, like industrial cement. So I had a cement top front tooth. It was a dark, almost pencil-gray color. It ended up exploding in my mouth on a chicken bone. I went for a long time without a date after Mongolia.

Have you ever read Roald Dahl's memoirs? I bring it up as an example of horribly mistaken medical treatment. One of his grandfathers fell off the roof of his house when he (his grandfather) was a kid and broke his arm. The town doctor showed up drunk, and was convinced that he had a separated shoulder, and his arm had to be put back in the socket. So he kept twisting the grandfather's arm...until it had to be amputated. He was Dahl's one-armed grandpa. It's a, uh, funny story.

I never read Roald Dahl, his books scared me, but I guess that makes sense. What is it about English writers -- they all seem to have mutliated aunts and uncles. Wasn't Saki's mother trampled to death by a cow or something?

Did you play basketball as a kid?

Yes, I grew up around sports. My father was a much better athlete than I was. I played everything when I was a kid.

Me too. I'm jealous of anyone who's ever able to get paid for paying sports.

I got paid once in a half-goat. That was one of our bonuses in Mongolia. And they split the goat literally right down the middle of its body with a saw.

And so it was then your responsibility to transform the half-goat into...?

Well, food or whatever. I was also working as the head of the English-language department of Montsame, which is the state news agency. So I just threw my half-goat out on the balcony at work. And since it never gets above minus twenty during the winter, the goat was fine. Then around the holiday season one of my co-workers got drunk in the morning and came up to me and asked me if he could have it, so he got the goat.

Well, getting paid in goats would be good enough for me. Just as long as I got something. For playing sports, I wouldn't mind getting paid in tadpoles.

What were the other people on the other team like?

Basketball is a really big deal in Mongolia. So even though I wasn't making a ton of money and it wasn't a real high level of the game, we had the lifestyle of pro athletes. Everywhere we went people would fawn over us. I also had my own radio show.

In English?

In English and in Russian. Almost everybody spoke Russian in Mongolia back then.

It was a call-in show. Our slogan was "Bringing the new steps to the steppes." It was the gayest thing of all time. I had no I idea how funny I wasn't.

But when we would go into a club...there was a guy on my team named Batzaya, the national slam-dunk champ, he was like the Michael Jordan of Mongolia. If you were rolling with Batzaya, you weren't going home alone. I remember once he and his girlfriend crashed at my girlfriend's place and he came in to our room in the morning and asked us both if we had been listening to him and his girl have sex the night before. It was very important to him that we tell him how long he'd lasted. I told him tav minute, five minutes. That bothered him for days. During the next game, in a timeout, he pulled me aside and said, "No tav minute! Arav [ten] minute!" But I held fast and said, "Tav minute." He yells back: "No Tav minute! Arav minute!" There are only like 600 people in the stadium, everyone could hear what we were saying. That was some seriously funny shit.

You know, I don't think I've ever met a Mongolian. There also aren't many Mongolians in movies. What do you look like if you're Mongolian?

Like a really muscular Korean. There's some Russian blood in there somewhere, but mostly it went the other way. That's why the Russians are sometimes down on Mongolia. They spent 800 years being raped by Mongolians. It's kind of funny actually. A lot of Russian women have these beautiful, big, exotic, almond-shaped eyes, and to most foreigners that makes them seem mysterious and alluring, but I look at them and I just imagine their great-great-great-great grandmothers being set upon on piles of oats by crowds of grunting Batzayas.

Anyway, the Mongolians are fantastic people. Drunken, but very charming. They have an advantage, which is it's so far away from everything else no one wants to travel the distance you have to go to get there. And there are no resources there that anybody really wants. There isn't too much interference by the outside world.

Yeah, the paradox is that being a country with lots of natural resources sucks. You get invaded every six minutes.

I remember there was great dread in Mongolia when it was thought that oil had been discovered there.

What do you eat in Mongolia?

Flour and meat, basically. I think the high point of my masculine existence was one night when I was sick and my girlfriend there cooked me an antelope steak. She was like, "Here you are, honey." I thought: it doesn't get any better than this.

She was Mongolian?

No, she was ethnically Indonesian. She worked in a Canadian aid program, teaching. Half the people in Ulan Bator were working for some kind of international organization like US-AID.

Do you have a list of the weirdest foods you've consumed while traveling?

Definitely. I've eaten horse penis.

I was in Kazakhstan. I honestly do not remember what the circumstances were. I was at dinner at somebody's house, in a situation where it would have been rude to say no.

Was it presented as a delicacy? You were the guest so you got the horse penis?

I was made to understand it was considered a really good food.

What did it taste like?

...please say, "Like chicken penis."

I don't think it had a distinctive flavor. But then there's kmuiss, both in Mongolia and Russia. It's mare's milk. It has a really foul smell, but you get used to it. It's also almost as alcoholic as beer.

I've also had dog soup, in Uzbekistan. I lived there for a while in my early twenties. Stalin moved a lot of Koreans there after World War II, so there's a huge Korean population in Taskent. I had a lot of Korean friends, and one night they made soup with dog meat.

I've always wondered about that. Which are the delicious dogs, and which are the dogs you should steer clear of?

I don't know. I'm sure I was eating low-grade dog. But I do know there are natural steroids in dog meat. So if you eat dog you'll bulk up like you're taking steroids.

So it's possible Mark McGwire has never taken steroids, but just eats a lot of dog.

I think Korean athletes actually have been bounced from the Olympics for that.

So after Mongolia you went back to Russia. How did you start the Exile? Were you ever scared of having people blow up the office? Were you scared of your advertisers being threatened?

Originally I was supposed to do this paper called Living Here, which was a competitor to the Exile. Basically I showed up in Moscow and found out it was a mess and bolted to the Exile instead. Ames was there already, he was there from day one.

I wouldn't say it was enormously scary. There was a situation once where I was working in a partnership with this Russian paper called Stringer. And the Stringer editor and I arranged to wiretap the phone of the Kremlin Chief of Staff. We bought off this ex-KGB operative to do that. And then we published transcripts of his telephone calls. That was a pretty dangerous thing to do. I was pretty nervous about that. I was actually out of the country when we first ran that. When I flew back into the country, I was detained on the way in, and I didn't know what for, and nearly shit my pants. It turned out the lamination on my passport was messed up.

There were some tight moments, though. The thing about Russia is you really never know. You never know when you're safe, and you never know when you're in danger either. Anything can happen.

Early on I had this situation with this pimp named Michael Bass, who made a fairly serious threat to my life. So I had to split town and negotiate safe passage back with some other gangsters.

My life has never been threatened. How is a death threat carried out?

In Russia they have this thing called a krysha, which means "roof." It's your mafia protection. I published this thing on this pimp, and he called me up on the phone and he said, "Matt, I don't know what to do. My roof wants to have you wacked, but I don't feel good about that. You know what I'm saying?" He didn't say "I'm going to kill you." He just let me know there was this discussion going on. And he's not sure how he's going to come down on the issue.

I went to the FBI after that happened, because this guy happened to be an American citizen. And I complained to them, saying that these guys were threatening me. Their advice was, "Observe normal safety precautions." I was like, thanks a lot! I remember the FBI guy like it was yesterday. I was telling him this story in the basement of the embassy, and he wasn't listening to me because he was enjoying a cold Diet Coke so much. It was like he'd never had a Diet Coke before.

What made you decide it was serious enough you wanted to leave town?

This guy Bass was in a lot of trouble generally. He was constantly borrowing money from people and getting in scrapes. He was always on the verge of getting killed himself—he was actually kidnapped a couple of times. He was a real doubledealing swindler-scumbag. And when he was in trouble he would often get so desperate... not having much experience with this sort of thing, I thought maybe that if he needed to prove himself to some other underworld figure, I could easily see how someone like me could become expendable.

So I left town and ended up talking to the people who were the real gangsters in the situation, and worked it out.

What was the case that you made to them?

To be honest, I don't even remember. It was something along the lines of, Michael's making threats and invoking your name. Again, that was a dangerous thing for Michael to be doing if that wasn't true. But they pretty much let me know that they didn't have any problem with me. Within a year I was having dinner with Bass. Hilariously, he stuck me with the bill.

Violence often has a self-limiting aspect to it. Your smarter gangster will only resort to violence when absolutely necessary. It's the real morons for whom violence is a first resort. For instance: the Bush administration.

Yes, well, that is why America is a doomed empire. You can see it so clearly in the Putin-Bush relationship. On the one side you have Putin, a self-made criminal genius, a guy who's had to learn to see every angle before they even happen in order to keep from getting shot on his way to the top. On the other side you have Bush, a total zero who fucked up everything he ever tried and ended up in the White House anyway. These other foreign leaders in the third world, the Putins and Musharrafs and the like, they're playing every hand with their own money. They understand the immediate physical consequences of failure. It has been a long time -- not since World War II, anyway -- since America has needed to be smart enough to protect itself from real harm. It has forgotten how to save its bullets for the real fights. And so it stumbles into this place and that, shooting out windows and randomly wrecking shit like teenagers playing mailbox baseball. Sooner or later that is going to come back and really bite us.

Link to article

 

--

"Mogi" Munkhdul Badral

Cover Mongolia

Email: mogi@covermongolia.mn

Mobile: +976 9999 6779

Skype: mogibb

 

 

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