Wednesday, January 9, 2013

[Wolf "prowling" for oil after PSC signing, BCM says draft minerals law hurts investment, and Draft Securities Law presented to speaker]

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WOF closes +1.5c to 12.5c with 899K volume today

Wolf Petroleum prowling for big oil in Mongolia, signs PSC

January 9 (Proactive Investors) Wolf Petroleum (ASX: WOF), formerly Strzelecki Metals, has signed a production sharing contract for a large 23,047 square kilometre exploration block in eastern Mongolia.

Sukhbaatar Block 27 is located in a region with proven and producing petroleum systems and is adjacent to Wolf's existing BU Block.

About 60% of the surface outcrops are Cretaceous aged with a high potential for source reservoir rocks at depth.

Historical gravity surveys indicate the presence of a large sub basin with a thickness of up to 3,000 metres and a potential petroleum "source kitchen" has been identified.

Currently, only two Chinese companies are producing and exporting oil on blocks adjacent to Wolf's Sukhbaatar Block 27 and BU Blocks. Production has increased eleven times over the last five years and the current proven reserves are over 2.4 billion barrels of oil.

Wolf plans to carry out an aggressive exploration program to complete its first three years of contract duties within the first year.

A geological and geophysical crew of up to 45 people is planning to commence the work program on site in January.

The PSC has a five year exploration period with two possible two year extensions and a further five year extension under government approval. A total of 14 years of exploration and up to 30 years of production are possible under the contract.

Wolf is now the largest petroleum exploration block holder in Mongolia with over 74,400 square kilometres held.

Link to article

Link to WOF release


YAK closed +0.9c to C$3.91 in last CNSX trading day

Mongolia Growth Group Ltd. to List on the TSX Venture Exchange on Wednesday January 9th 2013 

Calgary, Alberta CANADA, January 08, 2013 /FSC/ - Mongolia Growth Group Ltd. (YAK - CNSX),("MGG" or "The Company") is pleased to announce that the Company's common shares will be listed and posted for trading on the TSX Venture Exchange ("TSXV") at the opening of trading on Wednesday, January 9, 2013 under the symbol YAK.   The Company's shares will be delisted from the Canadian National Stock Exchange ("CNSX") following the market close on Tuesday, January 8, 2013.  In conjunction with the new listing, the Company's employees and executives will be ringing the opening bell for the TSX and TSXV on January 23rd 2012. 

Link to release


5 Questions With Harris Kupperman, MGG: Mongolia's Next Stock Going Up?

By Jon Springer

January 8 (Seeking Alpha) On December 24 and December 27, 2012, I published two articles calling a bottom and turnaround on the price of Turquoise Hill (TRQ) shares, a company I had previously been negative on. In these articles I mentioned that I believe all Mongolia related stocks would turn positive on the recent news cycle. Mongolia Growth Group (MNGGF.PK) has now moved to the front of the line of other Mongolian companies ready to move up with additional positive news.

After the market closed on January 4, 2013, Mongolia Growth Group announced that the company will be up-listing its primary Canada listing from the Canadian National Stock Exchange to the TSX Ventures Exchange (pending final approval).

Mongolia Growth Group's primary business in Mongolia is investing in real estate in Mongolia's capital of Ulaanbaatar. The thesis of the company is that a combination of factors will push the prices of central Ulaanbaatar property up dramatically in the coming 5 to 10 years. The two main points of this thesis are:

·         An economic boom on a scale with recent booms in Qatar and Kazakhstan over the last 20 years. Mongolia is at the beginning of a major mining boom. Mongolia GDP in 2011 was $8.5 billion. The largest copper-gold mine in the country (Turquoise Hill's Oyu Tolgoi), which starts production this year, will generate $6 billion per year toward Mongolia's GDP by 2020 (year 7 of production using conservative numbers with prices for copper and gold that are significantly lower than today). There are many other mines throughout the country that are being developed as Mongolia's resources are only now being discovered. Mongolia's population is only 2.8 billion people which means, according to Jim Dwyer of the Business Council of Mongolia, there is estimated to be over $330,000of natural resources in the ground per citizen. GDP growth and per capita income growth are going to rise dramatically which will push the price of everything, including real estate assets, upward.

·         Multiple pressures on the value of central Ulaanbaatar real estate. Ulaanbaatar is where roughly half of Mongolia's population lives. Most major shopping and services are in the city's center. The current infrastructure of the city services the center best. There are limited roads leading to the center which makes commuting to the center from a distance time consuming, and being able to live in the center is something people will pay a premium for. Today, in Ulaanbaatar's center, you can find Dior (CHDRF.PK), Armani and Louis Vuitton (MAGOF.PK) stores but there is not a McDonald's (MCD) or Starbucks (SBUX) yet. As the economy grows, more business are going to come in and want prime central commercial real estate: near the business district, near the shopping district, near the area with most of the night life, along the primary roads leading to the center; and all of these things are essentially in the same place.

I got in touch with the CEO of Mongolia Growth Group [MGG], Harris Kupperman, to ask him a few critical questions for potential new investors.

Link to full article


Commencement of mining delayed. GUF closes -3.5% to 55c today

Guildford: Mongolian Coal Production Update

January 9 -- The Board of Guildford Coal Limited (Guildford) (ASX: GUF) provides the following update in relation to progress of mining activities in Mongolia by its Mongolian subsidiaries at both the North Pit and East Pit in the South Gobi Coal Project.

Guildford remains confident of a successful 2013 with coal production and positive cashflow forecast from the South Gobi Coal Project. In the later part of 2012, there were some minor delays to the commencement of mining due primarily to the following factors -

·         Firstly, drilling in late November / early December designed to confirm the proposed location of the out of pit waste dump unexpectedly intersected coal in most of the drill holes all of which were expected to be barren. This drilling was designed to confirm that the out of pit dump was located so that no coal would be sterilised which is a requirement of Mongolian law. This positive but unexpected result caused a redesign of the dump location which required revised land permit applications and approvals.

·         Secondly, local Government (Soum level) elections were held and the approval of the revised land allocation permits were delayed whilst the permitting authority which includes the local Governor and local Parliament were decided. The new Parliament and Governor has now been elected and installed and land allocations made. The final coordinates are now to be agreed with the local Governor and these revised permits will then be presented to Mineral Resource Authority of Mongolian (MRAM) for ratification.

Mining contractors, Grand Power (North Pit) and Leighton (East Pit) are ready to commence operations once MRAM ratification is received and Guildford remains confident in delivering on production goals from both pits for 2013.

Link to release


Regal Funds Cease to Be Substantial Holder in Guildford – GUF, January 7


276 rises 19.5% since 4 January to HK$0.495 today

MEC: Poll Results of the Special General Meeting Held on 8 January 2013 and Completion of Subscription for HK$400,000,000 5% Convertible Notes

January 8, Mongolia Energy Corp. Ltd. (HK:276) --

The Board is pleased to announce that the Ordinary Resolution to ratify, confirm and approve (as appropriate) the entering into of the Subscription Agreement and the performance of the transactions contemplated thereunder by the Company was duly passed by the Independent Shareholders by way of poll at the SGM held on 8 January 2013.

The Board is pleased to further announce that all the conditions precedent under the Subscription Agreement have been fulfilled and the Notes were issued to the Subscribers on 8 January 2013.

Link to release


Daye Non-Fer (00661) unit satisfies Mongolian arbitral award

[ET Net News Agency, 7 January 2013] China Daye Non-Ferrous Metals Mining (00661) said its subsidiary agreed to transfer its 55% equity interest in Reservoir Moly to Nomin Deposit LLC (the Mongolian JV partner) in order to satisfy the arbitral award that the mining right to the Aleinuer Mine had to be returned to the Mongolian JV partner. 

China Daye Non-Ferrous said the transfer of mining rights has been prohibited under Mongolian laws. Since the key asset held by Reservoir Moly is the mining right to the Aleinuer Mine, China Daye Non-Ferrous' Mongolian legal counsel is of the opinion that the requirements of the arbitral award can only be satisfied through the transfer. (HL)

Link to article

Link to 661 release


Bestway Mongolia Update & Resumption of Trading

January 7, Bestway International Holdings Limited ( HK:718) --

Existing mining business

As disclosed in the Company annual report 2012, there was no active operation of the Group's mining business. In order to obtain a more reliable estimation for the development of the Mongolian tungsten resources, the Company has, in May 2012, engaged a qualified technical adviser for obtaining a resource estimation and to prepare a technical report on the tungsten mines based on international reporting standards, which is in line with the requirements under Chapter 18 of the Listing Rules. As soon as the Company has obtained the technical report, the Company will proceed with its fundraising exercise for raising additional funds for the development of the tungsten mining business.

Link to release (page 15)


BCM Says Draft Minerals Law Hurts Foreign Investment

January 9 (Bloomberg) Mongolia's largest business group representing foreign and domestic companies sent a letter to President Tsakhia Elbegdorj's office criticizing a proposed mining law that it says would "greatly discourage" investment.

The Business Council of Mongolia, in the four-page letter sent Jan. 7, also said the proposed legislation would "halt current minerals exploration and development" and "make the minerals industry economically non-viable." A draft of the proposed minerals law was released Dec. 5 by the president's office.

Mining investments by companies including Rio Tinto Plc (RIO), Turquoise Hill Resources Ltd. (TRQ) and SouthGobi Resources Ltd. (SGQ) helped fuel Mongolia's record economic expansion of 17 percent in 2011. That pace slowed as foreign investment cooled last year after Mongolia passed the Strategic Entities Foreign Investment Law, which gave the government more oversight of overseas companies.

The Business Council of Mongolia, founded in 2007, has 250 members including Rio TintoPeabody Energy Corp. (BTU), General Electric Co. (GE) and Mitsubishi Corp.. The group's letter on the mining law was publicly distributed yesterday.

The Office of the President of Mongolia didn't immediately respond to an e-mail seeking comment yesterday.

The proposed mining legislation would need to be passed by Mongolia's parliament for it to become law. Chimed Saikhanbileg, cabinet secretary, said the proposed law was drafted by the president's office and declined further comment.

Mineral product exports account for more than 90 percent of the country's exports.

Mongolia's economy grew 13.2 percent in the first half of 2012, according to the national statistics office (Mogi: Q3 was 10.2%). Expansion for the full year may have slowed to 11 percent, central bank governor Naidansuren Zoljargal said in October. The government has yet to release annual economic statistics.

Link to article


BCM Legislative Working Group's Memorandum on Draft Minerals Law sent to Mr. P.Tsagaan, Chair of the President Office

January 8, Business Council of Mongolia --

Dear Members,

BCM Legislative Working Group sent a Memorandum on Draft Minerals Law to Mr. P.Tsagaan, Chair of the President Office on 7th of January 2013.

Please click on the following links to read more about the letter and Memorandum on Draft Minerals Law:

1. BCM Minerals Law draft Comments detailed analysis

2. Cover Letter & Summary of BCM Memorandum

3. МБЗ-өөс Ашигт Малтмалын тухай хуульд өгсөн санал, зөвлөмж

4. МБЗ-өөс МУ-ын Ерөнхийлөгчийн Тамгийн Газрын дарга П. Цагаанд илгээсэн захидал  

Link to BCM


Mining Association Hosting Discussions on New Draft Minerals Law

January 7 ( Officials from the Mining sector are focusing on a new draft law on mineral resources after a new version of the mineral resource law was publicly announced. 

Due to the new draft law on mineral resources the Mongolian National Mining Association hosted the second discussion for member organizations on Thursday. 

Attorney B.Munkhtuya, the head of the working group that developed the draft law, introduced the concept and features of the new law and answered delegates questions. 

Attorney B.Munkhtuya said that the new mineral draft law is much better and more supportive for domestic companies than the previous law. 

The working group is still available to accept views and opinions from the public on the new mineral draft law and may submit them to the draft law. The Mongolian National Mining Association is responsible for establishing three main working groups that will consider public views and opinions and submit it to the working group for the new draft law, the PR working group and the survey working group. 

The attorneys who want to join the working group should give their names to the Mongolian National Mining Association before January 8th. 

Each working group will appoint their own head.

Link to article


Mogi: only found a Mongolian version of the news, although it was presented on the 7th. Following is the parliament press release

Үнэт цаасны зах зээлийн тухай хуулийн шинэчилсэн найруулгын төслийг өргөн барилаа

1-р сарын 7 (УИХ-ын Тамгын газрын Хэвлэл мэдээлэл, олон нийттэй харилцах хэлтэ) УИХ-ын гишүүн, Эдийн засгийн хөгжлийн сайд Н.Батбаяр Үнэт цаасны зах зээлийн тухай хуулийн шинэчилсэн найруулгын төслийг өнөөдөр /2013.01.07/ УИХ-ын дарга З.Энхболдод өргөн барилаа.

Үнэт цаасны тухай хуулийг 1996 онд, 2002 онд шинэчлэн найруулж Үнэт цаасны зах зээлийн тухай хуулийг баталж байсан. Сүүлийн жилүүдэд хөрөнгийн зах зээлд шинээр хувьцаа гаргах /IPO/ замаар олон нийтээс хөрөнгө татах явдал нэмэгдсэнтэй холбоотойгоор зах зээлийн хэмжээ өсч, хөрөнгийн зах зээлийн үнэлгээ 2009 оны эцэст 620,7 тэрбум төгрөг байсан бол 2010 оны эцэст 1329,9 тэрбум, 2011 оны 2 дугаар сард 3219,2 тэрбум, 2011 оны 11 дүгээр сарын байдлаар 2100,7 тэрбум төгрөгийн хэмжээтэй байна. Түүнчлэн компаниуд хувьцаагаа давхар бүртгэлтэйгээр дотоод болон гадаадын зах зээлд гаргах эрэлт, хэрэгцээ нэмэгдэж байгаа ч үнэт цаасны давхар бүртгэлийн асуудал одоогийн хууль тогтоомжийн хүрээнд зохицуулалтгүй байгаа нь уг хуулийн төслийг боловсруулах шаардлага үүсгэсэн гэдгийг хуулийн төсөл санаачлагч хэлж байгаа юм.

Хөрөнгийн зах зээлийн хөгжлийн чиг хандлагад нийцүүлэн үнэт цаасны зах зээлийн мэргэжлийн оролцогчдод тавигдах шаардлагыг нэмэгдүүлэх, анхан шатны үйлчилгээний стандарт, зохион байгуулалтыг сайжруулах шаардлагатай. Тухайлбал, 2006 оны байдлаар 25, 2010 оны байдлаар 51 брокер, дилерийн компани үнэт цаасны зах зээлд үйл ажиллагаа явуулж байсан бол энэ тоо 2011 оны 11 дүгээр сард 88 болтлоо эрс өсчээ. Энэ нь хөрөнгийн зах зээлийн эрэлт хэрэгцээтэй холбоотой хэдий  боловч одоогийн хуульд дээрх төрлийн үйл ажиллагаа эрхлэх тусгай зөвшөөрөл авахад тавигдах шаардлага төдийлөн өндөр биш байгаа гэдгийг салбарын сайд УИХ-ын даргад онцоллоо. Өөрөөр хэлбэл үндсэндээ 50 сая төгрөгтэй этгээд энэ төрлийн  үйл ажиллагааг эхлэх боломжтой байдаг нь хөрөнгө оруулагчдад учирч болох эрсдлийг нэмэгдүүлж байгаа юм байна. Үнэт цаасны зах зээл дэх улсын байцаагчийн эрх хэмжээ тодорхойгүй, хууль зөрчигчдөд хүлээлгэх хариуцлага  хэт бага хэмжээний торгуулиас хэтрэхгүй байгаа аж. Тиймээс уг хуулийн төслөөр Үнэт цаасны зах зээлд оролцох, үйлчилгээ үзүүлэх мэргэжлийн байгууллагын төрөл, бүртгэлийн үндсэн дээр эрхлэх үйл ажиллагаа, тавигдах нөхцөл, шаардлагыг шинээр тогтоож, нарийвчилсан дүрэм журмаар зохицуулахаар заасан байна. Мөн Төрийн эрх бүхий байгууллага үнэт цаасны зах зээл дэх бүрэн эрх, хууль тогтоомжийг хэрэгжүүлэх арга хэмжээний төрөл, хэлбэр, ялгааг заахаас гадна өөрийгөө зохицуулах байгууллагын эрх зүйн байдлыг тодорхойлж, тэдгээрийн бүрэн эрх, гишүүнчлэлийн асуудал  зэргийг тусгажээ.

Үүний зэрэгцээ Үнэт цаасыг нийтэд санал болгоход тавигдах шаардлага, танилцуулгад тусгах мэдээлэл, уг ажиллагаанаас үүсэх эрсдлийг бууруулахад чиглэсэн хариуцлага, мэдээлэх үүрэг, суурь үнэт цаасыг үндэслэн хадгаламжийн бичиг гаргахтай холбогдсон харилцааг нарийн тодорхойлсон хэмээн Эдийн засгийн хөгжлийн сайд Н.Батбаяр хэллээ гэж УИХ-ын Тамгын газрын Хэвлэл мэдээлэл, олон нийттэй харилцах хэлтсээс мэдээлэв.

Эх сурвалж


PM Altankhuyag: "Chinggis" bonds will be spent mostly on railroad

January 7 ( On last Friday's plenary session meeting of the SGH, Prime Minister N.Altankhuyag made a brief statement regarding the current political and socio-economic situation of Mongolia. Premier N.Altankhuyag provided information on the spending of the $1.5 billion sourced from the "Chinggis" Government bond.

The Premier also stated that the Government has established "Financial Intermediation Agreement" with the Central bank of Mongolia that will provide a financial management until the capital sourced from the bonds will be paid out in full.

In order to spend the Capital wisely and prudently, Policy Council was formed which is headed by the Prime Minister. Members of council includes Ministers of all Ministries of Mongolia, Office of the President, Office of the Government, Standing Committees of the Parliament, Governor of the Central Bank, Chairman of FRC, Speaker of the Parliament and Advisor to the Speaker.

The Premier noted that the Policy Council has sanctioned the following priority projects to be implemented at first.

The list of projects to be implemented by the fund sourced from the "Chinggis" Government bond:

-To construct a new railroad of 1800km
-To build paved roads to connect Ulaanbaatar city to centers of 6 Provinces
-To construct a railroad along the south of Bogd Khan Mountain
-To purchase new aircraft for MIAT company
-To build an industry on oil products
-Provide necessary investment into "Erdenes Tavan Tolgoi" LLC
-Provide necessary investment into "Baganuur" LLC
-To meet 100% of domestic demands in cement industry
-To develop local infrastructure of all 21 Provinces of Mongolia
-To build Sainshand Industrial complex in Dornogovi Province
-To construct a Underground Railway in Ulaanbaatar
-To construct power plants near large coal mines
(Other various projects are included in the list.)

Politicians and businessmen gave their advices and views on how to effectively use the 1.5 billion USD:

Prime Minister N.Altankhuyag: 

"Chinggis" Government bond should be spent to make the society better. We are planning epic projects like the 1800km railroad and connect the Capital city to 6 Provinces with paved roads. Feasibility study for the 1800km railroad project is completed and it requires significant amount of investment.

By implementing the new railway project we will easily export our mining products and have access to sea ports. Many have agreed on this proposal so far and other ideas are emerging. We are closely discussing on the listed projects and proposals.

Mongolian National Chamber of Commerce and Industry: 

MNCCI has summed up businessmen view on how to spend the "Chinggis" Government bond. MNCCI stated that the Capital should be spent on over 10 sectors including railway, road, energy, production of construction materials, construction and infrastructure.

Finance Minister Ch.Ulaan:

First priority is to implement the Energy project because of the shortage that we are having. It is very important to invest into a new power plant. He also noted that this kind of project takes about 5 years to give any return.

MP S.Ganbaatar: 

We have to pay back the 1.5 billion USD therefore we have to invest into production that will give us return starting from tomorrow. In my opinion, 60% of this capital should be invested into production, 30% to railway and roads and the rest (10%) could be spent on routine spending like refurbishment of old buildings.

Link to article


Prime Minister's Bond Policy Criticised By Opposition

January 9 (UB Post) Currently, the Mongolian government has 6.7 trillion MNT in foreign debt. In the last twenty years, the government has lent around three trillion MNT. On June 2012, the Development Bank released bonds worth 580 million USD and in addition to this the government has released bonds worth 1.5 billion USD last month.

On Monday, Members of the Mongolian People's Party (MPP) of Parliament, MPs D.Khayakhyarvaa, L.Enkh-Amgalan and J.Erdenebat informed that interest of the two loans combined total around 270 million MNT a day or in two days the amount of money equivalent to building a new kindergarten has to be paid, during a press conference.

Last week, the MPP established a task force devoted to monitoring the government's international and domestic spending of the money raised through government bonds and this was their first press conference. The task force informed that they did substantial amount of research since its establishment. They stated that though they have sent their evaluations to the Prime Minister N.Altankhuyag along with some questions, the Prime Minister did not provide the information asked.

The task force criticized that the statement the Prime Minister made at the parliament assembly such as "Bonds will not create debt pressure in Mongolia," and that the Mongolbank made financial management agreement with the government to circulate the bonds' wealth in the financial market to pay the interests with the profit, is false.

The task force reported that when they talked to the Head of the Mongolbank, N.Zoljargal two days before the assembly, he stated, "The government and Mongolbank did not make agreement to work together. The agreement project is being discussed."

The MPP members of parliament who organised the press conference expressed that they are not against the release of government bonds but are concerned about its correct use. They said, "Regrettably, the authorities are not openly informing the public, they are don't want to give the full information."

In regard to the potential pressure that might fall on the state budget when the 1.5 billion USD government bonds have to paid back, the Minister of Finance Ch.Ulaan said, "The responsibility of paying back the bond that was released with the purpose of investing and its interest is with the companies that acquired loans through the government. It is estimated that the state budget will not face pressure because economically beneficial projects will be financed. But, if the companies that received loans cannot pay them back, then the pressure will be on the state budget. Banks will be responsible for providing loans for financing projects and companies. By 2017, 500 million USD of the bonds will be paid back. The rest or one billion USD will be paid back within 2022."

The Prime Minister announced the list of approved projects where the bond money will be used on Friday's assembly that the Policy Council, which was formed to ensure the prudent use of the bonds' wealth, has sanctioned.

Link to article


MAK, SouthGobi, Shenhua-MAK Attends New Shivee Khuren/Ceke Border Gate Opening                                                             

January 8 ( New border gate with eight lines at Shivee Khuren in Mongolia and Ceke in China launched in January 5, with opening ceremony, which was attended by representatives from its co-founders; General Authority for Border Protection, General Customs Office, State Inspection Agency, MAK, SouthGobi Sands, Qinhua-MAK-Nariin Sukhait. The recent opening of new border gates between Mongolia and China exclusively for coal transportation will significantly increase coal export capacity between the two nations.

Coal was previously transported out of Mongolia at Shivee Khuren-Ceke through a single gate approximately eight meters wide, which would allow empty trucks into Mongolia in the mornings and loaded trucks into China in the afternoon. The new gates create a significant increase in the capacity as a number of gates will be available for simultaneous export traffic and two gates will be reserved for the inbound arrival of empty trucks such that a constant two-way flow of traffic can be facilitated.

Also the new gates at the Shivee Khuren-Ceke border-crossing eliminate a bottleneck, reducing costs for transport companies because of more efficient truck utilization for the transport companies. MAK, SouthGobi Sands and Qinhua-MAK-Nariin Sukhait have invested MNT 2 Billions to set up and equip the new gates.

Link to article


Mogi: gets some numbers wrong, but speaks a point I was saying all along as well, how could Rio be this naïve in the SouthGobi/Chalco fiasco. Interesting point where it says it was a deliberate test on China's part to test our China phobia levels.

Rio Tinto hits rivers of trouble in Mongolia's mines

January 9 (Leading Company) Rio Tinto: the very name is redolent of vast barren landscapes. Landscapes where trouble can appear out of nowhere. Its name in Spanish means Red River. For Rio Tinto this has meant red rivers of iron ore, red rivers of copper, red rivers of gold. Rivers, sometimes, of trouble.

While the company's executives bask in the friendly climes of London, Perth and Singapore, it is in Mongolia—one of those particularly unforgiving lands where the company digs up its treasure—that Rio has again orchestrated its own crisis.

At the start of the year things looked terrific. After years of creeping up the share register it had finally secured a majority stake in Ivanhoe, its Canadian joint venture party in what will shortly become Mongolia's largest mine: the Oyu Tolgoi copper and gold deposit. All it had to do was to secure an electricity supply from China, just across the border from the mine in the South Gobi Desert. Ten months later there are new laws in front of the Mongolian government which would raise royalties paid by all foreign mining companies.

In addition to that, Rio is being pressured by the newly elected government to change the Oyu Tolgoi shareholders agreement which splits the mine ownership 76-33 in favour of Rio (Mogi: funny, 76+33=109%). It wants a bigger slice sooner. And in something of a nasty coincidence, Sarah Armstrong– a 32-year-old Australian lawyer from Rio's Mongolian coal mining subsidiary SouthGobi Resources–has been the subject of ongoing interrogations by the country's anti-corruption agency, forbidden to leave the country for several months before her sudden release on Christmas eve.

It's far from the first time Rio's management team, under chief executive Tom Albanese, has shot itself in the foot. In 2009, after years of a distinct lack of management in its China operations, the chickens came a-clucking. Sometime during the previous decade, Rio took its most senior western executives out of China and handed off management and critical deal approval powers to local staff. Complaints about this poor governance decision from others in Rio's Shanghai office were ignored.

Rio had also left the chief salesman for northern China, a Tianjin man with an Australian passport known as Stern Hu, in the same job for more than a decade. More shoddy governance in an industry notorious for the too-cosy relationship between steel mills and salesmen. In July 2009, four Rio sales executives including Hu were arrested for bribery. Instead of keeping an eagle eye on its biggest market, Rio's Perth-based executives were happy to pocket their bonuses, despite gaping holes in the Chinese operations' systems and processes.

It was, according to former ambassador Geoff Raby (Australia's envoy in Beijing and in the thick of the case at the time), "management failure".

Rio's latest SNAFU goes like this: for many years Rio's been eyeing Mongolia's massive Oyu Tolgoi copper and gold deposit. The problem was Canadian company Ivanhoe had beaten it to the deposit. But as a top-tier miner Rio had ready access to the cash to develop a major mine hundreds of miles from a major city. It inked a management and operations agreement and in January finally wrapped its hands around Ivanhoe.

It took two months to complete all the transactions that would mean Rio could take control. That month it appointed Kay Priestly as the company's chief executive and changed Ivanhoe's name to the anglicisation of Oyu Tolgoi—Turquoise Hill. But there was a small wrinkle: Turquoise Hill also owned 51% of a small Mongolian coal miner called SouthGobi Resources (Mogi: actually owns 57.6%), its revenues about $300 million annually. Listed on the Hong Kong stock exchange (Mogi: also on TSX), it was a company with a future, run by Australian Alex Molyneaux.

But it was too small for a company as large as Rio to waste management time and resources on. Rather than wait, Rio decided to sell. After all, it had an eager buyer in Chinalco, Rio's largest shareholder and first port of call for any deals under a very close relationship the two have as part of Rio's charm campaign on China since the Stern Hu fiasco.

But there was a problem. And a big one. Mongolia has long lived in fear that China wants to take all its resources and maybe even the country. After all, its neighbour had already annexed what is now known as Inner Mongolia and with it millions of ethic Mongolian. A Beijing-backed state owned enterprise such as Chinalco was at the top of any list of buyers that any Mongolian government would be happy to see.

So this would be a test, perhaps deliberately set by China, to gauge just how much feeling there was against it. Management at Rio, SouthGobi and Chinalco had been told, quietly, the government was ready to do such a deal, welcoming Chinese investment rather than fear its financial and cultural hegemony.

But it seemed that no one at Rio had paid heed to recent history, taken the pulse of the man on the street or understood there was an election only three months away. Political groups immediately seized on the deal and it became the nation's biggest story. With nationalists in both main opposition parties–one only recently formed by ex-president Nambar Enkhbayar –the government was backed into a corner. Desperate, it drew up fresh foreign investment rules which handed more equity in any new project government. That was the end of the SouthGobi/Chinalco deal.

The election was won by a coalition of National Democrats (Mogi: just democrats) and the former president's new nationalist party. The winners kept the new investment rules and added extravagant fresh spending promises. Yet to keep those pledges, the Mongolian government is now staring into a fiscal abyss. Its only real option for raising extra revenue is from the companies– lead by Rio – which have caused it to be the world's fastest-growing economy in 2011 at a stonking 17%.

Rio believes it has a watertight shareholders agreement and investment agreement–a three-way deal between Rio, Turquoise Hill and the Mongolian government–but as Rio executives have privately admitted, the government can pretty much do as it likes although it could involve scaring away all but the most risk-happy investors.

The reason for Australian lawyer Sarah Armstrong's trouble in the corruption-riddled nation are murkier but it surely did not do her cause any good that that she had provided an extra lever on Rio.

Rio, as usual, points the faintly colonialist finger at the Mongolians. It is like most modern corporations– never to blame.

But it didn't have to be like this and arguably would not have reached this point if Rio had simply held onto SouthGobi until after the election dust had settled. Like the Stern Hu affair and the embarrassing Alcan fiasco, Rio's strategy in Mongolia for such a long time painstakingly executed switched to expediency. Not good enough. The company, time and again has shown remarkable poor judgment.

If you were a shareholder, you would wonder why the Rio Tinto board–certainly an improvement on the one that bought Alcan – allows this to keep happening.

Link to article


Mongolia's evolving foreign investment regime

January 9 (Julian Dierkes, East Asia Forum) In April 2012, Chinese miner Chalco launched a takeover bid for South Gobi Resources. (Mogi: SouthGobi)

The bid prompted the Mongolian parliament to pass a new foreign investment law distinguishing between bids made by private companies and bids made by state-owned enterprises (SOE) and introducing monetary thresholds for different kinds of reviews.

A large bid by a foreign investor or any bid by a SOE now triggers a review by parliament. In September, Chalco dropped its bid for South Gobi, citing the new law.

Mongolia's new regime is actually similar in its intentions to Australia's and Canada's in distinguishing private and SOE bids, but there is a key difference. In Australia or Canada, decisions on FDIs are made in the context of a stable and predictable regulatory regime; stability in the regulatory regime has not been a strong suit of Mongolian mining regulation.

Many non-Mongolians have focused on 'resource nationalism' to explain the new laws and to understand the detention of Sarah Armstrong, an Australian lawyer for South Gobi, until last week. Resource nationalism is generally equated with some evil movement aimed at the nationalisation of resource assets.

In Mongolia this claim is most commonly linked to the demands by some parliamentarians and parts of civil society that the Investment Agreement for the Oyu Tolgoi mine, jointly owned between Rio Tinto and the Mongolian government, be revisited.

But where foreign investors see resource nationalism, Mongolians see an attempt to preserve the resource wealth of their country and to reap its benefits for current and future generations.

Striking the appropriate balance between material needs, social aspirations, environmental and cultural protection, and financial rewards for investors is not easy. Jurisdictions that have had decades to arrive at appropriate mechanisms for these decisions are still struggling with these issues. Some have argued that the foreign investment law has led to a chill in FDI to Mongolia since its passage in May. Part of that slowdown is rooted in uncertainty surrounding the triggers for a review of foreign investments, particularly regarding SOE investments (Mogi: the 33% above government approval is the reason I'd say FDI dropped). But if a country is so dependent on mining for its future, is a slowdown not a reasonable cost to pay for more careful deliberation? The State Khural's decision to re-confirm the ban on new mining licenses in the last days of 2012 is probably a good decision in this context.

Still, there is some element of kneejerk nationalism in Mongolia and the Mongolian parliament. Some leaders ignore the fact that ownership of mineral resources does not necessarily automatically lead to profit. Mongolia needs some of the skills, technologies and capital that foreign investors can provide.

Nationalism scares foreign investors, who have a tendency to engage in herd behaviour, especially in the mining industry, making the perception of political risk potentially more critical than actual risk. This is especially the case for a place like Mongolia, where much of the information (including this discussion) relies on perception rather than measured empirical analysis.

Even so, the greatest hurdle to the development of a successful regulatory regime — one that would give Mongolians the greatest possible benefit while minimising social convulsions and environmental problems — is not political rhetoric. It is corruption. Mongolian decision-makers must be aware they have a responsibility to all Mongolians, not just themselves and their immediate social circles. In this year of a presidential election, hopefully anti-corruption measures will continue to be clarified further and pursued more vigorously.

Beyond the problem of public corruption, Mongolia still lacks capacity to make good policy. As the engine of the mining boom, the Oyu Tolgoi project, fires up and propels the country to what some are expecting to be another world-beating year of economic growth in 2013, Mongolian policymakers face challenges in all areas of government activities and social relations. Policy failures in these areas are more likely to hold Mongolia back than a lack of foreign investment.

So when the mining industry in advanced industrialised countries complains about governance and regulatory uncertainty in Mongolia, they need to recognise the country's limitations, but also acknowledge the difficulty of the struggle to balance competing goals in mining regulation. Investors should be especially aware that this struggle has taken a meandering path in their home jurisdictions as well.

There are lessons in the current discussions for Mongolia, to be sure. Mongolian policy-makers need to be more aware that the perception of regulatory initiatives abroad is often as important as the reality. They should also be thinking longer term when it comes to investments. The current boom won't last forever, and this generation should consider creating a sovereign wealth fund to carry Mongolia through leaner years in the future. Such a fund would seek to diversify its holdings internationally and would be regarded as a SOE in some jurisdictions. If Mongolian policy excludes some forms of such investments now, policymakers should not be surprised if they will be excluded in the future.

Julian Dierkes is Associate Professor at the Institute of Asian Research, University of British Columbia. He is the editor of Change in Democratic Mongolia — Social Relations, Health, Mobile Pastoralism, and Mining (Brill, 2012).

Link to article



January 9 (InfoMongolia) Ministry of Road and Transportation of Mongolia in collaboration with the Embassy of the People's Republic of China in Ulaanbaatar has organized a forum discussion themed "Developing High Profitable Eco Railroad" in Ramada Hotel, Ulaanbaatar on January 08, 2013.

At the meeting representing China, authorities of Inner Mongolian "Railroad Research Institute" LLC expressed its willing to be involved in new railroad up-building in Mongolia. Meanwhile, parties discussed how to establish an effective railroad infrastructure environmentally propitious and sharing with practices of world leading experiences suitable for Mongolian climate conditions, particularly for Gobi region.

Moreover, leading experts from China were present and at the conclusion of the meeting parties agreed to conduct a feasibility study for an eco-railroad construction and to deliver it to the Ministry of Road and Transportation of Mongolia near future.

Link to article


Mongolian Mutton Prices Surge on Higher Gas Prices, Says

January 8 (Bloomberg) The price of Mongolian mutton, the nation's staple food, rose 5.9 percent this month because of increased gasoline costs, news website reported.

Mutton prices have risen to 6,614-6,800 tugrik ($4.75-4.89) a kilogram, the news website reported yesterday, citing estimates from Jan. 2 that it didn't attribute. The price of a liter of gasoline has reached 1,670 tugrik, an increase of 50 tugrik since the end of last year, according to the report.

Mongolia's central bank at the end of last year gave the country's fuel importers 83 billion tugrik of loans after the companies said they may have to increase gasoline prices to as much as 2,010 tugrik, reported. As a result of the loans, gasoline prices rose by only 50 tugrik, the news website reported, citing O. Magnai, head of the Ulan Bator-based Authority for Fair Competition and Consumer Protection.

Beef prices have risen as much as 3.1 percent, goat meat has increased 3.7 percent and horse meat has gained 0.2 percent, according to Oil traded today near the highest level in almost four months in New York.

The price increase for gasoline was "reasonable," the report cited Magnai as saying. He was also cited as saying the cost for diesel and other fuels could see further increases.

Mongolia's long winters, dry climate and nomadic culture have largely limited the growth of crops, which has resulted in mutton become the cornerstone of traditional meals.

Link to article


Japan, Mongolia Sign Emissions-Reduction Pact

TOKYO, January 8 (WSJ) —Japan is making progress in its plan to bypass protracted United Nations-sponsored efforts to limit carbon emissions, signing its first bilateral carbon offset mechanism Tuesday.

According to the agreement Japan signed with Mongolia in Ulan Bator, the mechanism is intended to complement the U.N. Framework Convention on Climate Change, which last convened in Doha, Qatar, in December.

The pact is the first such agreement outside the U.N. framework, the Japanese government said. Japan seeks to expand markets for green technologies by signing bilateral carbon-offset pacts, while Mongolia is seeking to access those technologies.

Yuya Okuyama, the global warming policy director at Japan's environment ministry, said the country is also close to signing similar agreements with Bangladesh, Indonesia and Vietnam.

Japan has said over the past three years it was pursuing a strategy of signing bilateral pacts, as they can be more easily reached than multilateral agreements, such as the Kyoto Protocol. In December, signatories agreed to extend the U.N. climate change agreement through 2020, but this only commits a limited number of industrialized countries to cutting greenhouse gas emissions.

Emerging economies, with China at the forefront, have been resistant to any climate change mitigation commitments that would require them to reduce emissions. Meanwhile, the U.S. never ratified the U.N. climate change agreement, leaving only a handful of industrialized nations—including the European Union, Switzerland and Australia—with binding emission-reduction targets under the Kyoto Protocol. Japan agreed to the Kyoto Protocol extension, but refused to accept a binding reduction target, saying it wouldn't do so unless major polluters accepted similar obligations.

Under the Japan-Mongolia agreement, detailed rules of which have yet to be finalized, eligible emission-reduction projects would involve parties from both nations working to cut emissions in Mongolia. Carbon-offset credits would be awarded on a case-by-case basis.

Carbon credits earned from the initial projects won't be tradable at the outset, Japanese officials said. But in due course, Japan will seek to link the bilateral credits to carbon-trading programs that already exist in Japan as well as to international programs, such as the EU's Emissions Trading System, they said.

Japan is aiming to export green technologies used in major infrastructure projects, such as power stations and grids. Its export promotion targets call for sales of such equipment to hit ¥20 trillion ($228 billion) by 2020, double its 2015 target. It's unclear what level the new category of exports may have reached in 2012.

Mongolia is seeking to reduce its carbon-dioxide emissions by adopting green technologies. Meanwhile, coal, the most carbon-intensive fuel, is one of its major exports.

The Japanese government has financed 134 feasibility studies proposed by Japanese companies in preparation for the introduction of bilateral schemes. A few of these were been conducted in Mongolia, including a geothermal project by Shimizu Corp.

Link to article


Japan Signs First Bilateral Emissions Offset Pact With MongoliaUB Post, January 9


Mongolian delegation visits Israel to learn about treatment methods of contaminated soils

January 6 (Ministry of Environmental Protection, Israel) A delegation from Mongolia's Ministry of Environment and Green Development is hoping to take home practical lessons from a recent visit to Israel.

Staff members of the Mongolian ministry were here at the end of December, as guests of the Ministries of Environmental Protection and Foreign Affairs. Inter alia, the delegates were interested in learning from the Israeli experience in the fields of management and prevention of water pollution, as well as land rehabilitation.

Mining and quarrying activities in Mongolia have caused soil contamination and other environmental damage; the Mongolian delegates wanted to learn about treatment methods and about the laws and regulations Israel's Ministry of Environmental Protection is promoting in order to deal with these environmental issues.

The delegation met with officials from the ministry and from the Water Authority, as well as with representatives of companies that deal with land rehabilitation, biological treatment of contaminated soil, and treatment of other environmental woes. Site visits included the Shafdan Wastewater Treatment Plant and the Environmental Services Co., a government-owned company in Ramat Hovav under the auspices of the ministry. There, they learned about innovative facilities for the treatment of organic waste and solid waste.

The group also expressed great interest in further cooperation with Israel's Ministry of Environmental Protection on topics such as implementation of the Clean Air Act and an air quality monitoring system, and coping with desertification.

While Mongolia has the lowest population density in the world, it faces significant environmental challenges. The effects of desertification and climate change have damaged the ability of its grazing animals to survive, and has prompted a mass migration of Mongolian residents from rural areas to the capital city of Ulan-Bator. Today, 45% of the 2.75 million Mongolians live in the capital, which has registered a sharp increase in air pollution levels in recent years.

Link to article


Mongolia Eyes DPRK's Rajin Port Access

[The following is an edited version of a report from the Institute for Far Eastern Studies.]

December 11 (Cankor) North Korea is focusing on developing Rajin Port, located in North Hamgyong Province, with the aim of attracting more foreign investment.

China and Russia have already secured usage rights to the port's berths, and Mongolia has expressed interest in this endeavor, too. This indicates rising competition to use Rajin.

Mongolian parliamentary speaker, Zandaakhuu Enkhbold, met the DPRK's Supreme People's Assembly Chairman and Korean Workers' Party Secretary Choe Tae Bok October 19 on the latter's four-day visit to Ulan Bator, the capital of the Republic of Mongolia. Officials from both countries agreed on the future possibilities of bilateral trade and cooperation in the fields of information technology and human exchanges. Landlocked Mongolia expressed interest in cooperating for port leases, while Chairman Choe expressed enthusiasm for cooperation in the harbor and coal-and-metalmining industries.

The day after the two leaders met, the Choson Sinbo, a pro- Pyongyang newspaper published in Japan, directly reported on the results of the talks, reporting North Korea's positive reaction to leasing ports to the Mongolians. According to the newspaper, "Rajin Port is the most convenient access to the sea for Mongolia."

Mongolia's and North Korea's cooperation on Rajin Port fits the economic interests of both countries. Mongolia is interested in exporting coal and other minerals overseas, as the country is rich in underground resources such as coal, copper, gold, and uranium. However, these resources are costly to export since Mongolia has to rely on the Chinese and Russian railway systems.

Furthermore, once freight trains between Hassan in the Far East region of Russia and Rajin begin to operate, it will make it possible for Mongolia to transport coal directly to Rajin Port.

North Korea is most likely to lease Pier No. 2 and Sonbong Port to Mongolia, which are currently not being used by China or Russia.

Meanwhile, North Korea is looking for South Korean participation too in the development of Rajin Port. The Choson Sinbo reported October 21: "We (North Korea) sincerely want North and South to cooperate for mutual prosperity through communication and join forces to advance economic cooperation larger than that with neighboring countries."

Once inter-Korean relations improve and South Korea joins China, Russia, and Mongolia in the development of Rajin Port, other types of economic cooperation between these five countries is likely.

Link to DPRK Business Monthly Volume III, No. 11, December 2012


Mining Sector to Lead Economic Growth in 2013

January 7 (UB Post) In the last few years, Mongolia has enjoyed enormous growth in its gross domestic products (GDP) mainly thanks to the increased mining activity in the country. The Oyu Tolgoi project is expected to commence operations in their underground mine where majority of the wealth lies, which will boost the country's production to a new level.

The government has managed raise 1.5 billion USD through the release of the much publicised Chinggis Bonds, which will be used for infrastructure development. Government spending is bound to increase which will fuel inflation.

Inflation reached over 15 percent in 2012 while GDP growth decreased to around 13 percent which was 17.3 percent in 2011. Despite IMF's warning about decreasing spending, the government has plans for a large scale spending spree for this year to develop infrastructure through the bond money.

The Economic Intelligence Unit of Economic Group forecasts that Mongolia will be second largest economic grower in the year of 2012, mainly driven by mineral export to China.

Mongolia was one of the top economic growers, if not the top grower of 2012.

All of the above will play parts in oscillating the pendulum that is Mongolia economy, therefore we at the UBpost feel it right to let the country's top economic experts to have a say in what direction they think the economy of the nation will swing.

The following are the economic projections of Mongolia's top economists of this year.

Director of "Mongol" University and Economist N.Dashzeveg: GDP growth will be in double digits

-The fact that the Oyu Tolgoi Mines will commence operations next (this) year will significantly contribute in the increase our GDP. In any case, I think the growth will be measured in double digits. What will happen to coal price isn't certain yet. But, I think at least 20 million tonne coal will be exported. Though it is said that the inflation will be kept at eight percent, the possibility of this actualizing has not been seen. Tremendous amount of money flow is coming into the market; 1.5 billion USD. In such a case it is very difficult to keep inflation level at bay at eight percent. At this point, the government should have made the forecast for the next four years. This should be done by the Ministry of Economic Development. They should have made the projections for the upcoming ten years and introduced the projects they will implement in four years' time. Sadly, nothing has been revealed up until today. This shouldn't be going on like this.

Director of Institute of Finance and Economics of Mongolia, Economist B.Batjargal: The economic prospect looks very positive

-The economy looks positive. The shadow of the world economic recession didn't cast on Mongolia too badly. I think we can overcome such hurdles with the policy we form and implement. The reason I think this is because of the policies approved by the government that we are implementing and enforcing at the moment. The government has released 1.5 billion USD sovereign bonds. It is said that this bond will be used for infrastructure development and projects that will boost the economy. This is the right thing to do. Apart from this, the artificially created inflation that is on the market at the moment has to be stopped. Mongolia has begun to fight against, the falsely created inflation, price fixing and oligarchy market. The government and the Mongolbanks are taking avid actions to eliminate causeless price rising. If these actions are thoroughly execute, Mongolian economy need not fear inflation anymore. On top of this, if the bond money is spent not on social care and elimination of policy loopholes but rather on industrial development and infrastructure development, Mongolia economic prospect looks very good indeed.

Economist of Economic Study Institute of Mongolian National University, B.Tuvshintugs: Dependency on mining and mineral resource sector is likely to increase

-Mongolian economic growth is likely to be more than ten percent in 2013. The reason is that the Oyu Tolgoi is about to commence operations and the government is planning a major expansion in the budget. It is highly likely that inflation rate will increase as a result. For instance, it is very likely that it will venture beyond the aimed eight percent inflation rate. On the other hand, our nation will be more dependent on the prices of main goods sold on the international market. Our dependency will depend of copper and gold prices. Furthermore, since mining production will increase, our economy's dependence on mineral resource and mining will increase as well. Therefore it is important to set and follow a government policies that are suitable to the current condition. The policies should start by fitting the government bond project to the budget stabilization policy. More attention should be paid to separating government implemented projects from the monetary policy.

Member of Financial Market Union, Economist, G.Otgonjargal: Not just mining and mineral sector but travel, tourism and agricultural sector will expand

-The economy looks positive. Though foreign direct investment flows have been decreasing, the government bonds are making up for them. The commencement of large scale infrastructure projects is the main mover of the economy. The roads and construction sector is to expand the most, this means sectors that in relation to them will also develop and enlarge. Of course when Oyu Tolgoi begins operations and start producing copper, the exports will obviously boost the mining sector for sure. I think that, the travel, tourism and agricultural sector will experience substantial growth too. For example, enduring winter has become challenging and the chance of animals and live stocks dying in great numbers has become a very real possibility. Also the number of overdue loans by construction and mining sector from commercial banks is worrisome. It is estimated that GDP growth will be at least 10 percent in 2013. On top of this, if the production of Oyu Tolgoi and the boost it will have on the economy is added to the economic growth, the GDP could grow as much as 17 percent. Therefore, the GDP growth might as well beat the 17.3 percent of growth experience in 2011. I expect the policies to fight inflation rate will have some positive effects too.

Link to article


Mongolia Climbs 12 Spots in World Bank's Ease Doing Business 2013 Report

This page summarizes Doing Business 2013 data for Mongolia. The first table lists the overall "Ease of Doing Business" rank (out of 185 economies) and the rankings by each topic. The rest of the tables summarize the key indicators for each topic and benchmark against regional and high-income economy (OECD) averages.



East Asia & Pacific


Lower middle income

















DB 2013 Rank

DB 2012 Rank

Change in Rank

Starting a Business




Dealing with Construction Permits



No change

Getting Electricity




Registering Property




Getting Credit




Protecting Investors




Paying Taxes




Trading Across Borders




Enforcing Contracts



No change

Resolving Insolvency




Link to Mongolia's Economy Profile report

Link to Mongolia page


Singapore firm and Mongolian government create 'Medical Silk Road' to improve healthcare with mobile technology

January 9 (SGE) The Mongolian government has partnered with Singapore's Borderless Healthcare Group to improve rural healthcare through the use of mobile technology. The initiative is dubbed the 'Medical Silk Road'.

This partnership aims to give Mongolia's rural clinics access to mobile healthcare services, connecting them to medical services, expertise, and knowledge from around the world.

Announced by the firm today, the first plank of this Medical Silk Road will be the BabySmart mobile app, aimed at helping women achieve better health before during and after pregnancy.

The app gives them access to educational modules. They can also consult remotely with nutritionists, physiologists, and doctors from home, attend virtual yoga and aerobic workouts, and join webinars by gynecological experts.

The first phase of the private-public partnership commences in Q1 2013.

Mongolia is one of the fastest growing economies in the world. The emerging economy's GDP has grown by 17.3% in 2011 and 6.4% in 2010. However, 22.4% of the country's 2.9M population live below USD 1.25 a day, which is roughly equivalent to the Philippines.

The Borderless Healthcare Group is founded by Dr Wei Siang Yu. According to CNBC, the firm is a multi-million dollar player in the medical tourism industry. It has developed medical call centers, interactive health content, medical resorts, and consumer-centric health services.

Link to article


Mogi: these kinds of stuff is what scares me sometimes about living here

Government to regulate website comments

The Cabinet meeting reached a decision to create a system to control comments on websites during Saturday`s meeting. 

The Press Department of the Government reported that the Government reached a decision to establish a system with the purpose of making comment areas on web sites run smoothly and properly. The Government has tasked the Information, Communications Technology and Post Authority to design software and technical solution for the system and gave directions to the Communication Regulatory Commission to regulate a rule for news and domain web pages. The rule is designed to control insulting, threatening and criminal or immoral comments, and reveal suspects according to the citizens` complaints and take measures due to law. 

Though the Communication Regulatory Commission put a ban on some words in many web sites users are still able to comment using offensive words. Due to this aspect, some web sites are deleting comments.

Link to article


Mongolian News Websites Association oppose internet regulation

January 8 ( The Mongolian News Websites Association made a joint statement against the Government`s internet comment regulation to president Ts.Elbegdorj and Prime Minister N.Altankhuyag today. 

The Government passed a decree to establish a system to control internet comments during last Friday`s cabinet meeting. Mongolian press media groups see this decree as a violation of the Constitutional law. In the statement it says the Government of Mongolia, which is highly believed to be a country of mature Democracy, is regressing democracy by 22 years. 

Though the Government is trying to hide the real point of the decree by beautifully explaining to manage internet comments and set out proper use, the decree is designed to invade private freedoms of press media controls. Such action is a direct violation the right of free speech. 

Therefore the News Websites Association opposes the decree and has made a statement. 

Cyber media is a form of free speech and a platform for every Mongolian as Mongolia was able to keep  pace with the world with the help of Democracy in the 21st century. 

The ability to "comment" is a free tool for internet users to speak, express and criticize without any pressure presence. 

Many countries have tried to close, limit or at least control internet comments so far except for Mongolia. 

Countries that regulate internet insults and threats do so with expensive technological solutions.

Unfortunately the Mongolian Government does not want to find ways to solve the problems facing the cyber world by bringing into the world its own technology or by improving qualified staff.  Instead the Government tries to control the cyber world registering users ID and phone number data, allowing only users who are guaranteed by mobile operators and company's personal codes to leave comments, installing control programs on private websites. 

The Mongolian News Websites Association hopes that the Government will re-consider the decree that directly affects the citizens of Mongolia with the democratic president and the democratic parliament and make a rational solution. 

The Mongolian News Websites Association members are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Link to article


100 mothers to go on hunger strike to save Enkhbayar

January 8 ( A team of doctors appointed by the Ministry of Health conducted a check-up on former president N.Enkhbayar and came to the conclusion to transfer him urgently to the State Second Clinic. 

The City Prosecutor`s Office said that the transfer will violate an order by the Minister of Health and the Minister of Justice and Home Affair in 2002 making it impossible. 

The decree says "A convict who is sentenced for a serious crime is not allowed to transfer to the City or local hospital for medical treatment."

Therefore N.Udval, the Minister of Health sent a notice to Kh.Temuujin, the Minister of Justice to have the order changed in order to save N.Enkhbayar. 

The Health Minister N.Udval says the decree violates the human right to life. So she sent a petition to Kh.Temuujin, the Minister of Justice. 

The Minister of Justice has not made a statement in response to the petition. Therefore supporters and members of the Mongolian People`s Revolutionary Party (MPRP) have decided to take the next step.

According to a unconfirmed source, 100 women who are supporters and members of MPRP are planning to a hunger strike demanding the transfer of former president and head of MPRP N.Enkhbayar from prison to hospital. 

An unofficial source says that those 100 mothers will not gather at one place all at once. Instead, in groups of 10 will strike outside the president Ts.Elbegdorj`s home, State General Prosecutor D.Dorligjav`s home, State Palace, State and City`s Prosecutor`s Office, Statue to Political victims and the Court Decision Enforcement General Office and Detention center in Zaisan. 

The strike is expected to happen next week. 

Link to article


N. Enkhbayar's supporters demand his, January 8



January 8 (InfoMongolia) Minister for Mining of Mongolia Davaajav GANKHUYAG received the Ambassador Extraordinary and Plenipotentiary of Canada to Mongolia, Gregory Goldhawk on January 07, 2013.

During the meeting, two parts have conferred on Canada Labour Standards Regulations, particularly to introduce the affiliated law on Coal Mining Occupational Health and Safety Regulations into Mongolia. Also, it was exchanged views to collaborate on developing a particular project in order to accelerate the relevant studies on rehabilitation after closing the mine based on Canada experience.

Moreover, parties discussed to work together with Canada Stock Exchange to study its practices on issuing first securities by mineral resources affiliated companies and seek on how to boost Mongolian Stock Exchange activity.

Afterwards, Ambassador Gregory Goldhawk introduced briefly on upcoming Prospectors & Developers Association of Canada (PDAC) Convention 2013. PDAC International Convention, Trade Show and Investors Exchange is to be organized at the Metro Toronto Convention Centre in March 2013. Trade Show & Investors Exchange is the world's leading Convention for people, companies and organizations in, or connected with, mineral exploration.

Link to article


Strong opposition to proposed right hand drive ban

January 8 ( Citizens are not likely to support a regulation on the use of left hand drive vehicles on Sundays from 08.00 to 22.00.  The Governor of Capital City and Major of Ulaanbaatar, E.Bat-Uul initiated the regulation but the new regulation faces public opposition even before it is accepted. 

After a lengthy debate, it was decided to conduct a public poll based on the study in the city. 

The poll was launched through the City Information and Inquiry Center among the public for 30 hours on January 3rd from 12.00 pm. 

During the poll 98,802 citizens between 18-50 ages were questioned about if they supported the regulation to ban left hand drive vehicles on Sundays forbidding them from city traffic via SMS. Replies to the poll totaled at 18,644.

Almost 75 percent of the participants replied that they do not support the regulation to ban left hand drive vehicles (Mogi: right hand) from City traffic on Sundays. Only 4740 participants replied that they support the regulation. 

Only 6-8 percent of users participate in an ordinary SMS study but this time participation  rate was higher at 18.8 percent. 

Link to article


Mogi: I think the Minister of Transportation & Urban Development was elected to parliament from Baganuur. I'm not saying anything, but then again, I was born in Nalaikh, so ok, I'll shut up.

Proposed university town changed to Baganuur from Nalaikh District

January 9 ( A new university town had been planned to be built in Shiveetiin Khundii in Nalaikh district. The reservation of the university town construction made by the Ministry of Education, Culture and Science. 

But the location of the construction project changed  to Baganuur district instead of Nalaikh district. 

Due to the construction project 5 companies were selected in tender in the first quarter of 2012.  Currently those companies have done creating the topography with 1:500 scale, engineering and geological survey in the project site and environmental assessment. 

The Ministry of Education, Culture and Science announced a tender for feasibility study, overall plan and experts from Mongolia, USA, China, Republic of Korea made the general plan. 

And  it needs to expand 10000.0 hectare area approved by the Government to 20000.0 hectares. 

Therefore a suggestion delivered to the Government in order to expand approved area for the university town construction. 

Link to article


New land privatization bill drafted

January 9 (UB Post) A new bill has been drafted on Land Privatization for Mongolian Citizens. Journalists interviewed the Minister of Culture, Sport and Tourism, Ts. Oyungerel, regarding the draft bill.

-I heard that a new bill has been drafted on land privatization. How does it differ from the current Law on Land Privatization?

-The bill is very different from the current law. With the aim of explaining the differences and providing the concise information, we introduced the draft bill to the Mongolian Democratic Party first. We will soon introduce it to the Land Commission, which is led by the Prime Minister.

The sole purpose of the draft bill is to make sure that each and every citizen of Mongolia privatizes their land. It has already been ten years since the current Law on Land Privatization came into force. Yet, only seven percent of all Mongolian citizens have privatized their land, which means that the remaining 93% haven't enjoyed their lawful right until now. According to the current law, any citizen will be able to privatize their land after erecting a fence around their land. This is impossible for many groups of people such as children, the elderly, the disabled, and military officials and other workers who are appointed to other places. Around 93% of our citizens are not able to have their land added on a cadastral map and build a fence. With the new draft we tried our best to eradicate such issues and give equal opportunity for our citizens to privatize their land. Many unprecedented options have been introduced in the new bill. For example, there will be additional options for land privatization purposes. Under the current law people can only privatize land for family living purposes and therefore they take only enough land for building a house and don't seek more opportunities.

-Does this mean that not every citizen but simply whole families are privatizing land at the moment, in accordance with the current law?

-Yes. Say there's a family of five. Under the current law, once one member of the family privatizes a piece of land for family purposes, the other four members of that family are not able to privatize other land for family purposes. Therefore, we included an article in our draft bill that states that Mongolian citizen may privatize land for both family and business purposes. As a result, citizens will be able to privatize a part of the entity they hold a share of. Furthermore, the owner of the land for business purposes will not have to permanently reside there.

Also, now land is being privatized directly, but under the new draft bill citizens who haven't privatized their land yet will be provided with a land certificate, which is the first stage of privatization. Furthermore, they will be entered into a lottery for the area they are interested in privatizing, which will solve issues over where the land would be. In addition, citizens may use the certificate as collateral for loans or put it on the market. But the main aim of the draft bill is to provide a chance for every citizen to have their own land. According to our draft bill, an administration authority named the Land Corporation will be established that will be in charge of measuring, allotting and building pillars on land to denote that it is privatized land. The pillar will provide clear numbers and information on the privatized land on the spot.

-Does this mean that the Land Corporation will divide land into 0.07 hectares or will new measurements be introduced?

-The 0.07 hectares of land for every citizen will not change. The State won't obligate citizens to live on or build a fence around their privatized land. They are free to sell or exchange the land. But the pillar built by the Land Corporation will be property of the State. Legal Action will be taken against anyone who moves or damages pillars.

-If citizens will decide to sell their land, foreign citizens might buy it. Or only a few wealthy citizens may end up with most of the land. How will you manage such issues?

-The current law doesn't monitor whether Mongolian land is being privatized by foreigners. But if our draft bill is passed, a Land Exchange will be established alongside the Land Corporation. It would manage the land exchange affairs. If any citizen wants to sell their land certificate, it will pass through the Land Exchange. Information on what land is being sold or taken as collateral to which people will be received by the Land Exchange. But it won't store information about rent. If anyone sells their land to a foreigner, the state will confiscate the land immediately.

If our draft bill is discussed at the Parliament Meeting, members will be free to include their suggestions. Ts. Bayarsaikhan and J. Batzandan of our party have already expressed their willingness to include additional parts to the draft bill. Trade after the land is privatized will be managed considering the opinions of the party members. For instance, the maximum amount of land which can be privatized per person will be determined.

-If each Mongolian citizen privatizes their land, what percentage of our country will be privatized?

-Three percent of Mongolian territory will be privatized in total. When the land privatization began, the state planned to privatize maximum 3 percent of Mongolian territory.

-If the draft bill is passed, there seem to be many preparations to be made to enforce the new law. Isn't it right?

-Yes, many preparations will be required. The Land Corporation will be established and a team of professional engineers will be formed to install pillars. The pillar system will be a completely new system in our country. According to research, citizens spend between 1 and 5 million MNT on building fences. Therefore, the pillar system will save citizens money.

Link to article


Mogi: 10 years seems a little harsh for $100,000.

Malaysians sentenced to 10 years for credit card fraud in Mongolia

January 8 ( Malaysians who have been accused of committing organized crimes were called to Chingeltei District Court for credit card fraud on Monday. The trial for Won Jan Lun, Te Y Lin and Su Go Shi had previously been postponed twice because the State Prosecutor and interpreter failed to attend the Court session. 

The Malaysians Su Go Shin, Won Jan Lun and Te Y Lin were accused of committing organized crime by bringing fake credit cards to conduct fraud in Mongolia and are accused of causing 133 million MNT losses to the country in April 2012. 

Chua Cin Wi, Won Jian Lun, Su Go Shi, Chia Guan Sun, Khor Chi Tai and Te Y Lin pleaded guilty for the total of 133,064,678 MNT of fraudulent activity using fake credit cards. The accused were determined to have caused 43.6 million MNT damages to the Trade and Development Bank, 83.2 million to Golomt Bank and 6.2 million to Khaan Bank. 

Chingeltei District Court sentenced Te Y Lin to 10 years and 2 months in jail, Chua Cin Wi, Won Jian Lun, Su Go Shin, Chia Guan Sun and Khor Chi Tai to 10 years and one month in jail in maximum security prisons in Mongolia. The offenders also heard the Court decision to seize 1 million worth assets from each of them. 

Link to article


Mogi: Gantuya is the little sister of MP S. Ganbaatar, who's also still the head of Mongolia's trade union, who's also the MP who "won" or "lost", depending on how you look at it, the debate against Bayartsogt.

Oyu Tolgoi postpones trial for wrongful termination of employee

January 9 ( Oyu Tolgoi LLC dismissed staff member S.Gantuya who then had sued the company at Sukhbaatar District Court claiming she was fired baselessly

The trial was scheduled to take place at 9.00 am on Tuesday but a representative for Oyu Tolgoi LLC failed to attend the Court hearing. Instead, the largest project developer, Oyu Tolgoi LLC delivered a request to change the attorney. The trial was therefore postponed with no amended date. Attorney Urantsetseg had been the lawyer for the company. 

Mongolian citizen, S.Gantuya, claimed that there are unfair differences between foreign and Mongolian staff even if they have the same qualifications.  She explained that Oyutolgoi LLC dismissed her because she delivered a notice to the company stating that Oyu Tolgoi had failed to evaluate Mongolians working ability. 

S.Gantuya stated that Oyu Tolgoi LLC was campaigning its attorney against her, which means that the company is afraid of fair judgment.

S.Gantuya is to defend herself at the Court hearing because no attorney wanted to defend her during the case

Link to article


Mongolian friendship brings Houstonian into dinosaur case

January 8 (Houston Chronicle) Little did Houston attorney Robert Painter know that his decade-old friendship with the president of Mongolia would lead to unraveling an archaeological mystery worthy of Indiana Jones.

In a story that reads like a Hollywood script, Painter played a leading role - including flying to Dallas and New York over a single weekend ­­- to thwart the sale of a 70-million-year-old Tyrannosaurus bataar skeleton to a private buyer.

Although the rare skeleton was initially sold in May at an auction in New York, the transaction hinged upon resolution of litigation and ultimately was canceled after the U.S. government in June seized the bones.

After further investigation, Florida resident Eric Prokopi, the consignor who had placed the skeleton for auction, pleaded guilty Dec. 27 in federal court in New York to two counts of smuggling and one count of conspiracy.

Prokopi, 38, is scheduled to be sentenced in April and could end up serving up to 17 years in prison for his part in a scheme to illegally import dinosaur fossils from their native countries, according to a news release from the U.S. Attorney's Office for the Southern District of New York.

As part of his plea, Prokopi, who called himself a "commercial paleontologist," forfeited his claim to the Tyrannosaurus bataar skeleton.

Flew to auction

The remarkably intact set of bones looks like a smaller version of its Tyrannosaurus rex cousin, measuring about 30 feet long and 10 feet high, Painter said.

It was set to be auctioned May 20 in New York through Dallas-based Heritage Auctions.

Two evenings earlier, Painter received an urgent email from an adviser to Mongolian President Tsakhiagiin Elbegdorj. Could anything, he asked, be done legally to stop an auction in less than 48 hours in New York.

Painter flew into action. He got involved in the case through his 10-year friendship with Elbegdorj, whom he met at a conference in New Orleans, while Elbegdorj was studying at Harvard University's Kennedy School of Government. The two quickly hit it off and began collaborating on projects.

"We would have never thought of dinosaurs," Painter said, although in the past year he has learned that many of the world's dinosaur fossils are found in Mongolia's Gobi Desert.

On his quick trip to Dallas that May weekend, Painter met with state District Judge Carlos Cortez, who signed a temporary restraining order to halt the auction.

Then Painter jumped on a plane for New York to witness the auction, which he said included several hundred items but featured the dinosaur skeleton.

Despite the lawyer's multiple emails and faxes to Heritage officials to alert them of the restraining order, the event proceeded on schedule.

Judge on cellphone

Heritage Auctions President Greg Rohan said the company was caught in the middle of needing to protect consignors' rights and respecting the judge's order.

"The auction had been advertised worldwide for weeks," he said. "We never heard from the Mongolian people or Mr. Painter until literally 24 hours before the auction."

Rohan, who attended the auction, said he decided the best way to satisfy everyone was to announce prior to selling the skeleton that the sale would be conditional on the satisfactory resolution of pending litigation in the matter.

When the bidding began on the Tyrannosaurus bataar, Painter called Judge Cortez on his cellphone, stood up and said the proceeding was violating a restraining order.

At that point, Rohan said he ushered Painter to the back of the room, where the Houston lawyer handed his cellphone to Heritage's lawyer to talk to the judge.

The auction proceeded, with the skeleton bidding topping out at $1.1 million.

Painter said he continues to be involved with both the Mongolian government and the U.S. Attorney's Office for the Southern District of New York in the prosecution of the Tyrannosaurus bataar case and in an ongoing investigation of other dinosaur fossil smuggling.

Link to article



January 8 (InfoMongolia) Recent days, particularly approaching the Lunar New Year, traditional holidays of China (February 09-12, 2013) and Mongolia (February 11-12, 2013), small and medium business owners concurrently have been actively running its cross-border trade.

It was mentioned small and medium entrepreneurs, because most of these merchants doing business by exchanging the money in the form of cash. Due to the peak season of merchandizing, the counterfeit money in China is becoming a problem, fake money for some bills is being found not even in China, but also it was detected in big amount at the "Naiman Sharga" Currency Exchange Market in Ulaanbaatar recently.

Accordingly, the National Police of Mongolia released a caution regarding the fake banknotes of China Yuan (CNY) on January 07, 2013. It was warned to be cautions when exchanging the currency and advised to make transactions via banks or trusted financial entities. Moreover, to pay more attention and get familiar with the ways to detect some Chinese fake notes, especially 100 bill note.

Here is below some tips to follow advised by specialists.

1. The most effective way to detect a fake Chinese money is the watermark. Hold the bill up against light, a watermark of Chairman Mao is shown. The watermark on a real 100 CNY banknote is distinct while the watermark on a fake one is rather obscure.

2. The second way to detect a fake Chinese banknote is to scratch the hair of Chairman Mao. You can feel the hair on a real banknote. But on a fake banknote, the hair cannot be felt.

3. Another way to detect a fake bill is to see if there is a blue circle area below the 100, 50, 20 or 10 (shown below), you have to pivot the banknote horizontally and slowly.

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"Mogi" Munkhdul Badral

Cover Mongolia


Mobile: +976 9999 6779

Skype: mogibb

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