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Mongolia to Ease Investment Limit Amid Rio Tinto Dispute
March 7 (Bloomberg) Mongolia will ease limits on foreign investment that requires parliamentary approval even as it restricts overseas ownership in industries such as mining amid a dispute with Rio Tinto Group.
The threshold will be raised to 1 trillion tugrik ($715 million) from 100 billion tugrik, Foreign Minister Luvsanvandan Bold said today in an interview.
"Today at the cabinet meeting this issue will be addressed and there will be changes in the law in the near future so that the international community and investors will be happy," he said.
Mongolia, in the midst of a dispute with Rio over control of the $6.6 billion Oyu Tolgoi copper and gold project, passed a law last May restricting foreign companies from buying control of assets in industries including mining, telecommunications, media and financial services. The law blocked Aluminum Corp. of China Ltd.'s plan to buy coal miner SouthGobi Resources Ltd. (SGQ)
The change "will start the deal flow from investors, which has been stopped since last May," said Jim Dwyer, executive director of the Business Council of Mongolia, which represents more than 200 organizations and companies working in the nation. "Its good for the country to have foreign investment start up again after some nine months."
The Strategic Entities Foreign Investment Law required any deal worth more than 100 billion tugrik and involving the transfer of more than 49 percent of a Mongolian company to a foreign group to be referred to parliament for approval.
SouthGobi later came under Rio Tinto's control after the London-based company took a majority stake in the coal miner's parent company.
Jay Liotta, a partner at Ulan Bator-based Mahoney Liotta LLC, said the law still lacks clarity.
"The draft regulations and threshold increase do very little to address the substantive issues" in the Strategic Entities Foreign Investment Law, he said. "I remain cautiously optimistic."
Mogi: a bit cynical of the US I'd say. OT meets World Bank, EBRD standards but not the US'?
U.S. Abstains on Controversial World Bank Mongolia Mine Project
WASHINGTON, Mar 07 (IPS) - The United States has refused to vote for involvement by the World Bank Group in a massive but controversial mining project in Mongolia.
In abstaining, the U.S. representative cited concerns over the potential environmental consequences and an inadequate impact study of the mine plan.
The Oyu Tolgoi mine, a 12-billion-dollar project, is looking to massively expand copper-and-gold extraction in the South Gobi Desert. Its parent company, the London-based Rio Tinto, is currently fielding funding proposals from multiple international investors, including the World Bank Group.
If the four-billion-dollar expansion goes forward, income from the mine could make up a third of the gross domestic product in Mongolia, which has significantly expanded its mining sector in recent years. On Wednesday, Rio Tinto stated that it was on track to begin operations by June.
Criticism of the plan has been widespread, however, with local communities and international civil society warning that concerns are being pushed aside and that the World Bank's own safeguard guidelines are not being followed. It now appears that the U.S. backs some of this apprehension.
"[T]he United States' review of the Environmental and Social Impact Assessment (ESIA) for the project has raised concerns in a number of areas," a position paper, dated late February but publicly released this week, states.
"First, the United States believes the ESIA has gaps in critically important information, particularly related to the operations phase of the project and mine closure … Second, the ESIA does not provide a sufficiently detailed analysis of associated facilities and cumulative impacts."
In particular, the policy statement notes that the impact assessment, which currently focuses almost exclusively on the project's construction rather than its potential operation, covers this planned expansion "only lightly". (The U.S. Treasury declined request for additional comment.)
The document also draws attention to longstanding complaints from local herder communities, currently pending before a World Bank Group auditor. The U.S. says it is "keenly interested in the outcome" of this review.
Missing management plan
The U.S. position will not halt the funding proposal, which was greenlighted last week by the board of the International Finance Corporation (IFC), the World Bank's private sector arm. The institution will now work with Rio Tinto to decide on a funding package.
The IFC, which is reportedly offering up to 900 million dollars in loans for the project, is joined in its interest by numerous other multinational donors and investors. These include the European Bank for Reconstruction and Development (EBRD, which also approved a 1.4 billion dollar loan last week), the U.S. Export-Import Bank, Standard Chartered Bank and several others.
Yet the U.S. explanation for its abstention may now strengthen civil society recommendations on how to improve the Oyu Tolgoi project.
"Without valourising the U.S. government, what they have said on this project is important – they have made some very reasonable recommendations, many of which overlap with our own," Jelson Garcia, manager of the Asia programme at the Bank Information Center (BIC), a Washington-based watchdog, told IPS.
"The challenge is how these recommendations will be reflected in the loan agreement and in the updated management plan. Otherwise, it will be hard to hold the company accountable." (BIC has an extensive resource on the project here.)
As noted in the U.S. policy statement, one of the major complaints by critics is that the IFC only entered the Oyu Tolgoi project very late. By the time the IFC's required ESIA was filed, more than 90 percent of construction had been finished, and the assessment only covered the construction phase.
Nonetheless, when the project came up for a vote last week, as the United States noted, "the Boards of the IFC and EBRD [were] being asked to make a decision on this project without seeing the agreed commitments contained in the forthcoming Operations Phase Environmental Management Plans".
Extensive civil society analyses of the probable impacts of the full-scale operation are available, however. These detail the mine's intensive use of water in a desert area, as well as its plan to divert the Undai River, the major waterway in the area, which flows through the mine's planned open pit.
In addition, environmentalists are disturbed over a reported plan to build a 750-megawatt coal-fired power plant at the site, with which to power operations. According to a November brief prepared for the Sierra Club, a U.S. conservation group, this would contravene both IFC and World Bank Group guidelines.
Additionality
Last month, the IFC released an extensive public response to many of these concerns. It notes that the Oyu Tolgoi management has not made a final decision on long-term power sources, that the mine would be allowed to use only 20 percent of the water in a major local aquifer, and that the ESIA does include content on the mine's operation.
The response also points out that the nomadic herders are not formally considered indigenous peoples, and hence are not covered under more stringent safeguards.
The project "is compliant with our sustainability policy and environmental and social standards," the IFC said in a statement e-mailed to IPS. "The financing will not be concluded before certain key environmental management plans have been agreed to and publically disclosed. During the span of our proposed financing, IFC will actively monitor the project to ensure continued compliance with our standards."
Alongside, the Compliance Advisor/Ombudsman (CAO), an independent body charged with response to complaints from communities affected by IFC projects, has accepted two cases (here and here) stemming from the Oyu Tolgoi project, including one last week.
These relate particularly to the project's use of land and water, including the plan to divert the Undai River. "The complainants contend they have not been compensated or relocated appropriately, and question the project's due diligence, particularly around the issue of sustainable use of water in an arid area," CAO notes.
Both assessments are ongoing.
According to BIC's Garcia, such concerns raise questions about IFC's involvement in the project in the first place.
"Given that IFC is not a major source of financing for this project, the main argument from the institution is over the 'additionality' it brings, specifically its performance standards and requirements for environmental and social issues," he says.
"But we and many others have identified multiple flaws in exactly those assessments, even though the project has now been accepted. So the additionality here is highly questionable."
Mogi: what I have saying as well
Speculation: OT Dispute and the Budget
March 6 (The Mongolist) The silence is deafening in the Gobi. Not living in the thick of the Ulaanbaatar bustle has many upsides, but a serious downside is the metaphoric silence of news or even rumors about important issues like the OT dispute. Last week ended with a sense that tensions had eased between the government and Rio Tinto, and the OT board of directors approved stop-gap funding for the month of March to give some breathing room for continued negotiations later in the month.1 Making the best of the situation, I am turning the silence into a chance to speculate on a contextual point that seems to have fallen through the cracks in the reporting on the dispute--the 2013 national budget.
The 2013 national budget was passed by parliament in November 2012, and the government made the very surprising (in my opinion) choice to include approximately USD 300 million from renegotiating tax and royalty provisions in the 2009 Oyu Tolgoi (OT) stability agreement as part of the budget revenue projections. In poker they call that going all in, and as an opening gambit it needlessly put the government in a poor negotiating position. The move went against former New York mayor Rudy Giuliani's dictum that successful leaders under promise and over perform. The government made an improbable promise of raising hundreds of millions of dollars of additional revenue on the hope of renegotiating a complex deal that took years to complete. It was doomed from the start.
Unfortunately it does not stop there. The World Bank published a report on the 2013 budget shortly after it passed through parliament, and the analysis suggested that, even if the government could succeed in getting additional revenue from renegotiating the OT agreement, the economic growth and revenue projections still appeared overly confident and optimistic, especially given the economic slowdown in China.2 On that basis, one can assume the government started 2013 in a very shaky financial situation, and the OT dispute has potentially made it worse by producing negative knock on effects in the rest of the economy. The original annual growth projection for the economy in the budget was 18.5 percent (!), and it looked overly optimistic to the World Bank before the OT dispute fully erupted.3 What does that optimism look like now?
As it seems with every political issue, there is an added twist to the plot. This year's budget is the first to come under the Fiscal Stability Law passed by parliament in 2010.4 The law is intended to make the national budget anti-cyclical by saving excess revenues in good years and drawing on savings in bad years. In theory this should mitigate the boom-bust cyclical effects of a minerals dependent economy. In 2009 the economy was cratering as a result of the global financial crisis depressing minerals markets which in turn exposed several structural problems with the economy and the government's finances. The government required an infusion of USD 153 million from the IMF to meet its short-term obligations.5 It is easy for conspiracy theorists and critics of the OT agreement to assign nefarious explanations now for why the coalition government rushed to sign the agreement in the latter half of 2009, because people generally have short memories when it comes to politics. But, Graph 1 tells the whole story without the need for embellishments like back-room deals and triple-crosses. Mongolia was in a desperate financial situation and signing the agreement held the promise of additional infusions of much needed revenue. The Fiscal Stability Law was conceived as a way to prevent similar crises in the future, and it legally binds the government to spending and savings targets in each budget.
The World Bank calculated in its analysis that the government would begin 2013 already up against the structural deficit limit of 2 percent of GDP prescribed in the Fiscal Stability Law even when accepting all the government's revenue projections.6 The financial situation has continued to deteriorate since then. The attempts to renegotiate the agreement have thus far failed. Erdenes Tavan Tolgoi ran out of operating funds for the Tavan Tolgoi coal mine earlier in the year, and it has required its own bail out. General confidence in the business community has been rattled by the on-going OT dispute. The list goes on and on. Unless a revenue miracle occurs, the government will have to fix its budget problems either by cutting expenses or by ignoring the Fiscal Stability Law.
The law is new, so there is no precedent for the real political consequences of ignoring it. The law does spell out "punishment" for violations in Article 18.3. It states that violations are "a basis for raising the issue of dismissal of the Government (cabinet)."7 That only means something if there are the votes in parliament to make a dismissal happen, and one can only speculate at this point about whether the current coalition government is politically vulnerable enough for that provision in the law to exert any real pressure. Even without the law, the government faces the daunting prospect of filling an ever widening budget deficit while it publicly wrangles with Rio Tinto over its only real source of new revenue in the short-term. A government can ignore laws, but it can't ignore an an empty bank account.
It seems reasonable to surmise that the deficit pressure is driving some of the he-said-she-said dispute over the loan-for-tax-credits agreement signed in 2011 by the government and OT. The government has a very strong need to make sure another USD 150 million doesn't vanish from its revenue stream by allowing Rio Tinto to exercise its tax credit option. Getting Rio Tinto to back off on using that option, in fact, potentially provides a partial political victory in making it seem as if the government was able to squeeze an additional USD 150 million out of OT by conflating it with the original goal of raising USD 300 million from renegotiating the stability agreement. Of course, in reality it will have only kicked that financial problem down the road. The loan-for-tax-credits agreement, after all, was a loan agreement, so the government is still on the hook to produce the money or to have another argument with Rio Tinto about the terms of payment later on.
I find it very easy to sympathize with the current government's predicament as it takes responsibility for fixing prior financial mismanagement and learns in the process the economy is no longer simple and linear but rather complex and geometric. The financial situation of the government is not good and everything it does seems to make it worse. From a classical economic perspective it looks like the current OT dispute has cost Mongolia a lot more in collateral damage to the economy than the USD 300 million it intended to get from Rio Tinto in the first place. This is without actually doing any sort of in-depth analysis of opportunity costs. It's just that bad. There are tough decisions ahead if the government is serious about really fixing the problems and adhering to its own Fiscal Stability Law. The last few years do not provide much reason for optimism that the government or the political system is prepared to make those tough decisions before it is faced with an unavoidable crisis. It is a depressing thing to contemplate in the silence produced by the intermission in the OT dispute.
Footnotes
1. Michael Kohn, "Rio Mongolian Mine Failure Would Be 'Catastrophe,' Minister Says", Bloomberg Businessweek, http://www.businessweek.com/news/2013-03-04/rio-mongolian-mine-failure-would-be-catastrophe-minister-says, March 4, 2013.
2. "Mongolia : highlights of the 2013 budget and the fiscal outlook. Washington D.C. - The Worldbank", World Bank, http://documents.worldbank.org/curated/en/2012/12/17191742/mongolia-highlights-2013-budget-fiscal-outlook, (December 2012), pg. 4.
3. Ibid.
4. See "Law of Mongolia on Fiscal Stability", Il Tod, http://www.iltod.gov.mn/wp-content/uploads/2010/12/Law-of-Mongolia-on-Fiscal-Stability.pdf, 2010.
5. See "Mongolia: Request for Stand-By Arrangement—Staff Report; Staff Supplements; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Mongolia", International Monetary Fund, http://www.imf.org/external/pubs/ft/scr/2009/cr09130.pdf, 2009.
6. "Mongolia : highlights of the 2013 budget and the fiscal outlook. Washington D.C. - The Worldbank", World Bank, http://documents.worldbank.org/curated/en/2012/12/17191742/mongolia-highlights-2013-budget-fiscal-outlook, (December 2012), pg. 9.
7. "Law of Mongolia on Fiscal Stability", Il Tod, http://www.iltod.gov.mn/wp-content/uploads/2010/12/Law-of-Mongolia-on-Fiscal-Stability.pdf, 2010, Article 18.3.
Aspire needs rail approval to start Mongolia coal mine on time
March 7 (Bloomberg) Aspire Mining Ltd., the Australian company seeking to build a coal mine in Mongolia, said it needs government approval for a rail line by the end of the year to meet its production target.
"The critical part in terms of time line is the railway," David Paull, managing director of Perth-based Aspire, said in a phone interview yesterday. The company expects this month to complete the path of the $1.2 billion line that will connect its Ovoot coking coal mine to the northern city of Erdenet, he said.
"There's a very good socioeconomic reason for rail development in northern Mongolia," Paull said. "If we don't have a railway, we don't have a material production profile for the mine."
Aspire is seeking the approval as Mongolia's government wants greater control of Rio Tinto Group's $6.6 billion Oyu Tolgoi copper and gold mine. The Ovoot mine, scheduled to start producing steelmaking coal in 2016, has the second-largest coking coal reserve in Mongolia after Tavan Tolgoi's West Tsankhi, Aspire said last month.
"You have to look at Rio Tinto which obviously sees that Oyu Tolgoi has a terrific long term future," Paull said. "You have to look at the fact that Anglo American just appointed a country director there. These companies are not looking at the next year or two. They're looking at the next five to ten years."
2016 Production
Aspire's mining permit is in good standing and there has been no discussion to alter royalty agreements, he said.
The stock rose 3.1 percent to 9.9 Australian cents as of 3:49 p.m. in Sydney, bringing this year's advance to 46 percent, compared with the 10 percent gain in the benchmark S&P/ASX 200 Index.
Aspire's largest shareholder is SouthGobi Resources Ltd., controlled by a Rio Tinto unit, which holds 18.8 percent of the company, according to data compiled by Bloomberg. Noble Group Ltd., the second-largest shareholder, last month increased its stake to 15 percent.
Coking coal prices aren't expected to rise much further, Paull said.
"The next response is really what's happening on the cost side," he said. "Longer term, holders of these assets aren't prepared to accept losses at current prices so there will need to be some supply response to reflect that."
Japanese buyers agreed to pay BHP Billiton Ltd., the world's biggest exporter of coking coal, $165 a metric ton for the first quarter, according to UBS AG, a record low for contracts set on a quarterly basis. Asian buyers may pay $175 a ton for the three month period starting April 1, according to a Bloomberg News survey last month.
UBS Stake in Guildford Falls on Dilution
March 7 (Cover Mongolia) A Change of Interest of Substantial Holder notice released 6 March revealed UBS AG's interest in Guildford Coal Ltd. (ASX:GUF) fell from 7.07% to 5.47% mainly due to the issue of 75m shares to GUF's largest shareholder TheChairment1 Pty Ltd. UBS' shareholding also fell from 36,831,934 shares to 33,636,680 shares.
Voyager: Half-Year Financial Report, 31 December 2012
March 8, Voyager Resources Ltd. (ASX:VOR) --
Haranga: Annual Report, 31 December 2012
March 8, Haranga Resources Ltd. (ASX:HAR) --
Denison Mines Corp. Reports 2012 Results
TORONTO, ONTARIO--(Marketwire - March 7, 2013) - Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE MKT:DNN) today reported its results for the three months and year ended December 31, 2012. All amounts in this release are in U.S. dollars unless otherwise stated.
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Mineral Property Exploration
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In Mongolia, exploration expenditures on the Company's Gurvan Saihan Joint Venture ("GSJV") properties totaled $25,000 and $3,156,000 for the three months and year ended December 31, 2012, compared to $200,000 and $3,971,000 for the three months and year ended December 31, 2011. A 29,700 metre drill program was completed on the Urt Tsav and Ulziit properties in 2012 with the drilling on Ulziit approximately doubling the defined extent of the mineralized system.
The Company currently has an 85% interest in the GSJV in Mongolia. The other party to the joint venture is the Mongolian government with a 15% interest. In March 2012, the Company acquired the 15% interest in the GSJV held by Geologorazvedka, a Russian entity, in exchange for cash consideration of $742,000 and the release of Geologorazvedka's share of unfunded joint venture obligations. Under the Nuclear Energy Law of Mongolia, the Mongolian participant in the GSJV is entitled to hold a 34% to 51% interest in the GSJV, depending on the amount of historic exploration that was funded by the Government of Mongolia, to be acquired at no cost to the Mongolian participant. This interest would be held by Mon-Atom LLC, the Mongolian state-owned uranium company. The Company and Mon-Atom are proceeding with restructuring the GSJV to meet the requirements of the Nuclear Energy law, pending receipt of mining licences and government reviews and authorizations. The final restructuring of the GSJV is expected to result in the Company having its interest reduced to 66%. Discussions are on-going and the timing for completion of the restructuring is uncertain at this time.
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Outlook for 2013
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International
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In Mongolia, mining licence applications for its four license areas were submitted in 2011 and the Company is continuing to work to restructure the GSJV to meet the requirements of the Mongolian Nuclear Energy Law. In 2013, the Mongolian program is estimated at $1,700,000. The focus in 2013 will be on the ongoing restructuring efforts and the work necessary to obtain the mining licenses.
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MSE: Public Holiday Announcemet, Women's Day
March 6 (MSE) Mongolian Stock Exchange will be closed on the 8th March, 2013 on the occasion of the International Women's Day.
Mogi: anyone care to venture a guess who?
FOR SALE: Mongolian Thermal Coal
March 7 (OilVoice) ---
Coal from Mongolia
1. the Buyer will be given all SGS reports and placed direct to the Seller once the LOI is completed and forwarded.
As you know, the LOI is simply a show of interest and then the contract phase starts between buyer/seller.
This will be a simple and direct transaction, but seller will not move forward until he receives the LOI,
The Seller owns 26 mines in Mongolia, a fact which can easily be verified.
2. The port for delivery is Dahila or the coal can be delivered to the border for a price of $60.00 per ton.
Should the buyer wish a tour of the mines can be arranged !!!
We are ready to move forward once the LOI is forwarded.
For further instuction please contact me...
CONTACT: Aubrey Barrow
EMAIL: ProFinder4u [at] Yahoo [dot] Com
Oyu Tolgoi honoured with 'Best Project' at Bloomberg TV Mongolia Awards
- It is a true recognition of the achievements of all Oyu Tolgoi employees, suppliers and partners –
Ulaanbaatar, Mongolia, March 6 - Oyu Tolgoi, Mongolia's world class mining project was last night recognised as the 'Best Project' of 2012 at the Bloomberg TV Mongolia Awards, the prestigious final event of the Mongolia Economic Forum (MEF). The awards ceremony, attended by the Prime Minister, politicians and business leaders, took place in the impressive setting of the 23rd floor of the Blue Sky Tower.
Otgonbat Sedbazar, Oyu Tolgoi VP External Relations, said: "Even though I was given the honour of accepting it in the name of the company, the award is for a project that all Mongolians can be proud of". Considering the strong competition from the other nominees, this prize represents even more acknowledgment for the Oyu Tolgoi team. All of the companies nominated for the award manage outstanding projects.
Cameron McRae, Oyu Tolgoi President and CEO, said: "We at Oyu Tolgoi are absolutely delighted to win this award; it is a true recognition of the achievements of all Oyu Tolgoi employees, suppliers and partners. The incredible hard work that everyone has put into this project makes it a team success. We thank Prime Minister Altankhuyag, the MEF and Bloomberg for this recognition and wonderful awards evening and hope that by working together, we will continue to make Oyu Tolgoi a success in 2013."
Last night's recognition comes at the end of an extraordinary year for Oyu Tolgoi, which produced its first copper concentrate at the beginning of February. Over 12,000 Mongolian men and women worked through the extreme climatic conditions of the Umnugobi to complete the first phase of construction ahead of schedule and in-line with budget. Oyu Tolgoi is expected to enter commercial production in June 2013.
Visit the gallery: Oyu Tolgoi honoured by Bloomberg for economic impact
Major Revision of Mongolian Mining Regulations Is Underway
March 6 (Mendee Jargalsaikhany via Eurasia Daily Monitor) The first public debate on the proposed revisions of Mongolia's mining regulations was conducted at the Citizen's Hall of the Mongolian government on January 18, 2013. Although the revisions are long overdue, legislators appear to be in agreement that more deliberations are necessary in order to reflect the concerns and suggestions of miners, investors and the public prior to submitting the final bill to the parliament. As stressed by Tsagaan Puntsag, the head of the presidential office, lawmakers avoided politicizing the revisions, opting instead to push for a more comprehensive, long term regulatory framework (Minutes of Debate, Citizen's Hall of Mongolia, www.irgen.org).
Since 1994, the Mongolian parliament has revised the mining regulations several times to attract foreign investments in the 1990s and later to ameliorate domestic concerns over corruptions and irresponsible mining activities in 2000–2010. Although the Mongolian government concluded the first major investment agreement with the Western companies Rio Tinto and Ivanhoe Mines Ltd. over the Oyu Tolgoi copper deposits in 2009 (Press Releases of the Mongolian Government, Rio Tinto, October 6, 2009), the country's mining sector has experienced three major challenges.
The foremost issue of concern is environmental damage. Due to loose environmental standards and limited bureaucratic capacity to enforce environmental laws and regulations, artisanal mining—which began with the government's "Gold program" in 1990—as well as exploration and mining activities by domestic and foreign companies have caused extensive environmental harm. In particular, herders experienced increased pollution of their normal water sources and pastures. Pushed by demands from environmental and local activists, the parliament quickly approved the Law on the Prohibition of Minerals Exploration in Water Basins and Forested Areas (known as Law with the Long Name) in 2009. Under the law, the government cancelled over 200 mining and exploration licenses that operate within 200 meters from water and forest sources (http://politics.news.mn/content/110242.shtml). However, this sudden measure caused intense opposition from miners while raising public expectations for stricter enforcement and revisions in the major mining and environmental legislation.
Corruption is the second challenge. As a result of the politicization of the public service and transitional difficulties experienced by the judiciary and bureaucracy, corrupt practices became widespread in the government agencies—in particular, the provincial authorities as well as the Mineral Resources Authority of Mongolia (MRAM), which oversees mining licenses. According to various corruption assessments, the mining sector was regarded as one of the sources for corruption (http://pdf.usaid.gov/pdf_docs/PNADE136.pdf). A recent trial of a number of MRAM officials illustrates this widespread corruption. After a yearlong investigation, the former director and officials of MRAM were sentenced for illegally issuing 120 mining licenses, including the extension of four licenses of the SouthGobi Sands Company (News.mn, Bloomberg, January 31). Although some suspect the investigation was one sided and politically motivated—and clearly only addressed activities from the last two years—it will certainly appease the public's call for transparency and accountability in mining licenses.
Local communities as well as domestic businesses have generated the final challenge. Under current mining regulations, local communities who are most affected by mining activities are left out of the decision-making process. Moreover, small- and medium-sized mining companies contribute less to local economic development, but their activities cause more local damage given the weak environmental protection regime and limited state capacity to deal with irresponsible mining practices. In comparison to the 1990s, domestic business entrepreneurs and entities have increased their demands that the government support their initiatives to play a broader role in the mining sector. For example, a consortium of Mongolian companies was established in 2010 to participate in major mining projects such as the Tavan Tolgoi coal deposit (Unuudur, November 24, 2010). Furthermore, the Mongolian business community increasingly demands legal mandates that would force foreign investors to contract with local businesses.
In response to these challenges, President Tsakhiagiin Elbegdorj suspended the issuance and processing of both mining and exploration licenses in 2010, until comprehensive revisions were made to the existing regulations. The presidential decision was subsequently endorsed by members of the National Security Council and the parliament (Parliamentary Resolutions to Extend Suspension of License Issuance in 2010, 2011, 2012, Legal Data Base of the Government, www.legalinfo.mn). Consequently, the earlier working group on mining law revision was expanded to include parliamentarians, government officials and experts and began to work under the auspices of the presidential office from 2011.
Unlike earlier mining legislation, the current law-making procedure has several unique features. First, Mongolia is relying heavily on its own experts and experience of mining in comparison with its reliance on foreign experts in the mid-1990s. The lawmaking capacity of the government bureaucracy was also noticeably enhanced by the inclusion of professionals educated in developed countries, in particular Australia. Moreover, the government has accumulated substantial experience in dealing with both foreign and domestic investors at different scales. Second, as indicated by the president and working group members, Mongolia has studied the practices of resource-based economies like Australia, Canada and Scandinavia, in addition to the examples of Chile and other developing states (http://president.mn/eng/newsCenter/viewEvent.php?cid=&newsId=711&newsEvent=). Third, the lawmaking process has been very inclusive and avoids the dangers of politicization. By comparison, the Windfall Profit Tax Law (2006), the strategic deposit amendment to the Mining Law (2006), the Law with the Long Name (2009), and the Strategic Entities Foreign Investment Law (2012) were passed with little deliberation and limited consultation from miners, activists and the public because the law-making process was driven by the political calculations of parties and politicians. This time, the draft was debated at the National Security Council, parliamentary standing committee and, importantly, the Citizens' Hall since April 2011. The Citizens' Hall, established by the presidential office in 2009, is a key venue to facilitate public deliberations on the revision of the mining law. Meanwhile, in order to address public concerns, the working group has engaged civil society activists, local governments, government agencies and various professional organizations.
The new mining law will introduce stricter environmental requirements (in particular relating to mine closures and rehabilitation), increased local participation by delegating the initial approval authority to local communities, improved control and enforcement by the government bureaucracy (especially in license issuance), and greater requirements for local development and local sourcing. Broad agreement exists on the need for comprehensive revisions to the mining law, although some criticism remains over the new proposed license classifications and increased role for government as well as local community participation. Nevertheless, the government is finally responding to public discontent over the consequences of decades of weak mining regulations. Consequently, Mongolia will likely avoid both resource nationalism as well as the resource curse.
Mongolia tops rankings for "Room for Improvement" and "Policy/Mineral Potential assuming no land use restrictions in place and assuming industry "best practices""
Survey of Mining Companies: 2012/2013
February 28 -- The Fraser Institute Annual Survey of Mining Companies was sent to approximately 4,100 exploration, development, and other mining-related companies world-wide. The survey represents responses from 742 of those companies, which has provided sufficient data to evaluate 96 jurisdictions.
The survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage investment. Finland had the highest Policy Potential Index (PPI) score of 95.5. Along with Finland, the top 10 ranked jurisdictions are Sweden, Alberta, New Brunswick, Wyoming, Ireland, Nevada, Yukon, Utah, and Norway. The 10 least attractive jurisdictions for investment based on the PPI rankings are (starting with the worst): Indonesia, Vietnam, Venezuela, DRC (Congo), Kyrgyzstan, Zimbabwe, Bolivia, Guatemala, Philippines, and Greece.
For the first time since 2006/2007, no Canadian jurisdiction ranked first in the survey. Both Quebec and Saskatchewan dropped out of the top 10 in the rankings, to 11th and 13th respectively.
The companies participating in the survey reported exploration spending of US$6.2 billion in 2012.
Sysmex Establishes Representative Office in Mongolia
Sysmex Corporation (HQ: Kobe, Japan; President and CEO: Hisashi Ietsugu) announces its establishment of a representative office in Mongolia.
March 7 (Sysmex) Mongolia has vast mineral resources and boasts a high rate of economic expansion, ranking top in the world for growth in 2011. This trend is expected to continue, with real GDP forecast to rise by an average annual rate of 22% between 2007 and 2015.
On the healthcare front, the Mongolian government has announced its Health Sector Master Plan, which calls for aggressive investment in healthcare infrastructure. Consequently, growth in this market is likely to accelerate. Despite the existence of a host of companies that cite low prices as their strength, the country's Ministry of Health is focusing instead on improving quality, and requires pharmaceutical registrations by manufacturers who provide reagents. This move is intended to encourage manufacturers to provide higher-quality products, thereby raising the overall quality of healthcare in the country.
Sysmex has conducted sales and support activities in Mongolia via a local distributor since 2007. In 2008, the Company signed a support agreement for External Quality Assessment (EQA) with Mongolia's Ministry of Health to help standardize the testing results of medical facilities within the country. Since that time, we have conducted activities aimed at building the Sysmex brand, such as by installing hematology standard analyzers in national hospitals*1. Sysmex has a leading share of the market in its mainstay hematology field, and is well regarded by a wide range of customers, from small and medium-sized facilities to large-scale institutions.
Along with the establishment of a representative office, Sysmex is contributing to the standardization of clinical chemistry testing in the country. Through its representative office, Sysmex will work with local distributors on sales, and scientific and support service initiatives; as well as reinforcing its lineup of products in hematology and non-hematology fields*2.
Going forward, Sysmex will continue contributing to the development of healthcare by stepping up its establishment of sales and support networks in Asian and other emerging markets.
Overview of the Representative Office | |
Location: | Ulan Bator, Mongolia |
Lines of Business: | Providing distributors with sales support and healthcare market surveys, scientific support and support on raising the level of testing precision |
Established: | February 27, 2013 |
Terminology | |
*1: | When patients are diagnosed by multiple healthcare institutions, major differences between testing results at different institutions can cause them to wonder which facility has provided the most trustworthy results. An External Quality Assessment (EQA) is conducted to confirm and correct differences between facilities. Sysmex has installed standard analyzers in healthcare institutions designated by Mongolia's Ministry of Health and provides monitoring support on their operation. EQA methods involve establishing standard values for hematology analysis of survey samples and providing these to healthcare institutions throughout Mongolia. Sysmex analyzes the data collected from healthcare institutions and reports to Mongolia's Ministry of Health. Led by Mongolia's Ministry of Health, this new structure for precision monitoring allows Sysmex to contribute to better testing precision and the provision of better-quality healthcare. |
*2: | In-vitro diagnostics fields excluding hematology but including hemostasis, immunochemistry, urinalysis, clinical chemistry and others. |
Economic Forum 2013 aims to establish Mongolian brand
- Mongolia will be discussed on the World Economic Forum, says President Ts.Elbegdorj -
March 7 (UB Post) In his opening speech at the fourth annual Mongolia Economic Forum, which began on Monday, Prime Minister N.Altankhuyag spoke about creating a new global brand in Mongolia. The prime minister pointed out that some countries represent a brand themselves, such as Scotch whisky, Italian cuisine, French wine, Swiss watches and Japanese cars. Mongolia has yet to establish its own brand and unique signature in the world market. He remarked that he hopes Mongolia's 'brand' will be the natural or organic agricultural products through which the Mongolian nomadic culture has been able to endure for centuries.
The Mongolia Economic Forum 2013 opened under the banner 'Mongolian Brand and Opportunities'. More than 1,000 delegates participated in this year's event, with delegates from the private sector, public organizations, and research institution as well as political figures. Participants discussed the opportunities and challenges facing Mongolia's economy.
The prime minister noted in his speech that although Mongolia's level of resources per capita is ranked among the world's highest, most of Mongolia's mineral products, meat, leather and cashmere are exported as raw materials, with no added value.
"Despite its vast mineral wealth and increased mining activity, Mongolia is a country of agriculture," he said. He said the reform government aims to diversify the economy and decrease reliance on the mining sector. He explained that this would be achieved through major shifts in economic policy that would support national producers in creating a Mongolian brand under which to launch their products on the world market.
"Mongolia should develop a rainbow-like economy, rich in size and diversification," said the prime minister.
"It is very important that the state, entrepreneurs and civil society sit together to exchange ideas and information … If Mongolians could produce goods themselves, they could become the main driver of unstoppable growth in this country," he said.
Prime Minister N.Altankhuyag drew upon the example of Chile, which successfully utilized its revenue from copper mining to develop a successful wine industry and to become a world famous brand. Chile managed to increase its wine output 20-fold, increasing from a 30 million USD industry to a 600 million USD industry. N.Altankhyag said that Mongolia is fully able to realize such feats and that branding is no longer a dream but an achievable target that should be striven towards by Mongolian businesses.
At the moment, around 90 percent of Mongolia's exports are mining based products and only 30 percent of these products are processed.
The Guest of Honor at the event, Ms. Lakshmi Venkachatalam, Vice President of the Asian Development Bank (ADB), noted in her speech that Mongolia has achieved remarkable feats by implementing the Millennium Challenge, and that the ADB is proud to be a key partner in helping Mongolia to realize its developmental potential.
"When Mongolia joined the ADB some 22 years ago, its people were enduring economic hardships, like many transitioning economies. Currently, Mongolia's medium term economic prospects are regarded as very favorable due to the country's abundant natural resources. In the short term however, the deteriorating global economy has had a negative impact on exports. As a result, we've seen deteriorations in Mongolia's external and fiscal balance … Experiences of other resource-rich nations have suggested that they are at the risk of performing less well on human development indicators than more modestly endowed countries, unless they take the right steps at the right time," she said.
Ms. Venkachatalam observed that mining is an extremely productive industry, but provides high salaries to a small number of people, which makes it hard for other sectors to match offers. She also noted in her speech that the mining sector produced 90 percent of Mongolia's exports last year, 17 percent of government revenue, 18.6 percent of GDP, but less than 2 percent of new employment.
According to ADB figures, Mongolia faces significant challenges, such as high levels of poverty (around 30 percent of the population last year); high inflation (around 14.3 percent last year) which was represented by increasing food prices, particularly meat prices; and growing external risk. Ms. Venkachatalam said that double digit inflation is expected to continue due to strong demand for goods and services and external risk will persist, so advised that "diversification of the economy, with further private sector participation, is needed to mitigate such risk and ensure high sustainable growth and inclusive development."
"High reliance on mining can diminish the competitiveness of other sectors as it pushes up the exchange rate and labor costs … Services, in contrast to the mining sector, are labor intensive and generate many jobs. Mongolia has significant potential to diversify its economy, if it can take advantage of its excellent human resources, rich livestock and plant resources … Branding will enable Mongolia to diversify its economy," she added.
Lastly, Ms. Venkachatalam emphasized the importance of reliable infrastructure for long term sustainable and inclusive development.
In his speech titled 'National Brand and Mongolian Development,' the Economic Development Minister N.Batbayar revealed how he promoted the Chinggis bonds to other nations and how Mongolia was received with welcoming arms by powerful nations of the world.
"I believe Mongolia can not only brand its products, but become a global brand nation. We have vast lands, rich with mineral wealth. Some countries have already drained their natural resources but we are just beginning to explore them. Last year Mongolia successfully released its first government bonds, named after our Great Chinggis Khaan, worth 1.5 billion USD. When we ventured to promote our bonds to other nations, we told them that Mongolia has the eighteenth-largest land size — land that is full of mineral wealth; our two great neighbors are up to 500 times larger in population so we are well-positioned for trade; we are the descendants of the great Chinggis Khaan; we are citizens of a democratic Mongolia; we value human rights; and we protect private property through the rule of law. And we asked them to work with us and they agreed. When we offered to sell 1.5 billion USD of bonds, they proposed to buy 15 billion USD of bonds. This indicates the rising global interest and the enormous potential Mongolia has. We promised those that purchased our bonds that we would use this money for great development … The time of Mongolia to establish its name and brand has come. Agriculture and animal husbandry are the brands of Mongolia," said N.Batbayar.
Dinosaurs expected to be a big tourist attraction
According to travel and tourism industry representatives, although Mongolia enjoys numerous tourist attractions such as untouched natural wonders and rare paleontological finds, the travel and tourism sector of Mongolia has experienced nothing but neglect from the government in the past. But at the Mongolia Economic Forum 2013, tourism was undoubtedly one of the most popular topics of discussion, with many saying that given the inflow of foreign investment and increasing attention directed at Mongolia the tourism sector has enormous potential. It was also noted that dinosaurs are expected to be a big tourist attraction in future.
The Fukui Prefecture Dinosaur Museum of Japan was held up as an example of a successful tourist attraction. The museum contains fossil skeletons of 70-million-year-old dinosaurs and attracts many thousands of tourists each year. It is one of the largest paleontological museums of the world, but Japan has far fewer fossils than Mongolia.
Parliament Member Ts.Oyunbaatar said at the Economic Forum that in 2000 Japan proposed building a dinosaur museum in fossil rich Umnugobi Province in southern Mongolia. The MP remarked that Mongolia could enjoy the same interest from tourists as the Japanese museum and attract tourists by the thousands, if not millions, if the government paid attention to this sector and took decisive action to develop this sector.
All the participants in the discussions agreed that Mongolia has vast potential, with its many wondrous sights and scenery, but many said that until now the private sector has been keeping the tourism industry going, with no tangible support from the State.
The Minister of Culture, Sports and Tourism, Ts.Oyungerel, noted that the government is implementing major programs, including establishing a tourism and travel route, to promote and develop the sector. She added that the successful recovery of the smuggled Dinosour Bataar fossil last year, a retrieval operation led by President Ts.Elbegdorj, helped to promote Mongolia and its fossil wealth. According to Minister Ts.Oyungerel, around 800 publications worldwide reported on the incident. The dinosaur skeleton will be returned to Mongolia before May 18 (Museum Day).
"We want to present the dinosaur fossil to the children of the country on June 1, Children and Mothers' Day, as a present," said Minister Ts.Oyungerel.
It was noted at the forum that currently the only festival in Mongolia that receives a large budget from the State is the National Naadam Festival, celebrated in July. Naadam attracts many tourists and is a chance for foreigners and expatriates to learn about Mongolian culture and tradition. Other festivals, such as the Ice, Snow, Eagle, and Camel Festivals, do not receive much funding from the State, if any. Minister Ts.Oyungerel explained that the reason for this is that Naadam has a set date and place, which is consistent, but the others don't. The minister has proposed making a set calendar of all the festivals held in Mongolia so that they can all receive funding from the State. This calendar will be implemented by June, she said. The minister therefore urged travel and tourism companies and provincial governments to notify the ministry, by April 15, of the festivals and celebrations that they organize.
"The calendar will help advertise festivals and will attract tourists and travelers to take part in the events and learn about Mongolia, just like Naadam," said Minister Ts.Oyungerel.
Marketing of tourism and travel was a big issue that many forum participants spoke about. Some suggested that establishing a marketing department adjacent to the ministry, because promotion and marketing are essential to the sector.
Minister Ts.Oyungerel said that the State has budgeted 1 billion MNT for marketing this year. According to the minister, 500 million MNT will be spent on promotion, 200 million on international tours and expos, and 300 million on regular advertisements. More specifically, the ministry has made a 360 million MNT contract with National Geographic Traveler magazine. The magazine will update Mongolia's corner of its magazine and website daily. The Minister encouraged tourist companies and provinces to cooperate with the magazine, adding that compiling detailed information about tourist attractions in the country will help the ministry to formulate a nationwide master plan of travel routes.
Branding the Mongolian meat and dairy industry
Branding the Mongolian food industry was one of the main topics at the Mongolia Economic Forum 2013.
At the forum, the Minister of Industry and Agriculture, Kh.Battulga, emphasized that the meat and dairy industries, which produce 10 percent of Mongolia's domestic food production, are the most likely sectors to become a Mongolian brand.
Minister Kh.Battulga expressed his concerns about the low level of domestic processing, noting that only 7 percent of domestic meat and 9 percent of domestic dairy products are processed in Mongolia. Thes concerns were echoed in comments made by the Deputy Minister of Industry and Agriculture, S.Tuvaan.
"The meat industry that has been around for many millennia has still not progressed from its traditional methods. Last year's survey indicated that there were 40.9 million livestock in Mongolia. Eight million are slaughtered for domestic meat consumption, which is around 220,000 tons of meat. Only 3,000 tons are processed in a factory and exported. This is not enough. Our short term goal is to begin a continuous supply for Erdenet and other province centres," said Deputy Minister S.Tuvaan.
The need for standardization of meat and dairy products was raised by many forum participants, who said that the only way to establish a brand and export products successfully is to maintain consistent quality, which requires standardization.
The State Secretary of the Ministry of Industry and Agriculture, N.Zoljargal said at the forum, "Last Saturday, a number of policies to incentivize herders who provide meat and dairy products to domestic processors, was approved … We are working to introduce European standardization methods by marking the cattle so that the origin of meat and dairy products can be traced. This program has been ongoing for some years now and we hope that this method will be accepted by international standard makers by May."
Food Development Institute Specialist and Secretary, D.Tsedendamba suggested that the State, private sector, science, and research institutions work together to brand the Mongolian meat industry.
"In branding products, the method of operation and production is of vital importance. Mongolia's meat and dairy products are purely organic and ecologically healthy. The tried and tested method used widely around the world is the cluster method. This is a method in which the small, medium, and large enterprises collectively set a goal, with the government providing support from all sides, and science and research institutions providing technical and technological advice. National companies lack capacity when they want to reach out to the international markets. Therefore, companies need to cluster and the government needs to provide visible support for there to be a Mongolian brand," he said.
D.Jadamba, Executive Director of the Meat Union said at the forum, "We need to work at full capacity first. Currently there are 44 meat factories producing 150 types of products. Collectively, they are able to produce 140 million tons per day but they are working at only 10 percent capacity. To increase capacity, they need new technology and equipment, which will require funding of at least 200 billion MNT. If this equipment is exempt from value added tax, it would help a lot. As for support from grants, the State can't give herders 200-300 MNT per kg but they grant 2,000-3,000 MNT per kg for wool and leather. If this is the case, the meat industry cannot establish itself, let alone create a brand."
The discussion concluded with agreement on the introduction of the cluster method for the meat and dairy industry, the main driver of food production in the country.
Wool, cashmere, and leather industry 'already producing Mongolian brands'
According to representatives of the wool, cashmere, and leather industry, this industry provides the most jobs in Mongolia, and producers such as Gobi Cashmere have begun penetrating the international market with their designer cashmere clothing made in Mongolia, with the result that the industry is 'already producing Mongolian brands'.
Officials noted at a press conference at the forum that only 10 percent of domestically produced animal skin and wool become domestically-produced final products, such as clothing or construction material. The state has issued bonds worth 300 billion MNT to the wool and cashmere sector, and the leather industry has been given 200 billion MNT in circulation capital. But Mongolia Economic Forum participants expressed agreement on Monday for the notion that further government support is necessary to establish more brands in this sector.
Member of Parliament S.Ganbaatar criticised Mongol Bank's high interest rates, which he believes are burdening producers. He noted that one way the State can support private sector development is through loans, but current commercial bank interest rates are no less than 14 percent. He added that high ranking officials of Mongolia go around the world selling bonds, but if they made trade agreements and sold domestically processed goods to other countries instead, Mongolian brands would be established.
A program to restrict the exportation of raw wool and leather will be implemented this year. Wool producers will have to complete the first stage of processing before they are able to export their wool. Presently, between 3,300 and 3,600 tons of washed wool are exported each year. Producers said they want all their exports to be processed. By 2017, the government aims to export only final products.
At the forum, leather producers claimed that livestock in Mongolia endure all four seasons, hence their skin makes the highest quality leather. Leather producers noted that world-renowned German brand, Mercedes Benz, uses high quality yak leather imported from Tibet for their car interiors, but with the Tibetan yak slowly dying out, such manufacturers will have to look for other producers, and Mongolia is perfectly suited to meet the demand.
Biggest risk is political risk, says President
On Tuesday, the second day of the Mongolia Economic Forum 2013, the President of Mongolia Ts.Elbegdorj gave a speech criticizing the lack of competitiveness in Mongolia and the country's political instability, noting that the biggest risk facing the economy is the political risk.
"At last year's forum, I concluded that the State itself has become the biggest risk. And I think this needs to be addressed once again," he began.
The president noted that all the international rating agencies and statistic collectors say the same thing ¬ that the political state of Mongolia is uncertain and is becoming unfriendly to do business with.
"Change and progress are happening slowly, currency is still an issue, and the inflation rate is still an issue. The MNT has no power, although our economy is growing; we have plenty of livestock but meat prices are rising; and we are endowed with a stupendous amount of coal but we import energy. Officials want to do as they please on their whim. Today, the issues are handled differently depending on who holds the power and who is elected, and not with the best solutions. Investment has slowed down substantially, even stopped, and in other cases is flowing out, all due to political instability," said the president.
"The economy fell significantly last year and this is a big sign. Dropping from 17 percent GDP growth to 12 percent is a big sign that something is wrong… There needs to be an integrated policy that includes transportation, production, infrastructure, and everything."
"The job of the politician is to set policies – it is not a field where one makes profit. We are at a point where the ministries are trying to build railways and roads. The private sector should do it. It's a business opportunity."
According to the president, Mongolia ranked 93rd out of 140 countries on a global competitiveness report, with a score of 3.9, which has not changed for two years. Compared to similar developing nations in the region, Mongolia ranked 15th out of 15 countries for three consecutive years.
"The number one reason is political instability, followed by infrastructure, and education," said President Ts.Elbegdorj.
The president urged officials to standardize and quantify so that Mongolia is able to know where they are in terms of development, and how much it has progressed. "The State is not officials nor politicians, but rights, laws, and discipline," he said.
"Mongolia is facing a trend and the recent government bonds attest to that," said the president. "Furthermore, Mongolia will be discussed on the World Economic forum which is another indication of the growing interest and aknowledgement from international economic circles."
The president acknowledged that political transparency has improved significantly, with Mongolia moving up 26 places on a global corruption index, from 120th in 2011 to 94th in 2012. Mongolia leads the world in its corruption decrease. "This needs to be maintained," said Ts.Elbegdorj.
Finally, he encouraged companies to release public offerings to increase public participation and inclusiveness. "This will benefit the entire nation, not just a select few that form the oligarchy."
'Dutch Disease' can be prevented in Mongolia
Guest of honor at the Mongolia Economic Forum 2013, Mr Wim Kok, former Prime Minister of the Netherlands, shared his experience in overcoming the so-called "Dutch Disease," a phenomenon in which the exploitation and export of natural resources has a damaging effect on the economy as a result of currency appreciation. It comes about due to a sudden increase in foreign direct investment and results in resource rich nations experiencing high inflation.
The name 'Dutch Disease' came about from the experiences of the Netherlands. During the early 1960s, the Netherlands discovered a vast reserve of oil and experienced enormous foreign direct investment that inevitably increased the exchange rate and labor costs. This effectively decreased the competitiveness of the nation, as other sectors could not match the salaries offered by the oil industry and went out of business. As a result, the Netherlands had to take measures such as setting wage ceilings, which caused many worker strikes. The country begun regaining its economic strenght in mid 90s.
According to Mr Wim Kok, Mongolia has experienced some symptoms of Dutch Disease, but it has several regulations that effectively prevent the 'disease' from getting out of control, such as fiscal debt ceilings.
To prevent Dutch Disease, Mr Wim Kok advised Mongolia to diversify its economy and limit debt. "Mongolia's GDP growth is promising. GDP growth is important, but not enough. Economic growth must be inclusive and fair, and the growing income inequalities and disparities should be reduced as much as possible. Social justice and ecological sustainability are key elements for the society as a whole. Furthermore, the inflation rate has to be mitigated," said Mr. Wim Kok.
Mongolian Conflict of Interest Legislation Represents Real Progress
March 7 (ElectionGuide Digest) --
Introduction
Mongolia has traditionally been known for its nomads, wide-open steppes and colorful imperial history. Today, however, the country is becoming renowned for two attributes: its resource riches and its democratic transition. While these aspects are generally positive in themselves, their combination has arguably contributed to increased corruption in the country. Although corruption is an entrenched fact of life in Mongolia, and the public is increasingly cynical about the motivations of the country's parties and politicians, a small group of advocates and members of parliament have come together to address this complex issue.
Mongolia's mineral wealth is truly vast, and its extraction, though still nascent, has already begun to pay dividends. The country is thought to hold as much as $1 trillion worth of untapped resources, including the world's largest intact coal deposit and one of the planet's vastest copper-gold reserves, due to start production in mid-2013. These riches are reflected in Mongolia's recent economic performance: by many measures it has been the fastest growing economy in the world for the past two years.
Mongolia's apparently enduring transition to democracy was unforeseen, and in stark contrast to its neighbors and many other comparable states emerging from Soviet influence. This homegrown and largely peaceful democratic transition has garnered international attention. Mongolia currently serves in the presidency of the intergovernmental Community of Democracies and former U.S. Secretary of State Hilary Clinton called the country "an inspiration and model" for the transformation from "a one-party Communist dictatorship into a pluralistic, democratic political system" during her visit in July 2012.
While democracy and wealth, taken separately are undoubtedly beneficial the interplay between the two is less straightforward. History has shown that the promise of huge new resource revenues can lead to an erosion of democratic and human rights norms. This has manifested in Mongolia most blatantly in the form of widespread corruption.
Corruption and Conflicts of Interest in Mongolia
Corruption is often manifested in the form of conflicts of interest on the part of public servants and politicians. Instances of conflicts of interest common in Mongolia include using information gained while working in the public service for private gain; nepotism in appointments or awarding contracts; individuals working for regulatory bodies or industries in which they have financial interests; and the embezzlement of state-owned property.
In 2010 a Member of Mongolia's parliament, the State Great Khural, decided to do something to address this corruption by introducing strengthened Conflict of Interest (COI) legislation. Currently the Minister of Justice, but at the time a member of the opposition without many official resources, Member of Parliament (MP) Kh. Temuujin pulled together a draft.
Women for Social Progress (WSP), a non-governmental organization established soon after Mongolia's democratic transition, understood the value of Temuujin's efforts. They also recognized a major shortcoming in the drafting process: its failure to consult key stakeholders. Consultation is an essential element of any law-making process as it helps ensure legislation's efficacy in meeting constituents' needs. In Mongolia there is growing recognition of the importance of consultation and, as the parliament matures, it strives to become more consultative.
Together with the Partnership for Transparency Fund (PTF), WSP worked to remedy this problem by organizing a series of public forums, consultations with civil society groups, and working lunches with MPs and parliamentary staff.
Before finalizing the legislation, WSP also coordinated advocacy efforts to have the legislation discussed and passed in parliament. Legislation can take months or years to pass through the State Great Khural, so it was a significant achievement when the COI law was passed on January 19, 2012, and entered into force on May 1, 2012.
The inclusive drafting process not only strengthened the legislation, but also familiarized stakeholders with COI and other public service ethics concerns. The process also gave more groups a stake in the legislation's success, resulting in COI legislation that is robust, supported by civil society, and thoroughly understood in the State Great Khural.
The COI Law
The Law aims to prevent and regulate conflicts between official and private interests among public office-holders and members of the public service. If implemented properly, the law should ensure government activities and decisions are in the public interest. Additionally, it aims to restore and maintain public trust in government officials and the parliament.
The law also contains election-related provisions . It mandates that candidates for all elections – parliamentary, presidential and local – submit a COI statement to the General Election Committee (GEC). If a candidate is elected, the COI statement is resubmitted and the GEC forwards it to the Independent Authority Against Corruption (IAAC). Established in 2006, the IAAC is an independent government body with investigatory powers.
To ensure the law functions in reality and not only on paper, WSP produced a manual and trained representatives of each public service department, as well as parliamentary staff and representatives of the media and civil society. The training was delivered in cooperation with officers from the IAAC.
WSP also conducted a public awareness campaign so that Mongolian citizens would be aware of the new law, and what to do should they become aware of a breach. Televised conversations were held and newspaper articles published discussing these pertinent issues.
Conclusion: COI Legislation and the Political Process
While it remains too early to make a definitive assessment of the law's efficacy, there have been some preliminary results. The IAAC and the Ministry of Justice have identified some articles that have eluded implementation and are working on updating the law later this year to address these issues. More positively, 99.8 percent of the public service workforce submitted COI statements for 2012 by the 15 February 2013 deadline. COI statements are comprehensive documents in which civil servants declare items including shares, company ownerships, memberships, assets, sources of income, inheritances, property, debts and gifts received. Previously, public servants had avoided submitting such statements for fear of reprisals from relevant authorities. They are now more confident of their rights and responsibilities under the law.
There have also been some tentative signs that Mongolia's overall corruption situation may be improving. Mongolia was ranked the world's 94th least corrupt country in Transparency International's 2012 Corruption Perceptions Index (CPI), compared to 120th in 2011. This is a significant increase although it is subject to the caveat that the CPI methodology changed between 2011 and 2012, making year-on-year comparisons problematic. It should also be remembered that the CPI seeks to measure public perception of corruption rather than corruption itself. Some have suggested this increase may be due to an increased public awareness of government efforts to combat corruption, including through the Conflict of Interest Law.
Corruption in Mongolia is a complicated issue that no single action can hope to address. Nonetheless, robust COI legislation that is understood by public officials and the general public is now in place and provides a strong foundation for this effort.
Amy Dowler is a Project Officer with Women for Social Progress. She has a Master of Arts (International Relations) from the Australian National University. Amy blogs on music and politics at http://worldpoliticsblues.wordpress.com/.
Alaska National Guardsmen Travel to Mongolia for Aviation Maintenance Exchange
ULAANBAATAR, Mongolia, March 6 (Alaska Native News) – Four Alaska National Guardsmen are in Ulaanbaatar, Mongolia, March 4 – 7 for an aviation maintenance exchange to educate Mongolian Air and Air Defense Force members on the C-130 Hercules aircraft.
In conjunction with the National Guard State Partnership Program, the exchange is focused on providing guidance on the required maintenance and operation of the C-130 Hercules, an aircraft the Mongolian Air and Air Defense Force hope to purchase to provide much needed airlift capability to their armed forces.
"We are so happy you are here," said Maj. Enkhzorgol Baatarkhuu, staff officer for the Mongolian Air and Air Defense Force. "We hope this exchange expands our mutual understanding, strengthening military cooperation between our two countries. We are very interested in transport aircraft for Pacific region operations, and our hope is we can purchase the C-130J because it will be very useful for our future."
As the first exchange between the two countries to discuss C-130 capabilities and maintenance requirements, the Alaska Guardsmen traveled to Mongolia to share their knowledge and bolster the National Guard State Partnership Program that has partnered the state of Alaska and Mongolia since 2003.
"This exchange is really important because the people here have been trying to rebuild their Air Force since the decline of the Soviet era," said Lt. Col. David McPhetres, director of operations, Alaska Air National Guard. "This exchange will help the Mongolians build a proposal that they can take through their government, so that in the next five to 10 years, they'll hopefully be able to build a program that allows them to have their own transportation in and out of the country, while utilizing our expertise to staff, train and have a safe and capable program."
In a country as vast and open as Alaska, the Mongolian Air and Air Defense Force is tasked with transporting Mongolian Armed Forces, but with only Soviet-era helicopters that include the MI-24B, MI-8T and MI-171E, they lack the capacity to transport large numbers of personnel, making it impossible to meet all their mission requirements.
"This is a great professional exchange for us," said 1st Lt. Bayasgalan Baljinnyam, platoon commander, Unit 337 Nalaikh Air Base, Mongolian Air and Air Defense Force. "Our national Air Force needs a C-130 because we need to participate in every mission and right now we have to call on civilian aircraft to transport our troops. We need to have our own C-130 so we can manage ourselves and transport our own troops to other countries."
With a current request to obtain three C-130J aircraft, the aircraft maintenance exchange has provided an engaging opportunity for Mongolian enlisted personnel and officers to pick the brain of two Alaska Air National Guard crew chiefs on the ins and outs of C-130 maintenance and performance.
"We've been flying the C-130 in the Alaska Air National Guard for a long time, and we've learned a lot of lessons in maintenance that we can teach the Mongolians," said Senior Master Sgt. Ken Joyce, 176th Wing C-130 maintenance supervisor, Alaska Air National Guard. "We can help them, so they don't have to repeat things we've already been through."
"Nobody really does it better than the 176th Wing, Alaska Air National Guard, and they are really going to benefit working with us because we have some of the best maintainers in the Air Force," said Master Sgt. Pat McGrain, C-130 crew chief, Alaska Air National Guard. "They've worked on a lot of Soviet-era equipment, but they still have a lot of the same set up that we do as far as maintenance and standards. I think the C-130 will do very well here because everyone we've met has been an outstanding mechanic and officer."
Capable of operating from rough dirt strips and short runways, the C-130 is the prime transport for airlifting troops and equipment into remote areas while operating in extremely harsh weather conditions. This makes the C-130 the perfect fit for Mongolia because it has already proven itself in similar conditions in Alaska.
"The landscape and mission are very similar in Mongolia compared to Alaska," McGrain said. "They perform search and rescue and airlift like we do, and the austere conditions, weather and terrain are very similar to Alaska. So I think the things that make the C-130 successful in Alaska will make it successful here."
Meeting Mongolian people who are incredibly friendly and hospitable, the exchange has been a rewarding experience for everyone involved and has laid the groundwork for future communication through the National Guard State Partnership Program.
"I think this exchange is a great opportunity to build relationships with their maintenance personnel," Joyce said. "We'll have constant communication back and forth and if they have questions on C-130s, we're only a phone call or email away."
"It's really great you visited our country," said Lt. Col. Bolor Ganbold, senior signal officer, Mongolia Air and Air Defense Force. "This is a great experience learning about the C-130 and a nice partnership. Thank you very much for visiting and sharing your experience about the C-130; we welcome you back again."
Hypertension and hypertension-related disease in Mongolia; findings of a national knowledge, attitudes and practices study
Alessandro R Demaio, Dugee Otgontuya, Maximilian de Courten, Ib C Bygbjerg, Palam Enkhtuya, Dan W Meyrowitsch and Janchiv Oyunbileg
March 6 (BMC Public Health) --
Abstract (provisional)
Background
Mongolia has a high and increasing burden of hypertension and related disease, with cardiovascular diseases among the leading causes of death. Yet little is known about the knowledge, attitudes and practices of the Mongolian population with regards to blood pressure. With this in mind, a national Non-Communicable Diseases knowledge, attitudes and practices survey on blood pressure was implemented in late 2010. This paper reports on the findings of this research.
Methods
Using a multi-stage, random cluster sampling method 3450 participant households were selected from across Mongolia. This survey was interviewer-administered and included demographic and socio-economic questions. Sample size was calculated using methods aligned with the World Health Organization STEPS surveys.
Results
One fifth of participants reported having never heard the term 'blood pressure'. This absence of health knowledge was significantly higher in men, and particularly younger men. The majority of participants recognised high blood pressure to be a threat to health, with a higher level of risk awareness among urban individuals. Education level and older age were generally associated with a heightened knowledge and risk perception. Roughly seven in ten participants were aware of the relationship between salt and blood pressure. Exploring barriers to screening, participants rated a 'lack of perceived importance' as the main deterring factor among fellow Mongolians and overall, participants perceived medication and exercise as the only interventions to be moderately effective at preventing high blood pressure.
Conclusion
Rural populations; younger populations; men; and less educated populations, all with lower levels of knowledge and risk perception regarding hypertension, present those most vulnerable to it and the related health outcomes. This research intimates major health knowledge gaps in sub-populations within Mongolia, regarding health-risks related to hypertension.
The complete article is available as a provisional PDF. The fully formatted PDF and HTML versions are in production.
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"Mogi" Munkhdul Badral
Cover Mongolia
Email: mogi@covermongolia.mn
Mobile: +976 9999 6779
Skype: mogibb
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