Thursday, March 7, 2013

[Wolf chairman buys on-market, Bank of Mongolia launches interest rate corridor, and UBTZ to undergo technical upgrade]

CoverMongolia NewsWire

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Blue Wolf Mongolia Countdown: 44 days left till liquidation


Rio Mongolian Mine Failure Would Be ‘Catastrophe,’ Minister Says

March 5 (Bloomberg) Mongolia’s businesses could face a “catastrophe,” if Rio Tinto (RIO) Group and the government cannot resolve a dispute over funding the Oyu Tolgoi copper and gold mine, the deputy minister for economic development said.

While the two parties met last week to decide on financing the project through this year, disagreements on taxes, cost overruns and management control resulted in a one-month stop-gap budget. Rio Tinto in March will shoulder all the costs for a mine that at full production will account for 30 percent of Mongolia’s economy.

Rio is funding the project for daily, weekly, monthly operations but not for the big structural investment,” said deputy minister Ochirbat Chuluunbat at a forum in Ulan Bator yesterday. “It will be a catastrophe if it stops.”

Illtud Harri, a Rio Tinto spokesman in London, declined to comment on whether the company was providing all of the funding for the $6.6 billion Oyu Tolgoi mine this month.

Rio controls 66 percent of the project through its unit Turquoise Hill Resources Ltd. (TRQ) and the Mongolian government the rest. The shareholders are squabbling even as the mine is expected to start commercial production by June. Turquoise Hill rallied 10 percent to C$7.25 in Toronto on March 1 after news of the month extension.

The next round of formal talks between Oyu Tolgoi’s shareholders will take place in late March, Finance Minister Chultem Ulaan said at the forum.

Contractors Hurt

The dispute is damaging contractors who supply the mine known as OT, said the head of a leading business group.

Things are in slowdown mode because the government is not able to get along with the other investor in the project,” said Bayanjargal Byambasaikhan, chairman of the Business Council of Mongolia, which represents 244 companies and organizations.

Members of BCM are complaining about the fact that the contracts that they want to get from OT are not being awarded, because of the uncertainty and the disputes.”

Byambasaikhan said 80 percent of Business Council members are directly tied to the project, which employs around 12,000 workers, through procurement contracts or via other companies doing business with Oyu Tolgoi.

Revenues are not there and as a result companies have very high burn rates,” he said. “They prepare to supply services or goods to OT and they are not able to do that because of an unconfirmed contract.”

Funding Pipeline

New funding could be in the pipeline. The boards of International Finance Corp. and the European Bank for Reconstruction and Development granted approval to join a $4 billion project-finance deal for Oyu Tolgoi.

Directors of IFC, the World Bank’s funding arm, on Feb. 28 approved its participation and will work with Rio, Mongolia and other lenders to complete the accord, according to a statement on the lender’s website. While the EBRD’s board gave the go- ahead to participate on Feb. 26, a final commitment has yet to be signed-off, the bank said in an e-mailed statement.

While the news cycle around Oyu Tolgoi has been negative, due to political rhetoric surrounding negotiations over budget issues, the commitments from the IFC and EBRD send a completely different and positive message,” said Nick Cousyn, chief operating officer at BDSec, a brokerage in Mongolia.

Still, Mongolia’s presidential election in June continues to create uncertainty as politicians argue for more Mongolian control at Oyu Tolgoi.

“While Armageddon has been averted there is no assurance it will not reemerge very soon and unexpectedly,” Eric Zurrin, director general at Resource Investment Capital Ltd., a corporate finance adviser in Ulan Bator, said by e-mail.

“As much as I would like to say there has been a real and obvious step forward I can’t, as the time-line to key risks have just been delayed and remain an overhang.”

Link to article


Rio Tinto And Mongolian Government Locked In Negotiations But Mega Mine Keeps Humming

March 5 (Trefis) --

Quick Take                                                                             

Ø  The Mongolian government and Rio Tinto are locked in a dispute over high management fees, cost overruns and transparency in the Oyu Tolgoi project.

Ø  The two sides held talks for two days to thrash out differences but failed to break the deadlock. Meanwhile they have approved a temporary budget to run the Oyu Tolgoi mine.

Ø  Higher mining costs imply a longer wait for the Mongolian government before it can start receiving royalties.

Ø  If the mining operations had been halted, production would have been delayed beyond the original target of June.

Ø  Doesn’t make sense for Rio not to keep costs in check when it has been stated as a top priority in this year’s earnings report after a dismal performance last year.

Ø  If dispute is not resolved soon, arbitration may be the only option.

Mining giant Rio Tinto (NYSE:RIO) and the Mongolian government failed to reach an agreement over various disputes after two days of marathon talks on February 27 and 28, but the Oyu Tolgoi project was spared any adverse impact. The two sides will continue the talks in March and, in the meantime, have agreed on a temporary budget to keep Oyu Tolgoi operating.

The two sides had been locked in talks for two days over issues like management fees, cost overruns and transparency. The Mongolian government is not happy with the quantum of management fee paid to Turquoise Hill, and the mine’s cost to date of $6.6 billion, which is 15% greater than the forecast cost of $5.7 billion. The Mongolian government representatives on Oyu Tolgoi’s board had refused to approve the mine’s budget in January this year, demanding an explanation for a cost inflation by $2 billion.

A higher cost would mean that the government would have to wait much longer before it starts receiving royalties. This is because the existing agreement calls for Turquoise Hill to recoup its investment before commencing royalty payments. [1]

Oyu Tolgoi is controlled by Rio Tinto through its Turquoise Hill Resources unit. The Mongolian government has a 34% stake in Oyu Tolgoi, which it is keen to increase to 50%.

Halting Operations Would Have Been A  Lose-Lose Situation

At full capacity, production from Oyu Tolgoi will account for nearly a third of Mongolia’s economy while Rio Tinto is dependent on the mine to drive growth outside its massive iron ore business. Having suffered massive writedowns in its aluminum business for two consecutive years, Rio is looking for avenues to allow significant yet profitable diversification from iron ore. Also, almost all of Rio’s iron ore production is tied up in the Pilbara region of Australia where cyclones are quite common and lead to production outages.

It is thus clear that halting operations at the mine in absence of an agreement would have been a losing proposition for both sides. Production would most probably have been delayed beyond Rio’s original target of June.

While the main grouse of the Mongolian government is budget overruns, we wonder why Rio wouldn’t want to control costs. It has been a stated objective of the company to reduce costs, reaffirmed in its latest earnings release and presentation through quantified cost saving targets for the next three years. The step is essential to stabilize the company’s financials and shore up its balance sheet.

The situation has been complicated by the upcoming presidential elections in June because no politician wants to be seen selling out to Rio Tinto, especially when they all have promised to garner a greater share of profits for the country. [2]

If the two sides fail to reach an agreement in talks and operations eventually come to a halt, we see international arbitration as the only way to break the impasse. But that would delay production beyond June 2013. This will have an impact on the company’s performance for 2013. Also, arbitration proceedings are not enforceable, so little may be gained in the end even if Rio wins.

We have a Trefis price estimate for Rio of $45, which will be revised now that the fourth quarter earnings results are out.

Link to article  


Wolf Chairman Acquires Shares On-Market

March 6 (Cover Mongolia) A Change in Director’s Interest notice released on 5 March revealed Wolf Petroleum Ltd (ASX:WOF) Executive Chairman Matthew Wood bought 737,646 shares on-market for A$55,323.46 on 27 February and 1 March, translating to an average purchase price per share of 7.5c.

Link to notice


Modun Resources’ mining study shows potential for 30 year Mongolian coal mine

March 5 (Proactive Investors) Modun Resources’ (ASX: MOU) Nuurst Coal Project in Mongolia has the potential to deliver 84.7 million tonnes of sub-bituminous thermal coal to support a 30 year mining operation an initial mining study has shown.

The study, which was independently prepared by Brisbane’s Bluefield Group, provides increased confidence in the Nuurst Project economics that will help progress Modun’s plan of developing the project into a low cost producing mine.

Under the initial study, production will ramp up to 3 million tonnes per annum by the fourth year of operation.

Indicative production costs are estimated at $US13 per tonne over the life of the mine, at today’s costs, reflecting the low overall mining run of mine strip ratio of 2.3:1.

Coal Reserve

Bluefield was engaged to prepare a marketable JORC Coal Reserve for the Nuurst Project. 

Recent market opportunities have highlighted that more information is required before the final report can be completed. 

As part of the process to prepare the marketable Coal Reserve estimate, Bluefield completed an initial mining study.

There is potential for the mine life to be further extended by the realisation of lower strip ratio coal to the north of the basin that is currently in the Inferred Resource category and not included in the mine pit that is part of the mining study.

On the strength of the mining study, Modun will begin planning the next stage of the feasibility studies to commence in conjunction with approval of the Mongolian mining licence.

The granting of the licence is expected in the current March quarter. 

Modun was recently granted approval by the Mongolian Mineral Resources Council to have the Nuurst Project’s coal resources registered with the Mineral Resources Authority of Mongolia.

This is a significant part of the application process for converting the Nuurst Project from an exploration licence to a mining licence.

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

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

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

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

The company had just under A$2 million in cash at the end of the December 2012 quarter.

Link to article

Link to MOU release


Prophecy Obtains Power Plant Land Use Rights

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 5, 2013) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to announce that Prophecy Power Generation LLC, a wholly owned private Mongolian subsidiary of Prophecy Coal Corp., has been granted 532.4 hectares of land to be used for Prophecy's proposed Chandgana Power Plant Construction (the "Land Use Rights"). The Land Use Rights were granted pursuant to the Law on Administrative Unit of Mongolia its Management Art 29.2; land law Art 21.4.3 and Art 44.6 and Art 44.8 and an Decree issued by the Citizen's Delegate Representative Members (CDRM) of Murun Soum (sub-province), dated February 22nd of 2013 - no.17 and Governor's Ordinance dated the same day with number A/12.

Lead by Prophecy's country manager, Mr. Oscar Mendoza, the Company undertook major efforts over months to secure the Land Use Rights, including extensive consultation with local citizens and representatives regarding the impacts and benefits of the power plant. Prophecy would like to sincerely thank all the residents of Murun Soum and the surrounding area for their support of the Chandgana Project, and look forward to working closely with all stakeholders to timely advance Prophecy's Chandgana Power Plant project.

The proposed Chandgana Power Plant is the largest foreign investment ever made in Khentii Aimag (province, the same place where Genghis Khan grew up), and is expected to generate over 500 direct permanent jobs for local residents plus a further 1,500 indirect jobs once the power plant commences operation, slated for 2016. Prophecy has committed to the construction of over 250 modern housing units with heat, recreational facilities, and education centers and to providing grants to make Murun Soum and the surrounding area one of the most economically attractive and desirable living areas in Mongolia.

With the Land Use Rights in place, Prophecy has issued a contract to Erchim Concern LLC to bring 4MW of temporary power to the Chandgana Power Plant site from a local 35kV power line. Separately, Prophecy has issued tenders for the construction of 250 housing units along with a water supply to the Chandgana Power Plant site.

Link to release


Mongolia Growth Group Ltd. Announces the Resignation of Paulo Bilezikjian from the Board of Directors 

Thunder Bay, Ontario, March 04, 2013 /FSC/ - Mongolia Growth Group Ltd. (YAK - TSX Venture)("MGG" or "The Company") announces the resignation of Paulo Bilezikjian from the board of directors due to the overwhelming time commitments of his other investments and obligations. 

"I would like to thank Paulo for all of his help during our company's first two years," said Harris Kupperman, Chairman and CEO of MGG. "We have come a very long way since we first formed this company and appreciate Paulo's dedication and insight during this time." 

"I must say that MGG is one of the most ambitious, unusual and hard to execute projects I have seen. What has been accomplished so far is nothing short of spectacular given all the difficulties in operating in a frontier market and a litany of other reasons," said Paulo Bilezikjian, "I am quite proud of having been involved with this company." 

For further information on the Corporation, please visit or contact: Jordan Calonego

Link to release


Mongolia Growth Group Ltd. Announces Issuance of Employee Stock Options 

Thunder Bay, Ontario, March 05, 2013 /FSC/ - Mongolia Growth Group Ltd. (YAK - TSX Venture), ("MGG" or the "Company") announces that 350,000 5-year stock options to purchase shares of MGG at a price of $4.13 per share have been issued to salaried employees of MGG and its wholly owned Mongolian subsidiary pursuant to the Company's stock option plan. 

75,000 3-year stock options to purchase shares of MGG at a price of $4.13 per share have been issued to a new board member of MGG. 

50,000 3-year consultant stock options have been issued to 2 consultants based in Mongolia at a price of $4.13 per share. 

These options have been issued in order to retain and motivate new and existing employees, consultants and a director of the Company. 

Link to article


TheChairmen1 stake in Guildford increases to 45.61% after Management Agreement

March 4 (Cover Mongolia) A Change in Substantial Holding notice filed today reveals Guildford Coal Ltd’s (ASX:GUF) largest shareholder TheChairmen1 Pty Ltd’s stake in the company rises to 45.61% from 38.43% after issuance of 74 million shares under the terms of the Management Agreement signed between the two firms.

Link to notice


Initial Director Tsogt Togoo’s Interest Notice in Guildford

March 4 (Cover Mongolia) Initial Director’s notice filed today reveals newly appointed Non-Executive Director Mr. Tsogt Togoo’s interest in Guildford Coal Ltd (ASX:GUF) is 40 million shares through his directorship in Terra Holding Limited, Guildford’s Mongolian partner. 40 million shares is approximately is 6.5% of total outstanding shares.

Link to notice


Origo: Notice of General Meeting and Convertible Zero Dividend Preference Shares' Class Meeting 

March 1 -- Following the announcement by Origo Partners plc ("Origo" or the "Company," OPP:LN) on 20 February 2013 in connection with proposed changes to the terms of the Company's existing Convertible Zero Dividend Preference Shares ("C-ZDPs") (together the "Proposals"), Origo has today posted a circular to shareholders which includes notices convening a shareholders' general meeting (a "General Meeting") and a separate meeting of holders of the C-ZDPs (a "Class Meeting"). 

In order to give effect to the Proposals, the Board is seeking to amend and replace the existing articles of association of the Company. The Proposals require the approval at the General Meeting and at the Class Meeting, in each case by way of a resolution passed by a majority of 75 per cent or more of the eligible voting shares. 

The General Meeting and Class Meeting are being convened on 18 March, 2013 at 10.00 am and 10.15 am respectively and will be held at 4th Floor, 1 Circular Road, Douglas, Isle of Man, IM99 3NZ.  Forms of proxy are enclosed with the circular.

Link to release


SouthGobi Resources Ltd. AGM at May 8, 2013

February 25 (CIBC Mellon) Pursuant to a request from the reporting issuer, we wish to advise you of the following dates in connection with their Annual and Special Meeting of Shareholders:

Date of meeting:         May 8, 2013

Link to release


Major Drilling Announces Third Quarter Results

MONCTON, NB, March 4, 2013 /CNW/ - Major Drilling Group International Inc. (TSX: MDI) today reported results for its third quarter of fiscal year 2013, ended January 31, 2013.

·         Major Drilling posted quarterly revenue of $123.2 million, down 32% from the $182.2 million recorded for the same quarter last year.

·         Gross margin percentage for the quarter was 23.8%, compared to 25.9% for the corresponding period last year.

·         Net loss was $4.3 million or $0.05 per share for the quarter, compared to net earnings of $9.6 million or $0.12 per share for the prior year quarter.

·         The Company is still in an excellent financial position with a total net cash position (net of debt) of $30 million.

·         Given the Company's ability to generate healthy cash flows, it has declared a semi-annual dividend of $0.10 per share to be paid on May 2, 2013.

As stated in our press release dated January 23, 2013, subsequent to the holiday season, there have been increased delays in the decision making process on the part of many of the Company's senior customers in regards to their 2013 exploration drilling programs.  Also, November did not have the benefit of the program extensions we had last year.  This has led to reduced activity levels as compared to Q3 last year, and produced a seasonal loss as anticipated," said Francis McGuire, President and CEO of Major Drilling Group International Inc. "Quarter results were also impacted by $0.9 million of severance costs as the Company reduced costs in certain regions and a $1.0 million withholding tax charge on an inter-company dividend paid from Mongolia in contemplation of possible changes to the tax treaty between Canada and Mongolia."

"Capital expenditures for the quarter were $20.0 million as we purchased 28 rigs, while retiring 15 rigs through our modernization program.  Included in this, we purchased the Canadian and Mongolian assets of Landdrill International Limited. Through this, we acquired 15 compatible rigs that are less than three years old, as well as ancillary equipment and inventory for a total purchase price of approximately $4.0 million.  This will help reduce our capital expenditures for fiscal 2014 by some $10 million.  While capital expenditures are expected to decline going forward, we still have 11 rigs on order, seven of which are dedicated to the underground, a sector of the market where we are seeing opportunities."

The provision for income tax expense for the quarter was $1.9 million compared to $4.5 million for the prior year period. This quarter's tax expense was impacted by: 1) a $1.0 million withholding tax on an inter-company dividend from Mongolia in contemplation of possible changes to the tax treaty between Canada and Mongolia; and 2) differences in tax rates between regions.

Link to release


'HyperLeach®' Patent Granted in Mongolia for a Method of Oxidative Leaching of Sulfide Ores and/or Concentrates

March 6 (Alexander Mining Plc, LON:AXM) Alexander is pleased to report that it has received notification that its MetaLeach Limited ("MetaLeach") subsidiary has been granted a patent for a Method of Oxidative Leaching of Sulfide Ores and/or Concentrates in Mongolia, patent number 3671.  The patent has a standard term of twenty years from the effective date of 16 December 2011 (being the date of original filing).

This is the same patent that was granted in Australia and announced on 24 October 2012 and describes a method for leaching one or more target metals from a sulphide ore and/or concentrate containing such.   

Martin Rosser, Chief Executive Officer, said: "The technology described in the patent has significant potential application in Mongolia.  Although the country hosts some important discoveries and mines, including the world class Oyu Tolgoi copper-gold mine (under construction by Rio Tinto and containing some 25Mt of economically viable copper), the majority of the country is still underexplored.  We believe there are likely to be extensive sulphide deposits discovered suitable for leaching using HyperLeach®.  In addition, there is scope for converting sulphide concentrates, the source of the majority of the world's base metals production and resources, through to metal at the mine site."


HyperLeach® Process

MetaLeach's HyperLeach® process, although less advanced in its commercialisation than AmmLeach®, has very significant potential for application.  HyperLeach® is a hydrometallurgical process which has been developed by MetaLeach for the extraction of metals, especially copper, zinc, nickel, cobalt, molybdenum and rhenium from sulphide ore deposits and concentrates. 

The process utilises chlorine based chemistry to solubilise metals from ores under ambient temperature and pressure conditions.  The HyperLeach® process can be operated as either heap leach or tank leach.

Link to release



March 1 (BDSec) Gobi JSC (GOV:MO) reported strong 2012 sales and profit growth. Gobi’s sales revenue surged 15.4% over the year to MNT 40.8 billion and the net profit after tax tripled to MNT 5.25 billion as a result of raw materials prices decline, MNT 20 billion soft loan provided by the Government of Mongolia, growing sales and exchange rate related income.

As of 2012, 62.8% of the revenue is coming from domestic sales, while the rest 37.2% is coming from export markets. In 2012, number of goats increased and raw cashmere prices decreased by about MNT 10,000 or 14.1% to MNT 60,940 for 1kg while raw camel wool prices declined by MNT 1,760 or 21% to MNT 6,812. The Government of Mongolia (GoM) has also been supportive to the cashmere manufacturing industry. During 2011-2012, total of 37 national cashmere manufacturers received soft loan from the GoM.

In 2012, Gobi’s production of deel (traditional clothing) was doubled and that of coat increased 30%. In the line with purchasing 20 new whole garment machines for its textile factory in May, 2013, Gobi is planning to increase the workers in its knitting factory by 14%. The Company is also planning to add 41 workers in the Gobi Salon to increase the numbers and types of products. Since its privatization in 2007, Gobi has invested over MNT 18 billion in capital expenditure.

Gobi has plans such as expanding its global distribution by 20 to 56, focusing on Russian market for 2013, and improving the quality of the products by working with Japanese and Korean companies.

The company projected its sales revenue to be MNT 50.2 billion, representing 22.9% growth and net earnings to be MNT 5.7 billion, representing 5.7% growth for the year 2013.

BDSec strongly believes Gobi to maintain its impressive performance in the coming years simply because of the company’s well established business, value ori­ented policy of the company management, healthy financials and an unlimited number of opportunities lying in front of domestic businesses.

Established in 1981, Gobi is one of the 5 biggest vertically-integrated cashmere and camel wool producers in the world. With annual capacity of 1,200 tonnes of raw cashmere and camel wool processing, 500,000 pieces of knitwear, 250,000 length-wise meters of woven textile fabrics and 25,000 pieces of bespoke tailored garments producing, Gobi’s main products are knitwear, woven products, accessories, textiles, cashmere yarn and pashmina, a high quality handmade garments.

Link to article


Mongolia Introduces a Mandatory Deposit Insurance Scheme

March 5 (Hogan Lovells) On 10 January 2013, the Parliament of Mongolia adopted the Law on Insurance for Bank Deposits ("Deposit Insurance Law") with effect on the same day.

The Deposit Insurance Law establishes a mandatory insurance scheme for the protection of bank deposits. The insurance programme replaces a blanket deposit guarantee issued by the Government of Mongolia under the Law of Mongolia on Issuing a Guarantee for Savings held at Banks dated 25 November 2008 ("Deposit Guarantee Law"). Such blanket guarantee had been issued for the purpose of banking stability and reassuring bank customers amidst the financial crisis in 2008. The Deposit Guarantee Law had been in effect for four years and expired on 25 November 2012. The blanket guarantee provided a generous insurance scheme at the state's cost and was intended to be replaced with a more market-based insurance scheme similar to that adopted in other jurisdictions.

Below is a brief summary of the main contents of the Deposit Insurance Law.


The Deposit Insurance Law requires all Mongolian banks that are licensed to carry out activities for deposits and payment settlement services to join the deposit insurance scheme upon the payment of the applicable premiums.

Such mandatory insurance scheme will be operated by the so-called Deposit Insurance Corporation ("Corporation"), whose mandate is to carry out the compulsory deposit insurance activities set out in the Deposit Insurance Law and manage the Deposit Insurance Fund ("Fund"). The Corporation will be a non-profit state-owned company. The Deposit Insurance Law is silent on the capitalization requirements and shareholding structure of the Corporation.

The highest governing body of the Corporation will be the National Committee ("Committee"), consisting of seven members. The National Committee has certain regulatory powers under the Deposit Insurance Law for issuing implementing regulations on matters such as of investments by the Fund, providing financial assistance to banks, exchange of information with banks, compensatory payments and the like.

The main sources of Fund's revenue include:

(i)            commissions paid by the banks under the Deposit Guarantee Law;

(ii)           initial capital contributed from the state budget and the Bank of Mongolia;

(iii)          deposit insurance premiums;

(iv)          income from the sale of assets of liquidated banks; and

(v)           bonds issued by the Corporation.

Further, the law provides that the Fund's revenue can only be used for the following purposes:

(i)            compensation for depositors;

(ii)           financial assistance to banks receiving deposits from liquidated banks;

(iii)          the operational expenses of the Corporation; and

(iv)          payment of interest and fees on loans borrowed or bonds issued by the Corporation.

Further, the Deposit Insurance Law restricts the types of investment that may be made by the Corporation to reduce investment risk and ensure returns.


The principal source of the Fund's revenue are premiums payable by banks, which comprise the following:

(i)            an initial premium;

(ii)           a quarterly premium; and

(iii)          a special premium.

The initial premium is 1 percent of the share capital of the relevant bank.

The quarterly premium rate is to set by the National Committee for each bank depending on its risk level in the form of a percentage by reference to the average aggregate amount of deposits held at the relevant bank prior to the beginning of each quarter (excluding those deposits that are not covered by the deposit insurance scheme). The maximum rate for any bank will not exceed 0.125 percent of the deposited amount.

Furthermore, the National Committee may suspend the requirement to pay the quarterly premium if the total amount of the Fund reaches 10 per cent of the all deposits held with member banks.

The special premium can be called for when the Fund's reserves are not sufficient to cover all compensation payments declared by the National Committee. The special premium shall be calculated by multiplying the average amount of all deposits in a relevant bank by the special premium rate, which shall not exceed 0.5 percent.


A decision by the Bank of Mongolia to liquidate a bank constitutes an insurance event which triggers payment of compensation to depositors under the Deposit Insurance Law.

Such compensation is payable by the Corporation in an amount up to MNT 20,000,000 (approximately US$ 14,285) per person/entity, regardless of the total amount of deposits held by such person/entity. This constitutes a considerable reduction on the coverage afforded under the Deposit Guarantee Law which obliged the Government of Mongolia to compensate depositors for all losses.


The following deposits are excluded from the insurance programme:

(i)            deposits that are opened anonymously, using serial numbers or which are opened by persons specified in Article 4.1 of the Anti-Money Laundering and Terrorism Financing Law;

(ii)           bearer saving certificates or other bearer financial instruments; and

(iii)          deposits that will not be repaid at nominal value (non-nominative savings).

The Deposit Insurance Law sets out those persons whose deposits will not be covered by the insurance programme, which include:

(i)            banks and their related parties as specified under relevant legislation;

(ii)           central and local government; and

(iii)          health, pension or social insurance funds.


Whilst the Deposit Insurance Law provides a more limited deposit insurance scheme in comparison with the blanket deposit guarantee, the adoption of the Deposit Insurance Law is clearly a further step toward providing a market-based regulatory environment. At this stage, the Deposit Insurance Law has yet to be implemented and the Corporation is yet to be established. This will be achieved by forthcoming implementing regulations. Such mandatory insurance scheme will certainly be costly for the commercial banks and these costs will most likely be passed onto bank customers.

If you would like further information on any aspect of this note please contact a person mentioned below or the person with whom you usually deal:


Michael Aldrich, Partner,, +976 7012 1020

Chris Melville, Partner,, +976 7012 8910

Link to report


BoM issues 1-week bills

March 6 (Bank of Mongolia) BoM issues 1 week bills worth MNT 533.55 billion at a weighted interest rate of 12.50 percent per annum /For previous auctions click here/

Link to release



Improving monetary policy instruments

March 6 (Bank of Mongolia) --

Number: 2013/02

Date: 27 February 2013

At its meeting on 27 February 2013, the Monetary Policy Committee (MPC) of the Bank of Mongolia decided to establish an interest rate corridor based on macroeconomic conditions, demand for money market development and international experiences on monetary policy implementation.

Establishing the interest rate corridor and improving monetary policy instruments will play a significant role to reduce volatility in short-term interest rates, improve interest rate channel of monetary transmission mechanism and bring more transparency in the implementation of monetary policy.

In conjunction with making the decision, interest rate structure of the monetary policy instruments is fully changed and new monetary policy instruments such as overnight repo and overnight deposit facilities are launched.

The interest rate corridor around policy interest rate consists of two end-of-day standing facilities. The rate of overnight repo facility will become the ‘ceiling’ (policy interest rate + 2 percentage points) and the rate of overnight deposit facility will serve as the ‘floor’ of the corridor (policy interest rate - 2 percentage points).

This policy measure shall provide a core condition for enhancing the efficiency of interbank market, decreasing the volume of outstanding central bank bills, reducing the interest rate of financing to banks as well as promoting economic activity

Link to release


Sainshand Industrial Park to be restructured 34% state, 66% private

March 4 (Business-Mongolia) The Cabinet meeting of Mongolian government held on Saturday, March 02, discussed a number of critical issues including the funding for the much awaited Sainshand industrial park. The Minister for Industry and Agriculture was tasked to make the necessary amendments in the related laws and regulations so that “Sainshand Industrial Complex” LLC, a state owned company, is established with at least 34% of its shares, owned by the government and the rest to be distributed to private sector. Also, it was agreed that the Development Bank finance MNT 14.1 Billion for environmental impact assessment, urban planning and consulting services in 2013.

The Minister responsible for the sector was asked at the meeting to pay more attention for the initial investment of the industrial complex with the aim of processing minerals, and the project’s further implementation.

Link to article


Ulaanbaatar Railways to undergo $70m technical upgrade

March 4 (Business-Mongolia) It has been previously agreed that the equity fund of the Ulaanbaatar Railways (UBTZ), a Mongolia-Russian Joint Venture, would be increased by USD 250 million by the Mongolian and Russian parties, each contributing USD 125 Million. The Minister for Road and Transportation introduced at the latest Cabinet Meeting of the results of a government research conducted to renovate the alert system and automated devices, using funds to be provided by Mongolian side.

The Cabinet agreed to spend USD 70 Million out of the USD 125 Million raised by Mongolia for the equity fund of the Ulaanbaatar Railways for the renovation of its equipments. Once the system is upgraded, the freight forwarding capacity will be increased by 15-20%, and it would be possible to transport 28-30 Million tons of freight per year. Also, the out dated transmission system, installed in 1951, will be completely renewed.

Link to article


Newcom Announces New CEO Baatar UNENBAT

Ulaanbaatar, Mongolia, February 21, 2013 (Newcom) – The Board of Directors of Newcom LLC has released Bayanjargal Byambasaikhan from the position of the Chief Executive Officer of Newcom LLC, and appointed Unenbat Baatar to this position.

B. Unenbat will represent Newcom LLC on the Boards of Eznis Airways LLC, Newcom Mining Services LLC, New Gobi Supreme LLC, Newcom Property LLC, Fifth Combined Heat and Power Plant LLC, Tsegts LLC and the American University of Mongolia Development Foundation.

Unenbat is a 10-year veteran of the group who served as CFO of both Newcom LLC and Eznis Airways LLC prior to this appointment.

The Board of Directors would like to thank Mr. Byambasaikhan, who had served as the CEO since 2011 and wishes success in his future endeavors.

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Doug McGay: ‘We are lucky that Mongolians have been very quick adopters of modern technology’

March 6 (UB Post) Doug McGay has been in UB for so long he’s practically a local. This well-known Western Australian has been here for a total of 16 years, first coming to Mongolia, “looking to partake in the development of a cadastral system.” This never eventuated, but McGay realized very early on that the mineral potential of Mongolia was enormous. He quickly saw the similarities between Mongolia in the late 90s and the early mining days of Western Australia. He decided to stay and take part in the development of this country which he describes as, “sure would happen.”

“For the first 10 years I did various, extremely interesting things in the mineral industry. For instance I was the Country Manager for Ivanhoe Mines at the time of the discovery of Oyu Tolgoi and the co-founder and Executive Director of the Mongolian Minerals Development Foundation. In about 2005 I became excited about the possibilities of the Mongolian petroleum sector and so started an oil exploration company with my own money, along with some Australian friends and investors. By coincidence, Dr. Oyungerel of Petrovis was doing the same thing at the same time with another oil license. We had previously completed successful businesses together and had become friends, so we decided to amalgamate our two companies and list the resultant entity on the London Stock Exchange,” McGay tells me.

It was a difficult time for him – he spent four months in London trying to get the company listed, “but we finally succeeded and became the first publicly listed Mongolian company (Petro Matad Limited) on an international stock exchange. We are very proud of that achievement. I am still one of the major private investors in Petro Matad and have faith in its future and that of the oil industry in Mongolia.”

McGay recently retired from Petro Matad and is having a temporary break after 48 years of solid work with very few holidays. His intention is to continue his life in Mongolia and it’s easy to see why he’s decided to base himself permanently in the land of eternal blue skies. Quite simply he’s “happy” here. I ask him what he’s passionate about and he beams, “Mongolia, my family and my extended family.”

Today McGay remains involved in society and commerce “as there are still many things to do and opportunities to pursue.”

Q&A Time

-What were your first impressions of UB?

-As I looked out my hotel window in the early morning of my first day here in the middle of the 96/97 winter, my very first reaction was “Wow – who would want to live here!?!” People rugged up in early morning mist waiting for trolley buses that crabbed along Peace Avenue with sparks coming from the overhead lines. Opposite there were banks of grey Russian-style apartments that just looked lonely, dark, and inhospitable. But after a week or so, my overwhelming impression of Ulaanbaatar and Mongolia was of a city and country on the verge of something great. There was an underlying energy and belief just emerging from the difficult times days of the early and mid-90s.

The people that I met impressed me with their openness, honesty, and keenness to develop Mongolia. I made some very good friends in those early days and am grateful we have remained close ever since.

-What is the best thing about living in Mongolia?

-Firstly, my background is small towns in Australia, so I am at home with the relative intimacy of Mongolian society where you can get to know a lot of people from all walks of life. More specifically, it is exhilarating to be a part of a fast developing society that retains its cultural traditions. I have been closely engaged with many young Mongolian accountants, engineers, geologists, lawyers, etc .and even artists. It has been a joy to have been involved and witness their development from fresh out of school into world class professionals. Yet with all of them, as with my other Mongolian friends who have had modern successes, the traditions and culture of the Mongolian way of life have not been forgotten.

-How has UB changed since you first arrived?

-In lots of very obvious ways: From a few Ladas to lots of Mercedes; from a handful of restaurants to a multitude of good choices; from “tuuts” and open markets to supermarkets; from open roads to constant traffic jams; from clear sunny winter days to days where the sun struggles to be seen through the smog; from not even one escalator in town to multi-story steel towers with both escalators and fast lifts; from undeveloped, desperately poor ger suburbs to even larger undeveloped, desperately poor ger suburbs.

-Describe a perfect weekend in Mongolia.

-Spending time at our country log cabin. Ideally, one day reading and walking and then a day with friends and family.

-What’s your advice to UB newcomers?

-Make friends, both business and personal with as many Mongolians as quickly as possible. Learn about their culture and sensitivities. Don’t be too judgemental in the early stages, and work through the times you may get discouraged. You will need to develop a true and balanced understanding of this wonderful country in order to be a productive part of society and be happy while doing that.

-Is there anything you can’t live without in UB?

-When I first arrived, the biggest challenge was a reliable internet connection. These days it is totally different, and a lack of Internet access would make life more difficult, especially in business. We are lucky that Mongolians have been very quick adopters of modern technology. There are tremendously talented young Mongolians contributing to the world-class development of Mongolia’s digital framework.

-Have you managed to learn any Mongolian?

-Despite my best efforts and intentions in the first few years of being here, my language skills have not progressed much more than what I call “street Mongolian.” I think I own every Mongolian language textbook that has ever been printed and spent a lot of time and money at schools and with tutors. Unfortunately I think I may have come to Mongolia a little too late in life for my brain to process a new language, particularly one as difficult as Mongolian! I have tried to compensate for my disappointing linguistic progress by studying Mongolian history, both ancient and modern.

-What’s your favourite UB restaurant/s?

-My all-time favourite is called “Time Out.” It is in a relatively obscure location near the new “Japanese” bridge and has original home-style Mongolian cooking with some Russian dishes. Incidentally, an American friend and myself used to write a column called “Obscure Restaurants of Ulaanbaatar” in the late 90s, early 2000s. I think we could safely say we were the first restaurant reviewers of Ulaanbaatar and we had great fun. On looking at the archives recently, I realised that virtually none of the places we visited and reviewed were still operating.

-What’s your favourite pastime or something you like to do to relax?

-Read, go to the gym, or trying to do some creative writing. I also put aside a bit of time once a week to relax with my son and best mate at a bar and of late I have taken to renewing my bagpipe skills, as well as dabbling – once more – in Mongolian language lessons.

-Picture Ulaanbaatar 20 years from now and tell me what you see.

-The ger suburbs sensibly re-developed, a major business park, along with a large mall or two on the outskirts of the city, and the remaining historical buildings and character of the inner city preserved and enhanced.

A better street and traffic system, although I think that restricted vehicle access, as in London and Singapore will eventually have to be introduced in the central city.

An efficient backbone of a public transport system, such as an underground or overhead railway along the entire length of Peace Avenue with one branch off to the south and the new airport. This would be fed by network of smart mini-buses that service the outskirts and feed into the main system.

-What is your favourite Mongolian food?

-Being Australian, I should be at home in meat-eating Mongolia. But strangely, since coming here I have discarded my Australian heritage and tended towards vegetarian and fish. But the Mongolian cutlets at “Time Out” restaurant have no trouble into dragging me back to carnivore land.

-Who inspires you?

-Many people, both contemporary and historical. In Australia, a prospector called Mark Creasey came from humble beginnings and with hard work and instinct has discovered many huge mineral deposits and been very successful. Through all of that he has remained unpretentious and true to his core principles. Contemporarily, there are several modern Mongolians who have done the same thing in business, government, and the community while still maintaining their original values and ethics. I have watched their political or commercial or personal lives develop over my time here and am full of admiration for their drive, energy, honesty, and far-sightedness. Stories and examples such as these still inspire me to be a better person. On a more general basis, I am inspired by the life and achievements of Winston Churchill.

-What was the last book you read?

-“About This Life” by Barry Lopez. He is my favourite contemporary writer. His prose fills me with awe and pleasure.

-What is your favourite book/s of all time?

-“Atlas Shrugged” by Ayn Rand had a great influence on me when I was a teenager.

-Do you have a favourite quote or motto?

-Winston Churchill: “Never give up”.

-If you could have dinner with 5 people who would they be?

-I have already broken bread with many, many associates, friends and family over the years and immensely enjoyed those times. I would happily invite them every single one of them, five at a time to join me again. That may take a few years, so people such as Aung San Suu Kyi, S.Oyun, the new Pope, George Clooney, and Keith Richards will just have to take a ticket and wait a while.

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MIBG Chairman: Economics Should Dictate Politics, Politics Should Not Dictate Economics

March 4 (MIBG) MIBG’s Chairman, Mr. Jargalsaikhan Dugar, was recently interviewed by the Mongolian Daily News regarding the current investment climate in Mongolia and the impact that the Strategic Foreign Investment Law has had. The following is a selection of comments from the interview highlighting pressing issues currently affecting the market – the original article can be found here through the Daily News website. The interview was conducted by Ms. Baasansuren Tsetsegmaa with translation and editing by the MIBG Research Team.

BT: You are an expert in Mongolia’s investment sector. How do you feel that the Strategic Foreign Investment Law has affected foreign investment into the country?

JD: To tell you the truth, the law was adopted due to the concern that foreign state owned companies would attempt to acquire the majority of Mongolia’s natural resources. Therefore, the law makers took an immediate step to block foreign investment into these strategic projects. However, the word strategic itself has been left unclear and we still don’t have a proper definition of “strategic sectors”. Subsequently, many private sector investments that did not involve foreign state owned enterprises were also halted and while the GOM was trying to work out their agreement with Chalco the country missed out on some great investment opportunities – it was like adding insult to injury.

BT: Could you please specify the negative influences that (the Strategic Foreign Investment Law) has had on the banking sector?

JD: In Mongolia 98% of the financial sector is accounted for by the commercial banks. Banks earn money through lending the money that we deposit at higher interests. They issue loans and wait for their return, comparing this to human physiology it is like the circulation of blood throughout the body. So what happens when blood stops circulating? The person dies. The same can be said for the economy and the circulation of money. In a healthy economy money is in constant circulation. But today the government is blocking the main source of this circulation, foreign investment, by driving investors out of the market.

BT: Many people believe that only the mining sector is suffering from (the Strategic Foreign Investment Law) but you believe that the impact is being felt outside of mining as well?

JD: Yes, not just the mining sector is suffering from this legislation. It has already started, like Adam Smith’s invisible hand when the banking sectors lose strength the Government will participate in order to boost the banking sector. This is like copying practices that might exist under a communist government. The biggest examples of why the government shouldn’t consider going after profits are Erdenes Tavan Tolgoi and MIAT. But not everything is blackened out. We are not stepping after Kazakhstan, Turkmenistan, Tajikistan and Uzbekistan where there is one person in total control of the government even after entering market economy. Our society is still considered healthy and people can freely criticize political parties. As I have compared with human physiology before, this is the same as an immune system. When we chose democracy in the 90’s, we didn’t have money, capital, or recognition of our mineral resources. Therefore, we built our governing structure without much consideration for these aspects. We have two main parties, which work as great critics to each other. We have a President, Parliament, executive governance and constitutional court. These are the cornerstones of our principles.

BT: Statistics show that economic growth is not slowing down and will remain within double digits for 2013, what are your thoughts?

JD: I think the question that need’s addressing is how did economic growth increase so significantly over the last few years? It has been the result of long term Government policy that focused on attracting foreign investment. Therefore, it is not an achievement that today’s politicians can take ownership of. This has been the result of policy carried forward by great people in the past such as D.Sodnom, D.Molomjamts, B.Peljee, Sh.Gungaadorj. The last government said that during their leadership economic growth reached 17%. But in truth, they were lucky to be elected during this peak time in economic expansion. During this time they benefited from steady long term investment policy that resulted in many investors prepared to place their capital in Mongolia. But now we are scaring off investors. As I remember, in 1996 the total Mongolian budget was 300 million USD and today it has reached 6 billion USD. This has been the direct result of such simple examples as: investors staying in Mongolian hotels, mining companies buying dairy products in bulk, and foreign investment companies employing domestic workers. There are many other examples across a variety of sectors that we can point to. But, the fact remains that money cannot be pulled from thin air.

BT: Regarding the Draft Minerals Law and issuing of mining licenses, shouldn’t they be difficult to obtain?

JD: But the current situation is actually scaring people away. We could consider mining licenses to be like a wedding band between the Mongolian Government and investors. It should be the same as taking a vow, for better or worse, when one side gets angry they can’t always take off and throw away the band. Under the proposed Draft Minerals Law the Government is responsible for granting licenses, but when they don’t feel like it, they can take it back and give it to someone else. This is not just a problem in mining but also in other sectors such as construction and manufacturing. This leads to an increase in bureaucracy and a possible increase in corruption. The current Minerals Law of Mongolia consists of five reasons to revoke the license. However, the Draft Minerals Law has reached approximately twenty possible reasons. Let’s take a brick plant as an example. The raw material is a mineral resource. When the Government revokes the license the one who would suffer the most is the investor. However, the decision will have run on effects causing unemployment, lost tax revenues, decreased buying power, and further economic impacts. Causing damage to investors and destroying it’s own economy is not the Government’s role.

BT: So are you saying that licensing was used to scare off people but should now be used as a connection, therefore we need a proper definition and defined system?

JD: Exactly, we need a proper definition of licensing and an understanding of the meaning. Afterwards, we need to use it correctly, in line with the law and the constitution of Mongolia.

BT: What do you believe will happen if the draft minerals law is passed in its current form?

JD: We believe that there is hope that this will not occur. Following town hall discussions and the complaints and suggestions from sector representatives and experts further research is being conducted. This is the first time that the Draft has been discussed in a town hall format and is a great step forward for us. We believe that these conversations will lead to the quality of the law improving.

BT: The Minister of Mining has made some serious statements lately regarding Oyu Tolgoi. Following his statements there was a drop in Oyu Tolgoi’s share price on the international markets even though there were no official statements from Parliament. What are your thoughts?

JD: I believe it was last year when a minister in Japan commented that retirement benefits for elders were too high, he soon after retired from his position. As for us, we are still in the process of forming a truly democratic society. Lately we have been hearing a lot of words like national security, Mongolian citizens, and national interest from politicians. When we talk about national security, it also includes investors, the private sector, individuals and companies that are forming the society of Mongolia. If we are talking about citizens, it includes the rich and poor, every person in the country and national interest is only supposed to be used in a society where every single piece of property is under the authority of Government. But in developed countries, politics are dictated by economics while in Mongolia, economics are dictated by politics. If someone considered that the Government budget was the entire Mongolian economy that would be a naïve concept. Only after every contributing factor, both domestic and foreign, is included can we truly form a proper representation of the Mongolian economy.

BT: The Government has mentioned interest in revising the Oyu Tolgoi Investment Agreement and also the Chalco agreement. Rio’s executives appear to be in a waiting mode while Chalco has already expressed that they will not change their position. Does it appear to you that investors have already started their protest?

JD: A contract is signed when two sides reach a mutual agreement. Therefore, one side should not attempt to change the agreement single handedly after both parties have signed. Even if there was a disadvantage, one needs to honor their contract once they have agreed. Of course, over the tenure of an agreement there will come times when changes are necessary. In those instances one should request making changes and mutually agree upon those changes with their partners.

BT: In your opinion what should we do to help people understand that we cannot derail from our choice of a market economy?

JD: In 1990, we chose democracy and a civil society. A lot of us didn’t understand the concept and the importance of this choice. We need to review again why we made this choice and the resulting Constitution as it seems that some of us are unintentionally and subconsciously leaning back towards socialism. It will take a while until society learns how to control their politicians under our democratic system but it will happen. I understand that some people are in the process of translating Adam Smith’s book, The Wealth of Nations, into Mongolian. Adam Smith teaches us market economic principles which may help to improve and further our understanding of the Constitution while also protection and properly applying its principles.

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MIBG Report From PDAC 2013

March 4 (MIBG) MIBG is currently attending the Prospectors and Developers Association of Canada 2013 International Convention, Trade Show, and Investors Exchange - Mining Investment Show (PDAC) being held in Toronto from the 2nd to the 5th of this month.

The convention is the largest mining show in the world and provides a fantastic opportunity to gauge industry sentiment and international appetite for Mongolian opportunities. Over 30,000 people will attend from all aspects of the business including exploration, producing, services, and financing. Additionally, Toronto is widely considered as the global capital of the mining industry with 1,629 mining related listings on the Toronto Stock Exchange, making it the premier destination for such industry gatherings.

Mongolian juniors are actively exhibiting at the event, including: Erdene Resource Development Corp (TSX:ERD), Altan Rio Minerals (TSX.V: AMO), Centerra Gold (TSX:CG), and Entree Gold (TSX:ETG). However previously exhibiting companies such as Khan Resources (TSX:KRI), Southgobi Resources (TSX:SGQ), and Turquoise Hill (TSX:TRQ) – previously as Ivanhoe Mines (TSX:IVN) did not exhibit this year. That said, the Mineral Resource Authority of Mongolia (MRAM) has a booth which features prominent Mongolian companies such as Oyu Tolgoi LLC, Erdenes Tavan Tolgoi LLC, and Mongolia Mining Corporation. It was also encouraging to see that MRAM is promoting the Mongolia @ PDAC 2013 event to be held on the 5th of March at the Hyatt Regency Hotel on King St.

MIBG's Board and Executives have been participating in PDAC since 1997. Throughout our experience, the conventions atmosphere has always provided a strong indication of the state of the cyclical exploration sector. This year is no different, and with the most repeated comment of the convention being "half of the TSX Venture listed stocks have less than $500,000 in cash and even half those companies have less than $100,000," it’s fair to say that the outlook is not positive. In fact, Bloomberg has reported that the Venture board, which plays hosts to mainly junior exploration companies, will see over 1,200 companies facing a cash crunch and that consolidation in the industry is imminent.

How does this affect Mongolia? Well for starters it provides a sense of how difficult it will be for Mongolian Juniors to compete with other companies for capital. Even though positive news has started to trickle out of Mongolia, the GOM needs to start supporting the above named juniors in their competition to access already scarce capital. The best way to do this is to provide a sound business environment, supportive policies, and by limiting protectionist rhetoric from all sides.

During MIBG's meetings with various buy and sell side institutions in Toronto, it was evident that accurate and efficient information with regards to social and political developments in Mongolia is lacking. The western media's continued onslaught of negative news, speculative bloggers misreporting on material information related to publically traded companies, and an overall lack of objective reporting is continuing to hurt Mongolia.

In terms of the industry outlook, it’s fair to say that Metals have continued to draw significant attention. The recent decent in Gold price was discussed by Martin Murenbeeld of Dundee Wealth, with deflating Japanese Yen being said to continue placing short term downward pressure on pricing. However, the overall expectation for Gold appears to be towards continued growth. Zinc was another interesting commodity that seems poised for price appreciation. Mainly due to the global supply surplus looking to turn towards a deficit by 2015 as major mines from around the world are expected to close. Also, in terms of Copper, Paul Benjamin of Wood MacKenzie had some interesting commentary regarding a global supply surplus that would last from 2013 through to 2017 which should play into pricing for several Mongolian related stories.

MIBG's Bilguun Ankhbayar will be moderating the investors’ panel of the Mongolia @ PDAC 2013 conference on the 5th of March. We will continue to report on happenings around the convention. Please contact us if you have any questions or would like information on Mongolia @ PDAC 2013.

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Automated parking system to be introduced to Mongolia

March 6 (UB Post) On Monday three companies, Sigma Mongolia, Dong Yang Menics and LG International, held an information session to introduce a modern automated parking system that they plan to pioneer in Mongolia.

Described as the ‘Finest Solution to Parking,’ the system requires establishing multi-storey parking buildings that have ‘transporters’ installed. Parking will involve placing cars into the ‘transporters’, which will then place the cars in empty parking spaces in the multi-storey buildings. The transporter is expected to save people time and will involve using less manual labor than other parking systems. The transporter system uses a quiet engine, and the manufacturers claim it does not cause significant noise or vibrations.

Multi-storey parking buildings are designed to save space, which the inner-area of Ulaanbaatar lacks. Various types of multi-storey parking buildings can be built, both above ground and underground, depending on the desired shape and capacity.

According to a statement made by the Director of the Representative Office of LG International Corporation in Ulaanbaatar City, the initiative to introduce automated parking systems in Ulaanbaatar will be represented by Sigma Mongolia, a company with ten years of rich experience in Mongolia, while Dong Yang Menics, a leading Korean company in automated parking systems, will be in charge of the assembly work and will ensure the safety of the parking system. Dong Yang Menics assembles automated parking system with capacities of up to 5,000 cars. The Director noted that automated parking systems are widespread in Southeast Asian countries, China and Russia.

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BelAZ attends Coal Mongolia 2013, might supply more dump trucks to Mongolia

MINSK, 4 March (BelTA) – Belarusian Autoworks (BelAZ) is working on a new contract to supply dump trucks to Mongolia, BelTA learnt from BelAZ. 

Mongolia would like to buy BelAZ dump trucks with the load capacity of 55, 130 and 220 tonnes. Over the past three years, BelAZ has shipped 35 dump trucks with the load capacity of 220 tonnes to Mongolia. They are used at copper and coal deposits there. According to BelAZ marketing specialists, Mongolia is a promising and fast-growing market; BelAZ is closely studying it and looking for ways to strengthen its positions on this market. 

As part of efforts to secure a foothold in Mongolia, BelAZ took part in the international conference and expo Coal Mongolia 2013 that was held in Ulan Bator in late February. The company presented its products and services together with United Belaz Machinery, the official representative of BelAZ in Mongolia. The BelAZ delegation held talks with potential partners. Mongolian mining companies showed interest in Belarusian dump trucks, road construction machines and machines for mining operations, including loaders, bulldozers, and tow tractors. 

United Belaz Machinery provides maintenance services to Belarusian machines. Its specialists are sent to Zhodino to learn how to operate and service BelAZ dump trucks. The recent training course completed in January; a new group of specialists from Mongolia has arrived to Zhodino for training. BelAZ attaches great significance to providing maintenance services in Mongolia. The services will be constantly improved to raise the competitiveness of Belarusian machines, the company informed. 

Founded in September 1948, the Zhodino-based mechanical engineering company Belarusian Autoworks (BelAZ) was incorporated into a joint-stock company in 2010. BelAZ offers rock haulers, frontal wheeled loaders and bulldozers, tow trucks, special vehicles for underground operations, heavy-duty trucks for metallurgy industry, and other specialized vehicles. BelAZ accounts for a third of the global market of rock haulers and is a leading global supplier of quarry machines.

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Mongolia called on to create own brands at Mongolian Economic Forum

ULAN BATOR, March 4 (Xinhua) -- Senior officials attending the opening of the Mongolian Economic Forum on Monday called on their country to create its own brands to enter into the international market.

Prime Minister Norov Altanhuyag said "Mongolian brand, Mongolia creates" has always been the Mongolian people's dream.

Although Mongolia's per capita possession of resources ranks among the world's highest, most of its mineral products, meat, leather and cashmere are exported as raw materials with no added value, he said.

Mongolia should promote an upgrade and transformation of its economic structure, create its own brands and enter into the international market, the prime minister said.

Deputy Prime Minister Dendev Terbishdagva also urged Mongolian enterprises to join forces to create their own brands to sell abroad.

Mongolian cashmere made under minus 40 degrees could be able to produce highest grade cashmere, but Mongolian cashmere products were not well-known in the international market, he said.

The two-day economic forum was mainly aimed at providing suggestions for vigorously developing deep processing of Mongolian cashmere, leather, dairy and other products, local media reported.

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Work on central campus of universities restarts

March 4 (UB Post) Talk of building a central campus of universities has started over ten years ago in Mongolia. The Mongolian University of Science and Technology once decided to build its campus at the foothills of Bayangol and even obtained the official permission to use the land. The urgent need to establish a central campus has started to be discussed in government since 2008 and the land in Bayangol was estimated to be insufficient for building the campus. For this reason, two more years passed and the Mongolian Government approved Decree 149 to develop universities by establishing a central campus of universities. At that time, the Administration for Pre-Operation of the Central Campus (APCC) was formed under the Ministry of Education, Culture, and Science to implement the decree; and then Ulaanbaatar City Mayor G.Munkhbayar provided 2,000 hectares of land in Shiveet Valley of Nalaikh District for the purpose of buiding the campus.

Approximately 220 million MNT was spent for conducting a technical and economic assessment on the land, formulating a general plan, and designing the land survey. But the land was detected to have permafrost and the area’s harsh weather conditions prevented its construction. What’s more, it could have entailed a great risk and high amount of funding. Some parts of the land were also already privatized for citizens. Therefore, the National Development and Innovation Committee announced a bid to choose another suitable land. As a result, the central campus was decided to be built in Khurment Valley in the fourth and fifth Khoroos of Baganuur District on a 10-thousand hectare land, according to a decree in a government meeting last November 2011.

The advantages of building the campus in Baganuur were that no thermal power and water treatment plants had to be constructed there so that the campus will be linked to heating, electricity, and water lines directly. However, a year passed without any progress on the central campus. When journalists inquired about its slow progress, APCC officials said no further that it needs thorough preparation and planning before starting construction.

Soon enough, the Innovation and Reform Government was formed and all staff of APCC were reappointed as it is almost a tradition to change state officials when a new government is formed in Mongolia. Therefore, the central campus is restarting with other officials. As newly appointed officials are likely to be inexperienced, it will take time to learn. When they finally get to know what they are supposed to do and get enough experience, the election in 2016 may change everything again.

When the President of Mongolia, Ts.Elbegdorj, quizzed about the central campus’ progress, Minister of Education and Science L.Gantumur claimed, “It is rather slow. The estimation of 500 residents in Baganuur University Camp is impractical. This is preventing progress of the campus. Other camps are currently under research. It is too early to talk about their results.”

Mongolian GT Company is working as the main company for the general plan of university camps while Canon Design Company of the USA is working as an advisory company.

If the central camp is built, the pressing problems of our city – traffic congestion and pollution of air, soil and water – will be remarkably reduced. The camp is supposed to completely solve problems in current facilities by building dormitories for both students and workers as well as  kindergartens and schools according to world standards. Campuses must have an environment where students are provided with every required facility.

An additional 3,000 hectares of land was added to the 10,000 hectares campus purposes in order to develop Baganuur District along with the campus. Seven thousand hectares of land behind the Kherlen River is planned to be researched for further efficient use.

In the first stage, five state-owned universities, the National University of Mongolia, Mongolian University of Science and Technology (MUST), Health Sciences University of Mongolia, State Education University of Mongolia, and the University of Arts and Culture will be moved to the campus. University development work on establishing the central campus will be implemented orderly from 2010 to 2021 in accordance with the plan. However, no remarkable or practical progress has been shown.

Apart from the central campus in Baganuur, other campuses will be built, too, in Khovd, Dornod, Orkhon, and Darkhan-Uul Provinces. A campus land of 50 hectares in Orkhon Province and twenty hectares in Khovd Province have already been provided. Land issues haven’t been solved yet in Dornod and Darkhan-Uul Provinces.

Below is an interview of Unuudur Newspaper with Yu.Enkhbat, acting chief of APCC, regarding the campus issue.

-What is APCC working on currently?

-We worked in Orkhon Province and chose the land to build a campus where we formulated a land survey and conducted an engineering and geological study. In Khovd Province, the same research is in progress. As for Baganuur, research was already done and we announced a bid to carry out a technical and economic assessment as well as a general plan twice in July and October. We signed the contracts with bid winners in late 2012.

-How much fund has been allocated for the campus project in 2013 from the State fund?

-Two billion MNT. We planned to conduct 24 measures within the fund and submitted it to the relevant ministry. Construction work is planned to start in 2014 as there hasn’t been a suitable condition to start it this year.

-How are you managing the investment?

-There are eight financial backing sources including the fund from selling some premises which universities used; international soft loans or aid money; profit gained from the universities’ operations; funds provided by the Human Development Fund for the education sector, the State, and alumni; other investments; etc.

-When will the central campus of universities go operational?

-Exact numbers of university buildings and their square meters as well as the number of students and workers to move to the Central Campus will be determined based on technical and economic assessments. We are aiming to move the universities within 2015 to 2016. However, there are still many problems regarding some issues.

-You said the abovementioned five universities will be moved to the campus in the first stage. What will happen to other universities?

-It is uncertain what to exactly do with the other universities. Five universities will be obligated to move to the campus. It is too early to talk about other universities. We are thinking of moving MUST first. MUST will choose its first schools to be moved to the campus after discussing it with the State Property Committee and the Ministry of Education, Culture, and Science. As we are generally inexperienced in this field, we are learning from foreign countries.

-How much fund was budgeted for campus work in 2012?

-Two billion MNT was budgeted and we used half of the budget for the environmental general assessment, water prospect plan, land survey, as well as engineering and geological research.

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Mongolia holds int'l road machinery expo

ULAN BATOR, March 6 (Xinhua) -- An international exposition opened here Wednesday featuring advanced machinery and technology in highway construction.

Companies from China, South Korea, Japan, Russia and Mongolia participated in the two-day event.

Organizers said that the exposition was aimed at promoting exchanges of experience and information in the sector and building business partnerships.

In addition, the Mongolian government also expected the event to introduce foreign capital and technology into Mongolia.

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Developing Mongolia’s coal industry

March 1 (Energy Global) In the last two decades, with assistance and advice from various multi-lateral and bi-lateral donors, Mongolia has begun reforms to move from a centrally planned economy towards one with market characteristics. At the same time, geological surveys have shown it to hold vast reserves of coal, copper, gold, silver, uranium, molybdenum, iron, tin, nickel, zinc, tungsten, phosphates, fluorspar and some oil. The government of Mongolia recognises both that exploitation of its mineral wealth is essential if the economy is to grow and that it must establish a sustainable way forward if it is to avoid the problems that have affected several other resource rich developing countries in the past.

It has a strong vision of how the country should be developed, with an aim to establish major and long-lasting opportunities for Mongolia. The mining operations will need to meet all the environmental regulations and standards, so as to limit adverse impact on air quality, loss of water supplies and destruction of the fragile ecosystem. The government has declared that it will use the proceeds from mining activities to develop essential services. These need to include education and health care, as well as creating capable workers with equal access to opportunities to fill jobs in the mining and construction sectors. This will require a longer-term investment culture, with the prospect that the country can gain added value from its coal and other resources that will fulfill a crucial and beneficial role in the country’s overall development.

Mongolian investment environment: losing its credibility

In order for such an ambitious objective to be met, major investment is needed to develop the mines and associated infrastructure. The latter must include extensive rail/road links, an uprated and integrated power transmission and distribution grid, new power plant facilities, other industrial facilities, and townships in mining regions. Consequently, there is a need for external assistance. This requires a robust business and economic development plan for Mongolia, which includes an increase and enhancement of co-operation with the private sector, while also expanding international investment opportunities by creating a stable and secure environment for domestic and foreign investors. However, in practice, the lack of consistent implementation policies together with weak legal and regulatory frameworks means that the country is facing severe development challenges.

In the past, certain mining agreements were made without due regard to Mongolia’s best interests. Recently this has become apparent to much of the population. The adverse reaction that arose has led to the government to declare that it may renegotiate various coal production agreements, as well as other resource agreements such as the Oyu Tolgoi copper and gold mine contract. This retrospective approach is likely to lead to either a significantly more cautious or to a negative approach by international investors just at a time when a massive influx of capital is needed. Whereas the investment climate in Mongolia was previously seen as highly favourable, it is now seen as being overtly risky. This is resulting in unwillingness by international companies to support new projects until it is clear that a consistent approach is to be established that will cover both new and existing contractual commitments.

While it is essential to maintain foreign investment, it is also important to manage the economy as far as is practicable to limit vulnerability due to the impact of cyclical mineral prices. For example, GDP growth accelerated to 17.3% in 2011 from 6.4% in 2010, with government spending rising by 56% in 2011. Forward payments have been made to various cities in anticipation of continuing future revenues, which will not be achieved due to the flaws in the implementation plans within the mining sector. Thus, a further 32% increase in GDP growth was expected in 2012, but this is not now likely to be achieved as the global economy is facing a substantial slowdown in growth due to the continuing European sovereign debt crisis. This situation is made worse by China’s further cutback in coal imports due to the ongoing disputes over market accessibility. It seems that, in the near term, there will be a sharp drop in the Mongolian government revenues.

Mongolian coal: a minnow between two giants

The development of several major coal deposits to generate income for the greater good of the country is at the forefront of the resource exploitation boom. In this regard, Mongolia’s location between two very large countries, with major economies, offers some very complex challenges. While China is seen as an obvious market for its coal, there are very strong doubts about letting its state-owned companies gain a direct input into Mongolia’s energy (and other minerals) sectors. At the same time, Mongolia also remains dependent on Russia for petroleum products, and its industries (including the agricultural sector) remain vulnerable to any interruptions to that supply chain.

Consequently, Mongolia needs to establish a balanced relationship with the two, not least as both are keen to improve bilateral trade, while both can determine whether Mongolia can establish a route to establish its own significant export routes for bulk commodities. The steps taken so far have not necessarily worked to Mongolia’s advantage. It remains to be seen whether it can reach a financially and economically viable accommodation with its two neighbours and beyond them to the many international mining groups that can actively assist Mongolia to establish a sustainable coal-based economy.

Growing a clean coal economy

At the same time, Mongolia has a small population and until recently has had little industrial input. As such, there is a need to build up its own capacity to ensure there is sufficient scope for its people to take on more than unskilled jobs within the various mining sectors. It also needs to gain expertise and experience in the introduction and application of coal utilisation technologies if it is to establish a growing energy economy based on clean coal, to be supplemented with renewable energy as appropriate.

There is an international co-operative venture under way in the mining sector, with a broad agreement having been made between Mongolia and Germany to set up a Mining Academy that will cover joint research, workshops and advanced training. When clean coal utilisation is considered, there is considerable scope for Mongolia to engage with various independent expert bodies, such as the IEA Clean Coal Centre. There is a significant need for techno-economic based capacity building and associated technology awareness training to be provided, covering the efficiency and environmental impacts of clean coal and alternative technologies. This is necessary both to assist the nation in its near-term development plans and also to build up the national capacity from a longer-term sustainable perspective.

Dr Andrew Minchiner OBE is principle associate at the IEA Clean Coal Centre. His full report is available from the IEA Clean Coal Bookshop.

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Speaker receives World Bank Country Manager

March 3 (UB Post) Speaker of the Parliament of Mongolia Z.Enkhbold received Permanent Council of the World Bank to Mongolia Coralie Gevers on February 26.

In the beginning of the meeting, Mrs. Gevers thanked Z.Enkhbold for receiving her and officially congratulated him for being elected as the Head of the Parliament.

They then exchanged views on what issues both sides should focus on in the upcoming years regarding civil society in and the economic development of Mongolia.

Mrs. Gevers expressed her thoughts that not many changes would be made in the World Bank’s loan and aid policy and informed Speaker Z.Enkhbold that the World Bank would cooperate with the Ulaanbaatar administration on this matter. During the meeting, she also gave her position on the general plan to develop Ulaanbaatar until 2020 as well as how to implement the reform and innovation programs and policies of the new Parliament and government.

From his side, Z.Enkhbold highlighted that the 2013 State Budget of Mongolia was made possible through the continued efforts of the current Parliament, while the 2014 State Budget would be adopted with the contribution of policies from the new Parliament and government. Moreover, he mentioned that the scope of the local budget has been increased by 2.5 times. The expenditure breakdown should be informed publicly and that of investments should also be presented to the public so that the citizens can have control over the budget, noted Z.Enkhbold.

The general plan of Ulaanbaatar was approved during the Fall Session of the Parliament. If the Parliament issued the financing soon, then the plan to remove the administration of Ulaanbaatar from the Songinokhairkhan district would happen within two years, informed Z.Enkhbold.

At the end of the meeting, Mrs. Gevers said that the World Bank would continue to operate in helping develop the Mongolian economy.

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Mongolian president meets Danish parliament speaker on cooperation

ULAN BATOR, March 4 (Xinhua) -- Mongolian President Tsakhia Elbegdorj met visiting Danish senior officials here Monday on the two countries' cooperation in energy, agriculture and culture.

"Mongolia is interested in promoting cooperation with Denmark in such fields as culture, education, science and so on," Elbegdorj told the Danish parliamentary delegation led by Parliament Speaker Mogens Lykketoft.

He also expressed his willingness to introduce Denmark's environmentally friendly technologies to the Central Asian country.

The delegation, which started its official visit Saturday, was also scheduled to hold talks with Mongolian Foreign Minister L. Bold and Mining Minister D. Gankhuyag.

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Ts.Elbegdorj receives Danish SpeakerUB Post, March 5


Strategic Foresight Team of World Economic Forum to work in Mongolia

March 3 (UB Post) Foreign Affairs Minister of Mongolia L.Bold met Kristel Van der Elst, the Director and Head of Strategic Foresight, World Economic Forum. The two sides exchanged views on issues regarding the organization of the upcoming event, “The World Economic Forum and Mongolia: Strategic Talks,” this September in the framework of the project under implementation, “The Outlook on Mongolian Development,” which will be discussed in the 2014 World Economic Forum.

During the meeting, Mrs. Van der Elst said that the Strategic Foresight Team of the World Economic Forum would be present in the Mongolian Economic Forum, to be held in Ulaanbaatar on March 4 and 5.  They would also meet with the political, business, and press delegations as well as hear their thoughts and views on current developments in Mongolia and the way forward. Research and information collected by the team would become the groundwork of the presentation on Mongolia’s development outlook and trajectory.

In recent years, mutual cooperation between the two sides has been intensifying, reaching the partnership level; emphasized L.Bold. He also noted that Mongolia is finding great importance in discussing the issue of Mongolia’s development in the upcoming 2014 World Economic Forum.

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March 5 (VII Ministerial Conference of the Community of Democracies ) The National Security and Foreign Policy Advisor to the President of Mongolia L.Purevsuren and Deputy Minister of Foreign Affairs D.Gankhuyag have paid a working visit to Myanmar. The Mongolian delegation has held official meetings with the Director of the President’s Office, Deputy Speaker of the Parliament, head of the Parliamentary Standing Committee on Foreign Policy and some ministers and exchanged views on issues related to bilateral relations and cooperation.

At the meetings, the Myanmar side informed that representatives of the Myanmar’s Parliament and Government will participate in the VII Ministerial Conference of the Community of Democracies, to be hosted in Ulaanbaatar on April 27-29, 2013. It was announced that Daw Aung San Suu Kyi, the Nobel Peace Prize winner would attend the upcoming conference as well.

Mongolia is preparing to host the conference. Thus, it has invited foreign ministers of 131 states and about 20 international organizations. The President of Mongolia has invited heads of state or government of 10 countries and eminent persons as his honorable guests.

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Minister L.Bold finds great importance in hosting CD Ministerial Conference

March 3 (UB Post) The Board Meeting of member countries of the Community of Democracies (CD) was held in Geneva on February 26.

The Foreign Affairs Minister of Mongolia, L.Bold, opened the high-level Board Meeting where he stressed that Mongolia is finding great importance in hosting the CD Ministerial Conference and expressed his enthusiasm that invited countries were at the conference, and especially thanked the Board Member countries for sending their foreign ministers.

Japanese Foreign Minister Toshiko Abe attended the opening meeting and gave a statement that Japan would actively participate in the operations of CD and support the initiation of a working group that fosters democracy in countries such as Cambodia and Myanmar, which are now in the throes of the Democratic Movement.

During this Board Meeting, an important decision was made to invite more countries to attend the Ministerial Conference, which will be hosted in Ulaanbaatar. Later on, the delegations of Mongolia gave information on their preparations for this conference; such as the draft conference program, the draft of the Ulaanbaatar Independence project, and the participation status of invited countries. Furthermore, the working groups of the CD mentioned their relevant duties and discussed the regulation on choosing the chair country of the CD. The Board members also promoted the idea of forming a working group of to advance the Democratic Movement in South Sudan, with the Permanent Representative of South Sudan to Geneva, Mr. R. Riek, informing them that South Sudan is glad with this decision. The meeting was attended by the senior officials of the Board Member countries, CD Secretary-General Maria Leissner, and representatives of civil society.

Mongolia has been chairing the CD since July 2011, for almost two years; and is working to host its 7th Ministerial Conference from April 27 to 29. The CD is an intergovernmental organization established in 2000. The Community works to strengthen democracy worldwide by providing support to emerging democracies and civil society. It now embraces almost 140 countries, including a governmental component made up of government representatives and a non-governmental component made up of civil society organizations.

The Foreign Affairs Ministries of around 150 countries and around twenty international organizations have been invited to the upcoming CD Ministerial Conference in Ulaanbaatar. The President of Mongolia himself has invited over ten heads of foreign states and governments, and has since invited the same number of world-famous and prominent personalities. The actual Ministerial Conference will be held on April 29, and the previous two days, April 27 and 28, will be dedicated to the Parliamentary Summit of CD, Women Summit, Youth Summit, and the Conference of Civil Society.

Currently, some heads of states have already responded to the invitation to attend this Ulaanbaatar conference. Foreign ministries of ten countries and four international organizations have also agreed to take part in the Ministerial Conference.  It is estimated that around a thousand foreign delegations will come to Ulaanbaatar to witness this event. The National Committee to make arrangements to the CD Ministerial Conference is headed by the Prime Minister of Mongolia, N.Altankhuyag.

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L.Bold meets with UN High Commissioner for Human Rights

March 3 (UB Post) Foreign Affairs Minister L.Bold has met Navi Pillay, the United Nations (UN) High Commissioner for Human Rights, and said that some of the basic foreign policies of Mongolia are to help strengthen democracy outside of the country, and to support the operations of the UN and its affiliated organizations especially towards protecting and providing human rights and freedom. He also mentioned that Mongolia is putting forward some intentions in making a significant contribution to the promotion of human rights both in the regional and world levels, particularly given its engagement to the UN Human Rights Council from 2016 to 2018.

As far as human rights in Mongolia is concerned, President of Mongolia Ts.Elbegdorj made a resolution to abolish the death penalty in 2010. Accordingly, the Parliament of Mongolia has ratified the two additional protocols towards this abolition and stated that they are actively being implemented. These protocols were released in connection with the national report on human rights conditions in the country. Moreover last year, the UN Special Rapporteur on Extreme Poverty and Human Rights, Magdalena Sepulveda Carmona, and Mongolia’s Working Group on Human Rights officially began dealing with this issue. L.Bold also expressed the position that Mongolia is ready to receive and collaborate with the UN Special Rapporteur this June.

L.Bold then thanked the UN High Commissioner on behalf of the Mongolian government for supporting and promoting Mongolia during the period of its being the chair country of the Community of Democracies.  High Commissioner Pillay congratulated Mongolian government for showing a great example to countries in the region with its continued efforts in strengthening and popularizing democracy as well as in paying special attention to and preserving human rights.  Finally, she wished Mongolia in being elected as a member of the UN Human Rights Council.

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Event: Postsocialsim: Mongolia and China

Friday, March 8, 2013 - 12:00pm - 2:00pm

Columbia University Morningside Campus International Affairs Building, Room 918

The Weatherhead East Asian Institute (WEAI) presents "Postsocialism: Mongolia and China" an INTERACT Lecture Series, "Rethinking the Global" with Manduhai Buyandelger, Associate Professor of Anthropology, MIT, and Lily Chumley, Assistant Professor of Media, Culture, and Communications, NYU. 

No registration required.

Co-sponsored by The Institute for Comparative Literature and Society (ICLS), Harriman Institute, and the International Network to Expand Regional and Collaborative Teaching (INTERACT).

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The Importance of Balance: Electricity in Mongolia

By Paul Sullivan, Georgetown University

March 5 (UB Post) Looking at the International Energy Agency graphs on electricity production in Mongolia, one can see the dominance of coal. The only other source of electricity that even shows up is oil.

Both of these fuels are the dirtiest to use for producing electricity. The air pollution from them is about as bad as it gets. CO2 (carbon dioxide) production for each kilowatt hour of electricity is highest for coal, especially the softer coals. Oil is next in line. Natural gas produces a lot less CO2 for each kilowatt hour.

A kilowatt hour can be visualized as the running of a 1,000-watt lighting system for one hour. A 100-watt light bulb uses 0.1 kilowatt per hour. And you can figure it from there. It would be just 10 100 light bulbs and you get 1 kilowatt. You might want to check the wattage of your lights, televisions, radios, computers, and so forth and then add them all up to see how many kilowatts you are using every hour when these are running. A lot of you may be surprised by the results.

So every time you use your computer, lights, radios, electric stoves, and even when you recharge your Ipod, Ipad, and other electrical systems, you are draining electricity from the grid, unless you are getting all of this from a distributed power system that is just for your house, your factory, or neighborhood. You are also causing the production CO2, particulates, sulfur oxides (SOX) , nitrous oxides (NOX), and more at the power station when you use electricity.

I know that sounds odd. However that is what is happening. Just because you cannot see the power plant does not mean you have no part of what the power plant produces beyond electricity. Many countries have placed scrubbers in the coal-fired plants to reduce considerably the production of NOX and SOX. Some other countries are putting great efforts into carbon capture and sequestration (CCS).

SOX, for example, when it combines with the humidity in the air causes “acid rain.” This can damage the land, crops, wildlife, grasses, and more in long term higher concentrations. There are lakes in the state of New York in the United States that are pretty much devoid of life due to acid rain. They have a nice clear bluish-green hue, but there are no fish there. This is from acid rain that came from the power plants and factories of sometimes hundreds or more miles away. It traveled from cities and factories to once pristine hills, mountains, and lakes.

However, Mongolia is doing little to contain the pollutants from the coal and oil plants. A lot could be done. I am certain the leadership in Mongolia is thinking about this. The health costs of particulates alone could be quite large in the future. They are already building. The most vulnerable to the particulates are the very young and the elderly. However, even the most robust of people can be harmed in the short and long runs when the pollution from the coal burning in the gers combines with the coal and oil burning in the oil and coal plants, especially in UlaanBaatar, given how the hills capture the pollution and keep it hovering in the city for long times in the winter most especially.

As Mongolia develops, gets richer, starts extracting minerals and putting them to use (and I recommend that these minerals be processed in Mongolia to allow Mongolia to grasp the value added of processed minerals, not just the raw minerals) and starts more industries and services, there will be quickly growing needs for electricity.

Mongolia is looking into wind and solar power. There are many gers that have solar power. Wind is being developed by even some private sector companies. This is good. Mongolia could also develop systems like the power towers that use both and wind. These can work even in the evening. The point of them is to have the air go through a large group of massive wind vanes at the bottom of a very tall chimney. By tall, I mean from one-half to one kilometer high. At the base of the chimney are a series of solar panels that are high enough to allow the air to flow from the earth’s surface to the top of the chimney. Think of this. There would be a series of panels connected in a big circle at the base and all around the tower. The wind would rush under the solar panels, which produce electricity in its own right. The wind would swoop upward through the wind vanes and out the top of the chimney. The whole process works like the chimney for a fireplace or stove, but nothing is burning. It is the difference in the temperatures from the ground to the top of the chimney that makes this happen. It is like the eagle using updrafts to fly up the side of a mountain.

There are hundreds and even thousands of alternative energy technologies that are out there, will be developed, and have declining costs. Solar power is not just from solar panels outside of the gers. Solar power can be painted on houses and buildings. There are thin-film technologies for solar power that can be applied to the outside of buildings and everngers if done carefully. Solar power can also be done via concentrated mirrors and parabolic dishes that heat up special salts. The technological world is wide open when it comes to alternative energies. Garbage-to-energy is another one. The waste from Ulaanbaatar could be collected in an incinerator plant and the garbage burned, which produces heat, which in turn produces steam in the plant that turns the turbine that produces electricity. Municipal and agricultural waste can also be captured under thick containing plastic sheets or within vats to produce methane, natural gas, and in turn can be used to produce electricity and can be used for heating and cooling.

The huge coal reserves in Mongolia can also be used to produce cleaner energy. I do not say clean energy because there is no such thing. Two ways of doing this with coal are underground coal gasification (UCG) and coal-bed methane (CBM) extraction. UCG, in a much simplified explanation, is created by sending down oxides and steam into a deep coal mine. Within the mine, there will be a combustion chamber to, via the use of the steam, oxides, and high pressures, create natural gas from the coal. This natural gas is extracted from the deep mine up the production shaft, which is separate from the injection shaft that brings the steam, etc. into the mine. This natural gas could then be sent to a natural gas power plant. This plant will produce much less pollutants than the coal plants. The natural gas could also be used for industrial purposes throughout the cities and town. It could also be used for much cleaner heating in apartments and more than what could be done with coal. CBM is another way of getting the natural gas, which is natural coal mines, out of the mine and into pipes and along to power plant lines. Another use is by simply extracting the water from the mine and having a production pipe direct the natural gas to a collection area and then on to its end uses.

These two methods are a lot more complex than what I describe here, but the basics give a sense of the possibilities of producing cleaner natural gas from much dirtier coal.

Another way to reduce pollutants for each kilowatt hour is to tighten up on the efficiency of power plants and of the things that use electricity. For most power plants about 65 percent of the fuel put in is lost at the plant in the form of heat out into the atmosphere. Then there are losses until the electricity gets to the house, hotel, etc. Then the inefficient lights, toasters, TVs, and more waste even further electricity. Using electricity to pipe water along 90 degree turns is just plain silly energetically. The pipes need to have smooth curves to save energy.

We can also go back to the light bulbs for ideas. Some light bulbs, such as LED (light emitting diode) bulbs produce as much light as a 100-watt incandescent light bulb, but use much fewer watts. The efficiency of light bulbs is increasing by the day. Lots of energy (lots of electricity and the fuels that go into them) is used to produce lighting in houses, hotels, factories, and more. The amount of electricity used can be drastically cut by using efficient light bulbs. From that we can see that for each light bulb, going back to the power plant, we produce less pollution. Getting the same amount of light with less damage to the environment and health seems like what we Americans call a no-brainer.

Light can also be produced naturally in buildings by redesigning the roofs to let light in. There are also light tubes that can bring natural light into factories and buildings without using a single watt.

I heard an interesting story the other day. There was a factory that was used to repair aircraft. They used very strong lights to light up the aircraft during the repairs. These lights produced a lot of heat. The workers also got headaches from the lights. They needed to take breaks from the heat and headaches regularly. It harmed productivity and it was not a nice place to work. An energy expert came in and replaced the lights with light tubes, lighting from the roof, more efficient and less heat-emitting lights, and redesigned the work floor to make it a better place to be with proper lights and cooling/heating when needed. Productivity went way up. The costs for the changes will pay themselves back in just a few years with energy savings and increased worker productivity. Everyone wins.

There are thousands of examples of how one can not only get the job done, but get it done better, in a better work environment and also while not using as much energy or harming the environment and health as much as before the changes.

Our chances for improving things, rebalancing things, are limited only by its creativity, imaginations and our desire to make things better.

Mongolia has the chance to do this right as it develops. The shelves of technologies and ideas are out there. Mongolia could grow and develop in a much better, cleaner, and more efficient way than most other countries. It is a matter of choice – and of leadership at many levels.

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Ending measles and rubella in Mongolia

March 6 (UNICEF Asia Pacific) The Measles & Rubella Initiative, a global partnership to end these diseases, has helped reduce measles deaths by 71 per cent since 2001. An October 2012 immunization campaign against measles and rubella in Mongolia reached over 95 per cent of targeted children.

To view the full photo captions, expand the gallery and click 'show info' in the top right corner.

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Mongolia holds saker falcon festival

ULAN BATOR, March 5 (Xinhua) -- Mongolia held a saker falcon festival Tuesday to celebrate the Asian country's national bird.

The festival, rich in ethnic characteristics, took place in Genghis Khan camp outside the capital of Ulan Bator.

Twenty Kazakh falconers from western Mongolia rode past the podium on horseback as the sakers spread their wings for the audience.

A hunting competition was held following the opening ceremony. Under the guidance of the masters, the saker falcons caught rabbits, foxes and other prey before a "King Saker Falcon" was selected by both professional judges and tourists.

Tsedevdamba Oyungerel, minister of culture, sports and tourism, said Mongolia would declare the event a traditional Mongolian festival and celebrate it annually to promote tourism.

The saker falcon was named Mongolia's national bird last year.

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March 5 (Roads & Kingdom) Upon landing in Ulaanbaatar, I wasn’t surprised to learn that Mongolian barbecue is not Mongolian at all. Genghis Khan didn’t feed his army on stir fry. Research tells me that a Taiwanese man formulated Mongolian barbecue some years ago, and I think I know why he chose the name that he did. When you use Mongolia as an adjective, it intensifies any noun beside which you place it. Warrior: Mongolian warrior. Vodka: Mongolian vodka. Girlfriend: Mongolian girlfriend. Taiwanese barbecue? Hardly worth a taste.

In the way of intensity, Mongolia doesn’t disappoint. The country is double the size of Turkey, yet there are only two highways, making transport a frontiersman’s undertaking. Temperatures bottomed out at minus -42 degrees when I was there, yet many Mongolians are content to live in circular enclosures made of fabric. These people ambulate nomadically around the country along some of the remotest land in the world, their camps set against lonely winter tableaux, not a soul in sight. It raises some questions: how do they survive? What do they eat? If Mongolian barbecue wasn’t Mongolian, then what dish was Mongolian? I made some effort to answer these questions, and what I discovered is not for the weakly constituted. It is Mongolian, and it is intense.

It is called bodog (bow-dug), and I drove eastward from Ulaanbaatar to find it. My excited local companions (fixer, photographer) bragged that we were driving on a paved road. Just as they said so, the asphalt ran out. Passing a village of clustered huts, where a dirt-faced boy was playing with what appeared to be a juvenile wolf, we left all cars behind. The drive was several hours of frozen streams, snowy pathways, and ravines that howled with emptiness. Forest speckled the hillsides, and I could make out stumps where people had felled trees for fuel. It was a scavenger countryside.

We arrived at a small homestead. Smoke issued from the chimneys of two gers, the traditional Mongolian dwelling. This was the home of a man named Narantunglag, and his wife, Bujinlham. They were each 32 years old, but they looked older, life on the range doing their features no favors. Each year, Narantunglag, Bujinlham, and their three-year-old daughter Bayasgalan picked up stakes with the seasons, moving their herd of sheep, goat, and steer around the country in search of grazing grounds. This area, Terelj, was their winter encampment.

A small corral stood near their gers. One section held a half-dozen undersized cows. In the other, a single goat about knee-high, its fleece a muddy orange, stomped on its hooves, searching nervously for an exit from the wooden stockade. It appeared nervous, though that could have been my imagining, for I knew what was coming.

It didn’t take Ganzorig long to expose the vertebrae of the goat’s neck, and soon he had peeled the animal’s fur to the shoulders. The carcass twisted this way and that, as Ganzorig made careful not to puncture the skin, so as to not compromise the air-tight seal the skin would need to make later. Over the next several hours, I watched Narantunglag and Ganzorig slowly divest the goat’s fleece of everything that was held within it, slicing out meat and bone, collecting these pieces on a platter at their feet. With kicks and threats, they kept Narantunglag’s dogs away from the plate. The dogs instead snatched up the bits of fat and tendon that flecked from the goat to the ground.

The men worked with nonchalance, cigarettes dangling from their lips, unaffected by the cold, though they wore little that I would call winter gear. Bundled up in many layers, I was the one ducking inside the main ger to get warm. There was a central stove inside, its chimney running skyward through the small window at the apex of the ger, the only natural light source. Guests were meant to sit on the left side of the room on a daybed, women on a daybed to the right, the man of the house on a chair straight ahead. As is traditional, the furniture was painted orange, with colorful ornamentation. There was a small dresser, backed by a mirror, with a Mickey Mouse Clock tick-tocking the time. Bujinlham perched on a pillow, watching a tiny black-and-white TV screen. (They owned a generator.) A movie was playing, 3:10 to Yuma. It was the more recent vintage of the film, with two wealthy actors pretending to be desperate men clawing out a life on the edge of the landscape. As her daughter chewed on her sweater cuff, Bujinlham could not be bothered, lost in the world of the movie.

Outside, the goat’s spine snapped a foot beneath its head, and the carcass dropped to the ground. Narantunglag removed the head from where it hung and placed it in a pail. The head’s opened eyes superintended the continued slaughter. The carcass now hanging on a wire run between two spinal vertebrae, Narantunglag worked the knife carefully through bone and tendon. “The ribs and the hips are the hardest,” he said. “You have to be very careful not to rip the skin with your knife. And if you don’t take out the intestines and stomach cleanly, the contents can spill.”

Ganzorig positioned himself on his haunches and supported the goat from underneath, allowing Narantunglag some slack to work the knife around the hips. Blood pooled in a mess of organs. Ganzorig shifted his feet. This caused the blood to slosh around in the goat’s body. The liquid lapped over the skin and splashed Ganzorig’s face. He barely flinched.

Brown pellets issued from the goat’s bowels, spilling like jackpot coins to the ground and mixing with the flecks of tissue on the tamped-down grass and straw. Looking away, I caught sight of Narantunglag’s herd of sheep and goat, which came into view on a nearby hill, dark specks against the snow. The goat that Narantunglag and Ganzorig were dismantling once belonged to that group, and those animals migrated up the incline, pausing now and again to kick at the snow with their hooves and find the grasses underneath it. Over the distance, a sheep’s bleating call reached me, and then the answer of another. When I looked back to the slaughter, I noticed that the pellets were all gone from the ground, along with the tissue, the dogs indiscriminate in their search for protein.

After several hours, with the sun falling over the backside of the hill, the goat was skinned. Narantunglag had broken the carcass’s legs and removed those last bones. The goat’s ruddy, empty fleece hung limply in the crook of his arm. It was time to cook.

Bujinlham brought the platter of meat and bone inside the ger. She added seasoning: salt and pepper, onions, paprika, and the contents of a packet written in Polish. It was called Vigorn, and she sprinkled its dark dust over the meat. She handed the platter to Narantunglag.

A friend of his, Munkhbaatar, had arrived by horse, and along with Ganzorig, they positioned themselves around a fire in front of the ger. Using a pair of metal tongs, Munkhbaatar snatched a stone from the depths of the fire. Narantunglag held open the goat’s fleece, grabbing it around the neck hole. Munkhbaatar placed this hot stone inside it, shoving it into the space of one of the animal’s hind legs.

The rock sizzled the flesh. Munkhbaatar filled the empty carcass with a layer of scalding stones, then stepped aside. Ganzorig took several pieces of meat from the platter and placed them inside the fleece. The meat contacted the hot stones, and smoke billowed out of the fleece, making it hard to see.

Narantunglag placed another layer of hot stones into the fleece. Ganzorig inserted another layer of meat. The men worked this way quickly, making sure to hold the developing steam and heat inside the carcass until it was full of meat and stones. They closed the neck opening with a metal wire, cinching it tight.

They brought out the blowtorch. After pulling out the animal’s cashmere coat with their fingers, the men stood aside. Settled on the dirt by the fire, the carcass was now a white, hairless ball, stuffed fat, with four floppy appendages. This was a bodog. Narantunglag lit the torch. He directed the flame at the bodog, running it across the entirety of its exterior, slowly charring it brown. I stood back and watched.

n Ulaanbaatar, Oktyabri Janchiv had explained the process of the bodog. “The stones hold heat evenly,” he had said. “So the meat doesn’t undercook or burn. As the stones roast the meat, the steam acts like a pressure cooker. This creates juice that drips down and collects in the bottom of the sack. This juice starts boiling because of the blowtorch from the outside.”

The cooking took almost two hours. We stood around and waited. Narantunglag pointed to the far hill and said that wolves lived up there. They stole down under darkness and attacked his herd. It was a constant worry. He had a rifle, but the wolves were always there.

The men watched over the bodog, searching for signs that it might be time to eat. They knocked the ball with their fists. They looked for oil seeping out of the neck hole. “It lets you know it’s ready,” Ganzorig said. At last, they said the bodog was finished, and Narantunglag carried it inside the ger.

Grabbing the knife they had used to skin the goat, Narantunglag slit open the bodog lengthwise. The skin crackled as the interior steam hissed into the ger. Narantunglag plucked a rock from inside the bodog and handed it to me. The rock was hot, and he told me to pass it back and forth between my hands, as this would frighten off the evil spirits dwelling within me.

The men removed all of the meat from inside the carcass. They placed the food on a plate and set it on a small table. Then they titled the charred remains of the bodog, pouring its liquid contents into a small metal bowl.

Narantunglag handed me this bowl. It was hard to discern it in the weak light of the ger, but I knew what it was. Its glistening revealed this juice to be pure, distilled fat. The men all watched as I lifted it to my lips. I took a healthy gulp. It was hot and thick, and it slimed its way down.

I have sat in fine restaurants, linen napkin across my lap, the slightest pressure needed from my knife as the mutton slid off the bone. This was not that kind of experience. We sat on the floor around a small card table. We ripped into the meat with knives and daggers and our hands. We passed around a plastic cup, taking turns with the vodka.

Frontier meat tends to be dry. This was not the case with the bodog. The meat was tough in spots, tender in others, but it was uniformly bathed in the animal’s natural oils, making it easy to eat. This original sauce gave the mutton a tang. A byproduct of its proximity to the fiery stones, I figured, the meat also tasted slightly smoked. As I savored the meal, my eye strayed from the table and its piling of meat, falling upon a bowl that sat on the floor next to me. In the bowl was the head of the goat we were eating. One eye lay open, appearing to be focused on me.

“Do you eat this all the time?” I asked the table.

“Traditionally, in winter, this is what we eat,” Narantunglag said. “Meat, meat, meat. It’s what we need to survive the climate.” I reached into my mouth and pulled out a long, orange goat hair.

Ganzorig spoke up. “On TV, we hear people say fat is bad for you,” he said. “We’re thinking that maybe we should have less cholesterol, eat more vegetables. But we believe that cuisine is specific to that country.” He lips were greasy, and blood still dotted his cheeks. He lifted a rib from the pile of meat. “In Mongolia, we believe this is what we need to eat to survive these conditions.”

Having overeaten, I wandered outside. The moon was nearly full, and in its light, the dogs lay motionless on the snow, curled up like empty fleeces. The earth was still. And silent. The exhaust from the ger’s stove filtered into the night. I realized that I had found it, the real Mongolian barbecue, and I wore its smoke and fat and gristle all the way back to Ulaanbaatar.

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