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Monday, November 18, 2013

[2014 budget passed, MNT falls to ₮1,752, parliament rejects bill to raise 2014 debt ceiling, and Cover Mongolia's off to HK Mongolia Investment Summit]

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Monday, November 18, 2013

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Cover Mongolia

Cover Mongolia Participating at Mongolia Investment Summit 2013, Hong Kong

Dear subscribers,

As mentioned previously, I will be attending this year's summit in HK as a panelist and thus would like to apologize beforehand for scarcity of newswire issues this week. Find out more about the summit at http://mongoliainvestmentsummit.com/hongkong/.

Details of the panel I'm on below:

15:30, November 20: Panel discussion: Exploring investment prospects in Mongolia's up-and-coming industries

·         Identifying export and development opportunities outside of the mineral resources sector

·         Assessing opportunities in: Services industry; manufacturing; education; healthcare; technology; agri-business; construction, tourism and other sectors

·         Mongolia: Towards a knowledge-based economy? Challenges and opportunities for technology transfer, training and investment

·         Future outlook for the emerging sectors and investment and business potential

Moderator:

Jargalsaikhan "de facto" Dambadarjaa, Economist, Columnist and TV Host, Jargaldefacto.com

Panellists:

Batsaihan B. Jamichoi, Director and Co-Founder, MONGOLIA OPPORTUNITIES FUND

Tuyen D. Nguyen, Resident Representative, International Finance Corporation (IFC)

'Mogi' Munkhdul Badral, Founder and CEO, COVER MONGOLIA

Lakshmi Boojoo, Director, Economic Policy and Competitiveness Research Center

Magvan Oyunchimeg, Vice Chairperson, Mongolian National Chamber of Commerce and Industry

Best of regards,

Mogi

 

Overseas Market

YAK closed Friday -0.75% to C$2.66

Mongolia Growth Group Ltd. Publishes October 2013 Monthly Letter to Shareholders

THUNDER BAY, CANADA, November 15, 2013 /FSC/  Mongolia Growth Group Ltd. (YAK – TSXV), a real estate company participating in the dynamic growth of the Mongolian economy via ownership of institutional-quality commercial property assets in Ulaanbaatar, Mongolia, is pleased to announce the release of its October 2013 letter to shareholders.

To the Shareholders of Mongolia Growth Group Ltd.,

Please note that as part of our effort to provide maximum transparency to investors, we will begin providing monthly data on same store rental growth along with property occupancy data.

In October 2013, MGG's core commercial property portfolio* experienced a same-store rental increase of 21.4% relative to October 2012 on properties owned 12 months or longer as measured in local currency (Mongolian Togrog).  The occupancy rate for the core portfolio in October 2013 was 93.9%, including an occupancy rate of 98.7% for core retail properties and an occupancy rate of 84.9% for core office properties.

Portfolio, Operations, and Development Update

Portfolio

During the month of October we continued on-track with our plan to shift MGG's asset mix away from smaller properties that are proportionately more expensive to maintain and manage, and towards larger institutional-quality assets that are easier to scale as we build MGG into a premium asset quality real estate company.  This repositioning is making progress and we have now sold 5 of the 23 assets we set out to dispose of starting in May of 2013 and reinvested the proceeds in-line with our strategic plan.  We expect to substantially conclude the repositioning by the middle of 2014.

Operations

We have seen an increase in demand for high quality properties following the passage of the new foreign investor law. We have recently signed a number of new leases and expect to renew many of our existing leases at higher than prevailing rates over the next few months. For a point of reference, our most recently signed retail leases were at 52,690 MNT a meter per month and 42,685 MNT a meter per month, while September's average high-street retail rent per meter was 20,201 MNT per month. While these are premium locations, we expect to see our average rent per meter continue to increase upon renewals due to the strong market environment.

Development

During the month of October, we completed all structural work on a retail re-development project that we started during the second quarter. During November, we will complete the interior fit-out and begin to actively market the property. When completed, we will have a newly built 368 meter prime high-street retail space.

Mongolian Economic Update

In an effort to better inform shareholders about the growth of the Mongolian economy, we will begin noting some of the most important economic events that have occurred over the prior month.

In the most recent quarter for which data is available (Q3 2013) Mongolian real GDP growth was 11.9%.

Since we wrote you last:

·         On October 28, the Ministry of Mining for Mongolia signed an MOU with China's Shenhua Group Corp. to supply 1 billion tons of coal over the next 20 years. For a point of reference, during 2012, Mongolia exported 20.9 million tons of coal. At current prices, the contract is worth over $50 billion, or about five times Mongolia's 2012 GDP.

·         Sinopec has signed an MOU with the Ministry of Mining to build a brown coal gasification plant in Mongolia. The plant will have the capacity to produce 15 billion metric tons of gas fuel per year and will use approximately 50 million tons of coal a year worth over US $1 billion dollars. The plan will be for domestic needs and the export market.

·         Mongolia climbed 4 spots on the World Bank's ease of doing business survey and now is ranked in 76th place as opposed to 80th last year.

·         The United States Agency for International Development (USAID) has established a technical assistance fund of $400 million for development of Mongolian small and medium enterprises.

·         1,086 billion Togrog (approximately US $625 million) worth of mortgages have now been issued under the 8 percent mortgage program.  This program has lowered the cost of mortgages for over 27,000 families in Mongolia with a corresponding increase registered to Mongolian disposable income.

We look forward to updating you again on our progress and new developments in the Mongolian economy next month.

Sincerely, 

Harris Kupperman 
Chairman & CEO 
Mongolia Growth Group Ltd. 

Link to release

 

Mogi: oh please. It should actually read "Mongolia Tarnished Again by Rio Tinto". TRQ closed Friday +0.49% to US$4.11

Turquoise Hill Tarnished Again by Mongolia

by Rich Duprey

November 16 (The Motley Fool) The ongoing impasse at Turquoise Hill's Oyu Tolgoi project in Mongolia is causing a bit of a cash flow problem at the miner, forcing it to hit up the equities markets for financing to meet its debt obligations.

Under an agreement it has with Rio Tinto , which owns 50.8% of the miner and operates the massive Mongolian copper mine, it was required to repay to Rio a $600 million bridge funding facility, and a $1.8 billion interim funding facility by the end of the year.

Oyu Tolgoi is one of the five largest copper projects in the world, and over the life of the mine, it's expected to produce more than 1.2 billion pounds of copper, 650,000 ounces of gold, and 3 million ounces of silver annually. But because Turquoise Hill hasn't been able to secure $4 billion in provisional project financing in 2013 for the next phase of expansion due to the dispute with the Mongolian government over who should pay for what -- the government owns 34% of the project, while Turquoise Hill owns the other 66% -- it doesn't have the money available to repay Rio Tinto.

Earlier this month, Turquoise Hill announced it had completed its divestiture of its 56.1% stake in Inova Resources to Shanxi Donghui Coal Coking & Chemicals Group for approximately $85 million.

As part of the rights offering it filed this week from which it hopes to receive up to $2.4 billion, Turquoise's parent agreed to extend the repayment deadline by two weeks to give it time to finish the offering, which includes a provision that Rio Tinto buy any shares left over. Turquoise Hill will have to pay back $2.02 billion within the next 12 months.

Rio put the $5 billion underground expansion project at Oyu Tolgoi on hold in August after trying to resolve disputes with Mongolia over how they'll split the profits from the mine. The government accuses Rio Tinto of cost overruns on the project, though the miner says that, considering the scope of the endeavor in the middle of the Gobi Desert, the fact that it's only $786 million higher in cost than its original estimate is not unreasonable.

Now Turquoise Hill says it's suspending work on the project. "Given uncertainties surrounding the timing of resolution of issues with the Government of Mongolia," it wrote in a press release, "including obtaining all required approvals and completion of the Oyu Tolgoi expansion feasibility study, Turquoise Hill is unable to complete project financing in 2013."

It remains committed to the project, and of reaching an amicable resolution with the government, which is a process it says is moving forward in a positive manner. Of course, it has to say that; but the reality is that the country has morphed from "Minegolia" into a ghost town. Other miners have given up hope of working there.

While work still continues on optimizing Oyu Tolgoi's design, as well as on its construction plan and the finalization of the feasibility study, Turquoise Hill is nevertheless forced to resort to the rights offering because of all the delays.

However, the miner says the open pit mine consistently achieved throughput capacity of more than 95% of its capacity during the quarter, and is now operating at nameplate capacity of about 100,000 tonnes of ore processed a day, while progressively ramping up to produce between 72,000 and 77,000 tonnes of copper in concentrates this year.

While the rights offering gets Turquoise Hill over the latest hurdle, there doesn't appear to be a resolution to the impasse' and despite the riches the mine could bring to all the parties involved, this becomes a deeper morass that investors might want to avoid for now.

Link to article

 

Rio Tinto blames Mongolia for wanting bigger share

November 15 /business-mongolia.com/ Today, we have seen two opposing news in local and international media. The local media news.mn stated that Rio Tinto has been approved of USD4 billion from IFC, US EXIM, EDC and others. However, international media is stating that TRQ is issuing right-issue offerings to pay off the bridge financing debt to Rio Tinto after it failed to secure project financing due to reasons – being in dispute with the government.

International media – sourced by Rio Tinto, blames the Mongolian government – the whole debacle is about Mongolian demanding greater shares in the mine. Because of that, project financing could not be secured and also, because of that Mongolia is not approving it. However, the reality is different. The working groups that has been established to resolve the cost overrun and approving updated feasibility studies have worked to overcome the misunderstandings and proceed with the project. However, OT LLC, managed by Rio Tinto Alcan, couldn't justify the cost overrun and could not or did not update the feasibility study within time required by the Mongolian laws and regulations written in black on white.

It is true that Mongolia wanted to re-negotiate the terms in Investment Agreement after realizing the monstrous costs it has to pay for their 34% share. Because of its inexperience it attempted to amend the agreement, however it has been facing rejection from Rio Tinto. Then, the government backed off, and demanded justifications which Rio Tinto failed to provide. Without justifying the current spending, it seemed irrational to add more debt to the project, after all Mongolia is a shareholder. However, now it will got all the blames, even though it didn't manage the project, it couldn't monitor the cost overrun, and it can't access to certain information and data of OT LLC as a shareholder.

It has been long time since Mongolia stopped talking about their desire of having bigger slice of the project. However, the cost overrun has to be justified and all the necessary information has to been given and has to be explained. Don't rock the boat we're all on.

Link to article

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Economy

BoM Exchange Rates: November 15 Close

 

11/14

11/15

USD

1,738.82

1,752.48

EUR

2,340.10

2,357.26

CNY

285.42

287.67

GBP

2,788.28

2,819.04

RUB

53.17

53.58

November Chart:

Link to rates

 

State Budget for 2014 approved

Ulaanbaatar, November 15 /MONTSAME/ The State Great Khural (parliament) Friday approved the 2014 State Budget within the time planned.

The budget law approval came about after the fourth discussion of draft bills of the law the Budget of Mongolia, the law on the Budget of the Social Insurance Fund and law on the Budget of the Human Development Fund for 2014.

The budget law estimates total balanced budget revenue of four trillion, 676 billion and 370.5 million MNT, a total balanced budget expenditure of five trillion, 594 billion and 785.9 million for 2014.

The budget expenditure on capital investments, equipment and capital repairs is projected at  one trillion, 143 billion and 275.5 million, while the Budget Stability Fund collection is set at 29 trillion and 799.6 million, as stated in the law on the Budget Stability.

A voting has been conducted on every article of the 2014 Budget Law, highlighting the goals of the law to regulate the pecuniary relations in fiscal year 2014 that include financing support to the local budgets, revenue accumulation in the consolidated local development fund, revenue transmittal from the consolidated local development fund to the local development funds, the capital to grant budget-spending right to the budget general managers, to accrue in the budget stability fund, and sources and currency transaction to finance the budget deficit.

The Government will finance the budget deficit through year-to-year issue of securities costing  one trillion and 400 billion MNT, and the Government's new foreign project loans of 289 billion and 971.1 million, with a maximum limit of the Government's loan guarantee of two trillion 500 billion.

A total financing support to local budgets is projected at 159 billion and 170.7 million, g total revenue to be accumulated in the consolidated local development fund--at 71 billion 338.5 million, and a total revenue transmittal from the consolidated local development fund to the local development funds--at 284 billion 400.8 million MNT.

The budget general managers' programs for 2014, result specifications the programs intend, and list of investment projects, measures, and facilities that will be financed by the State Budget of Mongolia in 2014 have also been approved in a form of an attachment to the Budget.

The above said projects, measures, and facilities with budgeted cost of two trillion, 567 billion and 529.1 million MNT will be financed with one trillion, 143 billion and 257.5 million.

Thus, the 2014 State Budget was approved receiving a support from 42 out of 53 present members.

Ending the session, the Speaker of parliament Z.Enkhbold congratulated the MPs and working groups for approval of draft bills of the law on the State Budget, the law on the budget of the Social Insurance Fund, and the law on the budget of the Human Development Fund.

Link to article

 

Mongolia Parliament Rejects Bill to Raise Country's Debt Ceiling

By Michael Kohn

November 15 (Bloomberg) Mongolia's parliament blocked a bill to raise the debt ceiling, a move that could limit the government's ability to raise money for infrastructure needed to develop the mining sector.

The bill to amend the Fiscal Stability law and raise the debt limit to 60 percent of gross domestic product from 40 percent failed to muster the necessary two-thirds approval yesterday, said Purevbaatar Gantsogt, the State Secretary for the Ministry of Finance.

Mongolia is increasing its spending on road, rail and power projects as mining companies including Rio Tinto Group invest billions in mineral deposits. Much of the country's spending on infrastructure this year has been facilitated by proceeds from the sale of dollar bonds in 2012.

Government debt this year will be 49.5 percent of GDP, just shy of the 50 percent mark allowed for 2013, Gantsogt said. The 40 percent limit goes into effect starting from 2014.

"The plan was to issue more bonds to finance infrastructure development so yesterday's decision restricts this," Gantsogt said. "Next year we will probably not do what we had planned."

Mongolia's Fiscal Stability Law, adopted in 2010 as a way to smooth spending habits and generate savings from mineral revenues, imposes limits on expenditure growth and caps the structural budget deficit to two percent of GDP, separate from the 40 percent cap on outstanding debt.

Mongolia's currency, the tugrik, fell to the lowest since at least 1993 today, reaching 1742.50 to the dollar and foreign direct investment has been cut in half this year.

International Debt

Instead of selling international debt, Gantsogt said parliament is planning to approve the sale of 1.4 trillion tugrik in local bonds, to be issued in 2014. The bonds, issued in tugrik, will be used to plug revenue shortfalls, Gantsogt said.

Mongolia posted 17.4 percent growth in 2011 and 12.4 percent growth in 2012. Growth over the first three quarters of this year stood at 11.9 percent. By stopping the sale of international bonds Mongolia's GDP to debt ratio is forecast to fall to 40 percent by the end of next year from 49.5 percent because of increases to GDP, Gantsogt said.

"We still believe we will achieve double digit growth next year but it will be less because of parliament's decision," he said.

Link to article

 

Ирэх оны төрийн мөнгөний бодлогын үндсэн чиглэл батлагдлаа

11-р сарын 15 (Монголбанк) Төрөөс мөнгөний бодлогын талаар 2014 онд баримтлах үндсэн чиглэлийг 2013 оны 11 дүгээр сарын 14-ны өдөр УИХ-аас баталсантай холбоотойгоор өнөөдөр буюу 2013 оны 11 дүгээр сарын 15-ны өдөр Монголбанкнаас хэвлэлийн бага хурал зохион байгуулж өнгөрсөн оны мөнгөний бодлогын хэрэгжилт, ирэх оны мөнгөний бодлогын үндсэн чиглэлийн талаар мэдээлэл өгч сэтгүүлчдийн сонирхсон асуултад хариуллаа.

2014 оны мөнгөний бодлогын гол зорилт нь инфляцийг нам, тогтвортой түвшинд байлгаж, макро эдийн засгийн болон санхүүгийн салбарын тогтвортой байдлыг бэхжүүлэх, бодит салбарын идэвхжлийг мөнгөний бодлогоор дэмжих замаар эдийн засгийн дархлааг сайжруулахад чиглэнэ.

1.    Мөнгөний бодлогын зорилтын хүрээнд:

1.1.        Хэрэглээний үнийн индексээр хэмжигдэх инфляцийг 2014 оны эцэст 8 хувь, 2015-2016 онд 7 хувиас хэтрэхгүй түвшинд байлгана. Төсвийн тогтвортой байдлын тухай хуулийн дагуу инфляцийг хязгаарлах, мөнгө, төсвийн бодлогын харилцан уялдааг хангах чиглэлээр Засгийн газартай хамтран ажиллана. Эдгээрийн үр дүнд дунд болон урт хугацаанд макро эдийн засаг тогтвортой байх нөхцөлийг бүрдүүлнэ.

1.2.        Төгрөгийн гадаад валюттай харьцах ханш нь макро эдийн засгийн суурь нөхцөлтэй нийцэж, уян хатан тогтох, төгрөгийн тогтвортой байдал болон үндэсний эдийн засгийн тэнцвэртэй хөгжлийг дэмжих зарчим баримтална.

1.3.        Гадаад валютын ханшийн эрсдэлийг бууруулах тогтолцоог бүрдүүлнэ.

2.    Банкны салбарын тогтвортой байдлыг бэхжүүлэх хүрээнд:

2.1.        Банкуудын төлбөрийн чадварыг хадгалж, системийн шинжтэй эрсдэлээс хамгаалах чадавхыг нэмэгдүүлнэ.

2.2.        Олон улсад мөрддөг зарчим, зохицуулалтын арга хэрэгслийг банкны салбарын үйл ажиллагаатай уялдуулан, эрсдэлийн үнэлгээнд суурилсан хяналт шалгалтыг сайжруулна.

2.3.        Банкны эрсдэл, зээлийн хүү буурах нөхцөл бүрдүүлэх зорилгоор банкны зээлийн барьцаа хөрөнгийн болон зээл, хүүгийн зардлыг нэмэгдүүлж байгаа бусад хүчин зүйлийн нөлөөллийг бууруулах эрх зүйн орчныг шинэчилнэ.

3.    Санхүүгийн зах зээлийн дэд бүтэц, түүний институцийг бэхжүүлэх хүрээнд:

3.1.        Монгол Улсын төлбөр тооцооны системийн найдвартай, тасралтгүй ажиллагааг ханган, төлбөр тооцооны системийн шинэчлэлийг 2014-2016 онд эрчимжүүлнэ.

3.2.        Санхүүгийн зах зээлийн харилцагчдын эрх ашгийг хамгаалах, олон нийтийн санхүүгийн суурь мэдлэгийг дээшлүүлэх хөтөлбөр боловсруулах ажлыг холбогдох байгууллагатай хамтран эхлүүлнэ.

3.3.        Мөнгөний бодлогын шийдвэр гаргах үйл ажиллагаа, арга хэрэгслийн ил тод, нээлттэй байдлыг хангах, гаргасан шийдвэрийг олон нийт, бизнес эрхлэгчдэд хүртээмжтэй хүргэх замаар бодлогын үр нөлөөг сайжруулна.

Эх сурвалж

 

OBG: Mongolia takes steps to boost FDI

November 14 (Oxford Business Group) In a move aimed at reviving flagging FDI levels, Mongolia's national parliament has approved legislation it hopes will remove uncertainty over investor rights and facilitate the flow of overseas capital into key sectors of the economy.

FDI inflows have fallen sharply in 2013, weighed down by investor caution which was heightened by previous legal changes introduced last year.

However, while regulatory reforms under the new legislation should bring greater clarity regarding tax rates on foreign-owned enterprises, slowing global demand for commodities and ongoing investor wariness could lengthen the time it takes for FDI to regain momentum.

Greater clarity

The legislation, which went into effect on November 1, introduces so-called tax stabilisation certificates that ensure stable tax treatment for a defined period of time, ranging from five to 22 years, depending on the industry. The new rules will apply to value added tax (VAT), corporate income tax, mining royalties and Customs duties. Under the law, local and foreign investors will be charged the same rates.

Chris MacDougall, managing director of Mongolian Investment Banking Group, views the legislation, which was approved in early October, as the most important advance in facilitating FDI to be introduced in the past five years.

"Tax stabilisation measures and provisions that will help to prevent future changes to the legislation should provide investors with the confidence that they need to return to the market," he told the Bloomberg news agency.

Broader investment opportunities

Analysts have suggested that the legislative changes could pave the way for investment across more of Mongolia's economy. Under previous regulations, foreign investors were obliged to obtain state approval before they could invest in sectors deemed by the government as strategically important. The requirement has been lifted for private overseas investors looking to pursue opportunities in the mining, banking and telecommunications sectors, although majority state-owned enterprises will still need government approval to invest in these areas.

Lee Cashell, chief executive of Asia Pacific Investment Partners, which is involved in property development and cement production in the Mongolian market, described the law as "very good news". "It was clear the government realised this was an urgent situation that needed to be taken care of," he commented.

The legislation supersedes the Strategic Entities Foreign Investment Law, which was hastily enacted last year with the aim of blocking the acquisition of a large mining firm by a state-owned Chinese corporation. While the 2012 bill achieved its objective, it also deterred other overseas investors, helping depress Mongolia's FDI levels. Foreign investment in 2013 is down by an annualised 47% for the first eight months of the year to $1.8bn, as overseas companies delayed new projects.

Uncertainty surrounding Mongolia's largest mining project, Rio Tinto's Oyu Tolgoi copper and gold mine, has also dented investor confidence. The multinational announced that it was deferring further investment, estimated to be worth at least $5bn, following a series of disputes with the government over the terms of the second stage of its development. Analysts will be looking to see whether the government's latest efforts to reassure investors prompt Rio Tinto to lift its embargo on new spending, which, in turn, could lead to other overseas firms following suit.

Still more to be done

While Mongolia's revised regulations governing investment could help boost FDI levels, a recent report by a parliament working group highlighted a number of obstacles to investment.

The report, submitted to the Standing Committee on Economics in late September, concluded that while the tax rates Mongolia imposed on foreign investors, alongside its regulations and tariffs, were similar to those of other developing economies, the country was still perceived as a risky destination.

Other factors keeping investors away, on top of uncertainty over tax issues, included inadequate infrastructure, excessive bureaucracy and an underdeveloped financial sector, the report said.

The findings also highlighted the significant proportion of FDI - up to 85% - earmarked for the mining industry, which served to underscore the economy's dependence on a limited commodities pool. Such dominance could hamper Mongolia's broader-based development in the future.

In its recommendations, the report called on the government to provide incentives for FDI, further improve the legal and regulatory environment and create a system which targeted investors for industries in need of capital.

Some of these issues, such as providing clarification about the tax regime and improving access to more economic sectors, look to have been addressed by the new law. However, investors may well still opt to wait until the amended legislation begins producing results before returning to Mongolia. 

Follow Oxford Business Group on FacebookGoogle+ and Twitter for all the latest Economic News Updates. Or register to receive updates via email.

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Politics

Policy-less governance

By Jargalsaikhan Dambadarjaa

November 17 (UB Post) The second "Metals Mongolia" conference on mining investment was held this month in Ulaanbaatar. While the first conference, held two years ago, was attended by 1,200 representatives from 25 countries, there were only around 240 attendees at this year's event. Attended by a few expatriates, the conference seemed to be indicative of the fact that foreign investors are not really rushing to make investments into Mongolia's mineral processing industry.

On the other hand, the active participation from the Ministry of Mining, Ministry of Economic Development, Ministry of Industry and Agriculture, and Mongolian state-owned companies showed that the government is actually rushing to accelerate the development of its mineral processing industry.

During the event, government representatives who attended the conference reported that the Mongolian parliament is discussing the development of a resource sector policy for the government. Even though our resource sector has seen high economic growth for the past 10 years, the government of Mongolia has never had proper management or a specific policy in this sector. Despite the belated measures the government is planning, the initiative to devise a policy intended for the resource sector sounded promising to the companies that have been operating in the sector, enduring the absence of a governing policy for a long time.

Participants of the "Metals Mongolia" conference placed great emphasis on the fact that the absence of a governing policy in the resource sector has been the cause for laws that kept the sector from developing and pushed foreign investment away. Furthermore, the subsequent amendments to those laws have wasted a significant amount of time and harmed Mongolia's reputation. We have made a mistake by not having a proper governing policy for extracting natural resources. If we repeat the same mistake when we start processing natural resources, Mongolia will lose not just ten, but a hundred years of development.

When extracting natural resources

The experience from gold mining in Mongolia clearly illustrates the damages caused by the absence of governing policy and occasional laws that were passed almost secretly and implemented only in part. Gold production is different from other metals because it has to be first found, then washed, sorted, smelted and refined before the final product is ready for use.

T.Ganbold, a Director of the Mongolian Gold Producer's Association, stated that Mongolia extracted approximately 130 tons of gold during the 20 years since the "Gold Program" has been implemented. Although we used outdated equipment during the initial years and the rehabilitation was not adequate, gold extractions increased consistently, reaching 20 tons a year several times.

However, the gold mining business went underground after the windfall profit tax law was passed in 2007. Consequently, there was increased gold smuggling, more "ninjas" (unauthorized individual gold miners) and decreased environmental rehabilitation. Furthermore, the reputation of gold miners in Mongolia was falling.

P.Ochirbat, the first President of Mongolia and founder of the "Gold Program", noted that after the profit tax was imposed on gold mining, gold prices were rising worldwide while there was "less" extraction taking place in Mongolia.

The Ministry of Finance has failed to implement the law that states one fourth of the royalties paid to the state by mining companies should be allocated to provincial (aimag and soum) governments. As a consequence, gold mining companies were pressured by local governments and communities who constantly demanded various payments and donations. It triggered the emergence of many governing institutions at local levels and expanded the underground economy where corruption flourished.

The conference attendees stressed that it was time to restore the ethics of local governance and regulate the operations of so called "ninjas" to prevent environmental damage as well as damage to human health and wellbeing, including that of the "ninjas" themselves.

It was also said during the conference that some companies were interested in receiving compensation from the public budget for their unsuccessful exploration projects. Fully aware of their risks and responsibilities, those companies carried out exploration that turned out to be unsuccessful and stopped operating. Now they are trying to use the "long-named" law to use the public budget to cover their expenses.

Participants of the conference supported Mongolbank for resuming their purchase of gold at international rates.

When processing extracted natural resources

The government representatives at the "Metals Mongolia" expressed that they were resolved to increase the value of Mongolia's natural resources by processing them, and introduced certain projects related to refining raw products.

D.Ganbold, the Director of Heavy Industry Policy Implementation Department of the Ministry of Industry and Agriculture, spoke about the government's decision to establish an industrial park in Sainshand and build a power plant along with steel, coking coal, copper and cement plants.

D.Ganbold said that all raw materials to be processed at the plants mentioned above are found in Mongolia, and that Sainshand has enough underground water reserve to support the plants. The industrial park will employ a technology that uses nitrogen instead of water when processing coke. Also, when producing steel, the iron ore will be transported from Selenge to Darkhan for wet processing and then sent to Sainshand for final processing.

Several companies that are to take part in the project gave presentations on the plants that they are planning to build. Large amounts of sulfuric acid, which is an output of steel production, will be used to produce fertilizers from the Burenkhaan phosphate deposit located in Khuvsgul aimag. It was also noted that there would be minimal environmental impact because the deposit is located a hundred kilometers away from Khuvsgul Lake.

The plan is that those companies will build a steel plant to meet all domestic demands and become a leverage for future urbanization.

In the upcoming ten years, they are planning to supply steel to the Chinese market, and by that time, China will have steel production that can only meet half of its domestic demand. It was also said at the conference that India has already banned their iron ore exports and Brazil is likely to do the same in the near future, and the structural change in iron ore trading will be advantageous for Mongolia.

O.Sainbuyan, the CEO of the state-owned Erdenes Mongolia (Mogi: Erdenes MGL), and the other government representatives who were present at the conference, promised that they would invest in building mining plants in Mongolia. Erdenes Mongolia is to establish a subsidiary in each of the 39 deposits including the existing seven strategic deposits.

The only question left unanswered during this conference was the role of the Mongolian private sector in this huge historic development. Their manner of involvement, and in which part of the project they will contibute to, wasn't clear. It was also unclear when, how and by what criteria these private companies that had already developed their plans and completed their estimations were selected. The participants are hoping that this information will be disclosed in the government policy document which is expected to be finalized soon.

O.Sainbuyan shared his plans to make Erdenes Mongolia into a company just like Temasek, a multinational investment fund with a net portfolio of 170 billion USD and owned by the government of Singapore.

However, what he did not mention was that, in order to build a company like Temasek, there must be transparent public governance, a business-friendly environment and much less corruption, like Singapore, which is one of the five countries with the lowest corruption. Mongolia is currently ranked 94 out of 178 countries on the Corruption Perceptions Index.

The people of Mongolia would be doubtful of the government's ability to manage these huge projects, which will increase the amount of debt by issuing additional bonds, and will require them to build high quality plants, make profit by operating them, and repay the debt on time.

One in every three state-owned companies in Mongolia runs a deficit, and their management team is selected based on their loyalty to the ruling political party rather than their skills. Unless there is a change, we should not even dream about those plants profiting.

In any case, Mongolia is currently discussing what policy the government will be pursuing in the resource sector in the future. The investment law has recently been changed and a new agency called the "Invest Mongolia" is to be established. Depending on the amount of investment and location, the agency will determine the length of time to be given as guarantee of stability.

A substantially more foreign investment is needed when processing natural resources than extracting them. In order to attract such a vast amount of foreign investment, there must be a business environment that is stable for the long term, and it should be easy for investors to understand the rules and how their interests are going to be protected. The same conditions will be required to attract domestic investments as well.

When the government takes part in industrialization, for example, by building an industrial park, the principles of public-private partnership (PPP) should be applied. There is absolutely no need for the government to build those plants by issuing bonds, putting the economy at risk, and laying a huge debt burden on the people.

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Premier Denies Rumors on Tax Hike, Children's Money, Nuclear Waste

Ulaanbaatar, November 15 /MONTSAME/ On Thursday, a newly completed road project and an ongoing housing loan program were the main subjects of the traditional "30 minutes with PM" meeting.

Addressing the media, the Premier N.Altankhuyag briefed on his last week visit to Dundgovi province where he attended the Ulaanbaatar-Mandalgovi paved road opening. This aimag's  center has been connected to the capital city by the paved road, thus becoming the third of six cities to get connected as such within this year.

The PM also made some corrections to misunderstandings regarding children welfare money, the eight-percent housing and a tax increase.

The Government for Reforms has been granting the children welfare money of 20 thousand MNT every month, and this will continue without any changes, the PM said. It is the same for the the apartments program, "there is no cancellation in this project".

Regarding a speculation about an upcoming tax increase, the Premier noted there is no rate increase or a new add to the existing 23 tax types. "On the contrary, exploring ways to ease taxation for small and middle enterprises, the Government is working on its reforms to support these businesses and employment," he said.

At the meeting, PM also rebutted a recent rumor on supposed uranium exploration here, saying, "Mongolia has an unambiguous policy on nuclear energy and uranium exploration. Japan has not buried and is not going to bury nuclear waste in our territories".

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From Big Government to Smart Government: Mongolia's Growth Roadmap to 2050

November 15 /infomongolia.com/ The Office of the President of Mongolia announced to organize the national consultative meeting themed "From Big Government to Smart Government" to take place at the Government House on November 16, 2013.

Over 500 of Mongolia's top leaders from the business, academia, media, non government and government institutions will gather in Ulaanbaatar to draw the country's growth roadmap to 2050.

President Tsakhia ELBEGDORJ has called this national consultative meeting at a time when Mongolians everywhere are engaged in deliberations to ensure political stability and economic prosperity.

Mongolia is working to establish its economic competitiveness in the Asia Pacific region. The economy grew at 17% in 2011,11% in 2012 and is expected to grow by 12% in 2013. By 2020 the Mongolian economy will have grown 5 times, and by 2050 -by 40 times. President Ts.Elbegdorj is focused on strengthening Mongolia's economic and political institutions to be more inclusive and be united behind its growth targets and plans.

Participants of the national consultative meeting are expected to identify critical solutions to challenges, and define growth targets that would make up the country's development goals to 2050.

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Business

Khan Bank Signs Long-Term Strategy Partnership Agreement with International Investment Bank

Ulaanbaatar, November 15 /MONTSAME/ Mongolian commercial "Khan Bank" will cooperate with the International Investment Bank /IIB/, headquartered in Moscow, the Russian Federation.

On November 15, a long-term strategy partnership agreement was signed by the executive director of the Bank Mr Norihiko Kato and by a chairman of Board of the IIB Mr Nikolay Kosov.

The sides intend to cooperate in loans granting, small and medium businesses support, trade finance, the IIB's member-countries foreign trade support, inter-banks loans, foreign exchange market, and in banks' hi tech technology sector.

The IIB, founded in 1970 on the basis of the intergovernmental agreement, is multilateral institution for development and assists in social and economic development, growth of people's well-being, and economic cooperation of the member-states.

Its main directions are the support for the small- and medium-sized businesses, participation in financing socially-significant infrastructure projects. Its membership consists of Republic of Bulgaria, Socialist Republic of Vietnam, Republic of Cuba, Mongolia, Russian Federation, Romania, Slovak Republic and Czech Republic.  

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American Chamber of Commerce in Mongolia Selects New Executive Director

Full-time Executive Director Represents Increased Commitment to Commercial Ties Between the United States and Mongolia

Ulaanbaatar, Mongolia, November 7 (AmCham Mongolia) The Board of Directors of the American Chamber of Commerce in Mongolia, or "AmCham Mongolia," is very pleased to announce that Mr. Tuvshinzaya Gantulga has joined the organization as its Executive Director. Mr. Tuvshinzaya previously served as Program Coordinator at the Zorig Foundation where he was in charge of public policy, education, and community development projects. Mr. Tuvshinzaya studied at the European College of Liberal Arts in Berlin and Franklin and Marshall College in the United States and holds a BA degree in Value Studies with concentration in political philosophy and literature.

"I am thrilled to be joining AmCham Mongolia as Executive Director and becoming part of AmCham's international business community. Commercial ties between the United States and Mongolia is crucial to both our countries and I looking forward to contributing to the organization's success and leadership in expanding these ties," said Mr. Tuvshinzaya.

Mr. Jackson Cox, Chairman of the AmCham Mongolia Board of Directors also commented, "the decision by the AmCham Mongolia Board of Directors to hire Tuvshinzaya as our full-time Executive Director represents our strong commitment to develop AmCham Mongolia into a meaningful and impactful organization working each and every day to strengthen commercial partnerships between the United States and Mongolia. We are pleased that Tuvshin has joined us and expect his unique talents will play a big role in advancing AmCham's mission."

About AmCham Mongolia

AmCham Mongolia is an independent membership-driven organization that seeks to build, strengthen, and protect business between the United States and Mongolia and to actively promote Mongolia as a destination for American investment. AmCham Mongolia is the official local office of the U.S. Chamber of Commerce. Based in Washington, DC, the U.S. Chamber of Commerce is the largest business federation in the world with over 3 million member companies. American Chambers have been established in over 100 countries in the world – Mongolia being one of the most recent. Founding members of AmCham Mongolia include: Gibson Dunn, Magnai Trade Group, Peabody Energy, Woodmont International, Philip Morris, John Deere, Gatsuurt LLC, GE, Hogan Lovells.

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Japan-Mongolia Business Forum to Take Place in Tokyo on December 03, 2013

November 15 /infomongolia.com/ Member of the State Great Khural (Parliament) and Chairman of Mongolian National Chamber of Commerce and Industry, S.Demberel is conducting an official to Tokyo, Japan on December 01-06, 2013.

The visit is aimed to connect entrepreneurs and introduce projects discussed during the 6th Japan-Mongolia Joint Consultation with the Government and Private Sector on Trade and Investment, which was held in Ulaanbaatar last May.

Also, during his visit, Chairman S.Demberel will meet Japanese authorities that advocate Chamber and Trade activities, and representatives of Japan Parliament, moreover to attend Japan-Mongolia Business Forum to take place in Tokyo on December 03, 2013.

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Ulaanbaatar

Narantuul Owner Plans to Turn Market into Residential Area

November 15 /news.mn/ The owner of Narantuul market, the largest market in Ulaanbaatar, Sh.Saikhansambuu, has planned to build residential apartments for 6000 households on the site of Narantuul market.

Swiss engineers have made a project design proposal for the residential apartments. The construction of the new apartments is expected to begin in the autumn of 2014. The project has been estimated at 80 million US dollars to build a new market on 6 hectares of land, on an extended section of Narantuul market.  The16-24 storey residential apartment will be built on the site of the current grocery section of Narantuul market.

The grocery section of Narantuul market caught fire two months ago causing property damage to over 300 renters of the market. Both renters and owners of the market experiences a large amount of stock damage and financial loss during the fire. The renters of the grocery section of the market are still waiting to be compensated and to re-establish their business. But the owner of the market Sh.Saikhansambuu said that the renters will be in some manner or partially compensated only if they can fairly describe their property damage and loss and their claim is supported with evidence.

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Diplomacy

EU's Barroso hails Mongolia's transformation on historic visit

November 17 (AFP) European Commission (EC) President Jose Manuel Barroso on Sunday hailed Mongolia's transformation from Soviet satellite to economic and democratic dynamo on a historic trip to the resource-rich country.

Barroso, making the first visit to Mongolia by an EC president, expressed admiration for what he called its "remarkable achievements" in economic growth, democratic progress and the rule of law.

The visit marked a "historic day in relations between the EU and Mongolia", he said at a press conference with Mongolian President Tsakhia Elbegdorj.

Barroso said a Partnership and Cooperation Agreement with Mongolia signed in April would broaden the scope of relations as well as increase trade and cooperation.

He also said that the European Union (EU) would double its cooperation budget with Mongolia for the period covering 2014-2020.

Barroso did not provide a figure, but Mongolia's foreign ministry said the amount would total $100 million.

The two sides also discussed opening an EU diplomatic mission in Mongolia, officials said.

"Developing relations with the EU and its member states is one of the strategic objectives of Mongolia's foreign policy," Elbegdorj said.

Landlocked Mongolia, once a satellite of the Soviet Union, peacefully threw off 70 years of communist rule in 1990, with Elbegdorj, a former journalist, having played a leading role in the change.

Exploitation of Mongolia's vast coal, copper and gold reserves has helped transform an economy once characterised by nomadic lifestyles not far removed from its empire-building hero Genghis Khan 800 years ago.

Barroso also met Prime Minister Norov Altankhuyag and planned to deliver a lecture at the Mongolian National University on prospects for Mongolia-EU relations as well as open a European film festival.

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U.S.-Mongolian Bilateral Consultations

Washington, DC, November 15, 2013 (State Department) On Friday, November 15, 2013, the United States and Mongolia met for bilateral consultations at the State Department in Washington, DC. These talks are an important opportunity to review the bilateral relationship between the United States and Mongolia and our shared interests and goals both in the region and globally.

Assistant Secretary of State for East Asian and Pacific Affairs Daniel R. Russel and Mongolian Vice Minister of Foreign Affairs D. Gankhuyag co-chaired the meeting, which was attended by representatives from the U.S. Department of Commerce, the Office of the U.S. Trade Representative, the Office of the Secretary of Defense, the Joint Staff, the U.S. Agency for International Development, the National Security Staff, and numerous bureaus of the U.S. Department of State.

During this year's talks, the major topics discussed were: development of trade and commercial relations, including discussions relating to the recently signed Transparency Agreement and future Trade and Investment Framework Agreement talks; the U.S.-Mongolia military-to-military relationship; Mongolia's experience as head of the Community of Democracies; and opportunities to enhance cooperation between the United States and Mongolia in multilateral fora.

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Mongolian president to visit Myanmar

November 15 (Mizzima) Mongolian President Tsakhiagiin Elbegdorj will pay a  state visit to Myanmar soon, according to an official announcement Friday.

Elbegdorj's visit will be made at the invitation of Myanmar President U Thein Sein but no specific date of his visit was given in the announcement.

There are few links between Myanmar and Mongolia despite establishment of diplomatic relations between the two countries.

Mongolian Embassy in Myanmar is stationed in Vientiane, Laos.

In April this year, at the invitation of the Mongolian president, Myanmar opposition leader Aung San Suu Kyi paid an eight-day visit to Mongolia and attended the ministerial meeting of the Communities of Democracy in Ulaanbaatar.

Together with Elbegdorj, Aung San Suu Kyi, chairperson of the National League for Democracy (NLD) and chairperson of the Committee for Rule of Law and Tranquility of the Lower House, delivered a joint speech during her visit.

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"No tyranny lasts forever," Mongolian president said in N. Korea

November 15 (Kyodo) Mongolian President Tsakhiagiin Elbegdorj praised freedom during his official trip to North Korea late last month, telling scholars and students in Pyongyang, "No tyranny lasts forever," according to the president's office.

"Freedom is an asset bestowed upon every single man and woman. Freedom enables every human to discover and realize his or her opportunities and chances for development," Elbegdorj said in his lecture at Kim Il Sung University on Oct. 31. "It is the desire of the people to live free that is the eternal power."

The president also quoted a Mongolian saying that it is "better to live by your own choice however bitter it is than to live by other's choice, however sweet," according to the transcript the office has released by Friday.

Elbegdorj, who ended his four-day trip to North Korea on Oct. 31, was the first foreign head of state to visit the country since Kim Jong Un took power after the death of his father and longtime ruler Kim Jong Il in December 2011.

During his stay there, he also met North Korea's No. 2 leader Kim Yong Nam, considered the country's de facto head of state, and other senior officials but could not meet Kim Jong Un (Mogi: my sources say he did, for almost an hour at the People's Assembly).

The topic of the lecture at the university was proposed by North Korea, but Elbegdorj was requested not to use the words "democracy and market economy," the presidential office said.

During the lecture, where no questions were raised, Elbegdorj explained Mongolia's rapid economic growth in recent years and told the attendees that it is a country also respecting human rights, rule of law and open policies.

He also told them that Mongolia has "fully stopped capital punishment" and has maintained a nuclear-weapon-free status recognized by the U.N Security Council.

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Related:

Mongolian leader to N. Korea: 'No tyranny lasts forever'Yonhap News Agency, November 15

Mongolian president makes "unusual" comments about tyranny while in N. Korea – The Hankyoreh, November 17

Mongolian President's Speech Raises EyebrowsThe Daily NK, November 15

 

Kuwait's new envoy presents credentials to Mongolian pres.

KUWAIT, Nov 15 (KUNA) -- Kuwait's new ambassador to Mongolia Khaled Al-Fadhli has presented his credentials to Mongolian President Tsakhiagiin Elbegdorj.

A protocol ceremony was held on the occasion at Genghis Khan square in the capital city Ulaanbaatar early Friday, with Mongolian Foreign Minister Luvsanvandan Bold and several other Mongolian officials attending, according to a release of the Kuwaiti Embassy in Mongolia.

During the ceremony, the Kuwaiti ambassador conveyed greetings from His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, His Highness the Crown Prince, His Highness the Prime Minister and the Deputy Prime Minister and Foreign Minister to the Mongolian president, wishing Mongolia more progress and welfare, said the embassy release, a copy of which was obtained by KUNA.

The Mongolian leader, in turn, asked the ambassador to convey his greetings to His Highness the Amir, hoping that bilateral relations would be reinforced and cemented in all cooperative areas, it added

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Mogi: hacking your way to participating huh

Chinese Army Wants Khaan Quest Participation

Ulaanbaatar, November 15 /MONTSAME/ The Chinese People's Liberation Army (PLA) delegation led by Wang Guanzhong, a Deputy Chief of the General Staff is here with an official visit November 13-16. 

During the visit, a seventh consultative meeting ran between the two Defense Ministries, and a meeting took place between the delegation and our Defense Minister D.Bat-Erdene, at which they shared views on global and regional security, defense relations and cooperation and their prospects.

The sides also discussed future joint actions that include utilizing cooperation opportunities in the defense industry, stabilizing "Steppe Leaders" joint exercises, providing military and equipment assistance, and involving the PLA militants in the annual "Khaan Quest" multinational peacekeeping exercises–the activities stated in the intergovernmental agreement on military-technical cooperation that was established during the Mongolian Defense Minister's visit to China last September.

The guests are planning to visit the Defense University of Mongolia, the Bagabayan Rehabilitation center for Peacekeepers, and Unit no.311 of the Armed Forces, before taking a trip to the ChinggisKhaan Monument Complex in TsonjinBoldog.

Mongolia and China have been cooperating in all spheres since establishment of the diplomatic relations in 1949. Since 2011, the relations have been developing in a policy level that is not only consistent with both countries' interests, but also has a great importance for the peace and stability in the Asia-Pacific.

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Related article:

Mongolia and China Discusses to Involve Militants of PLA in Annual "Khaan Quest" Multinational Peacekeeping Exercise – InfoMongolia, November 15

 

Mongols - the Masters of the Blue Steppes

November 15 (Women of China) In the full-seated Opera House of the National Grand Theatre in Beijing, the Embassy of Mongolia to China organized a Mongolian traditional art concert within the framework of cultural exchanges between Mongolia and China last week. 

The best seven folk bands, "Altan Urag", "Altain Orgil", "Arga Bileg", "Jonon", "Tenger Ayalguu", "Khusugtun" as well as the Domog Folk band, who won the Grand Prix of Golden Orpheus this year, which is a gold medal certificate of 'Absolute World Champion of Folklore', held an outstanding performance for over 1,500 guests. Other artists included Ulaanbaatar theatre's dancers and contortionists. State-honored artist of Mongolia, Mr. D. Sosorbaram conducted the concert and Ambassador Mr. Ts. Sukhbaatar made the opening remarks.

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Social, Environmental and Other

Local veterinarian shares Mongolia teaching experiences

By Kate Prengaman

November 17 (Yakima Herald-Republic) Sandwiched between China and Russia, Mongolia is the most sparsely populated country on the planet, with just 3 million people. But it's also home to 48 million livestock.

Forty percent of the population relies on animals for their livelihood. Yet few herders regularly work with veterinarians and most have a general distrust of the profession. Vets get little hands-on training and lack access to most modern medicines.

This is the surprising landscape the two local veterinarians, Kelley and Andy Denome, found when they traveled to rural Mongolia's rolling green hills in the summer of 2011 to volunteer with a veterinary mission group.

"Our role was to support and mentor the local vets, not to be the vets," said Kelley Denome, a professor in the Vet Tech program at Yakima Valley Community College during a recent public presentation about her Mongolia experience.

It was difficult not to be a veterinarian when they were around sick or injured animals, she explained, but it did more good in the long term to stick to a mentoring role.

When a foal needed hernia surgery, Andy Denome coached two Mongolian vets through their first attempt administering anesthesia and first hernia operation, and the horse survived.

Horses are a huge part of Mongolian culture, from Genghis Khan's 12th century soldiers on horseback building an empire that stretched across Asia to present day nomadic herders with cellphones and satellite dishes who still migrate to different grazing grounds with the seasons. Kelley Denome said it was difficult at first to reconcile the Mongolians' obvious respect for their horses with their practical decision to also eat them.

The vet who was their guide and translator told her that "Nobody loves horses more than Mongolians do," Denome said. "He told me 'We love our horses so much that we have to eat them. Why would we waste them?'"

The rural Mongolians they visited eat mainly meat and dairy products, Denome said, and she tried local delicacies such as dried cheese, fermented mare's milk and beef kabobs cooked over a dung fire.

"If you ever have the opportunity to eat yak butter, I urge you to take that opportunity. It's delicious," she added.

The Denomes traveled the countryside in an 1950s-era Russian van with two Mongolian vets, an accountant and a driver, trying to convince herders and vets alike of the value of modern veterinary medicine. The monthlong trip was organized by the Christian Veterinary Mission's Mongolian organization, V.E.T. Net.

The accountant was key because both herders and vets often lack business skills, Denome said, a lasting legacy of communism in the country. After breaking from the Soviet Union in 1990, Mongolia became a democracy and began working toward a market economy.

V.E.T. Net wants to demonstrate that investing in the animals' health, such as vaccinating sheep or buying mineral supplements for cattle, could pay off over the long term.

Traditionally, the herders valued having more animals rather than fewer, healthier animals, but Denome said Mongolia is now pushing beyond its open range limits.

"There's a serious overpopulation problem, which leads to overgrazing," Denome said. Overgrazing leads to declines in pasture quality, which is a big problem because since the animals only graze, they aren't supplemented with grain.

Although there's lots of work to be done to improve vet training, the availability of equipment and medications, and sustainable grazing, Denome said she was encouraged by how many young vets and herders were excited to learn more about modern techniques.

Many of the rural vets she met had shiny new microscopes that had been donated by other aid groups, Denome said, but no one knew how to use them. That's the sort of education gap that V.E.T. Net and volunteer work from vets like the Denomes, are trying to fill.

"Donating money and equipment don't solve problems alone," Denome said, "We can do a lot of harm when we don't know what the issues are and just throw things at it, like microscopes."

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Visiting a nomadic living family on the steppes of Mongolia

This is the third part of Janet Landfried's series of columns on a trip to China and Mongolia.

By Janet Landfried

November 16 (Redland Daily Facts) We continued our journey and ride on the dirt roads north of the capital city of Ulaanbaatar, Mongolia, in our purple fringed bus, keeping a lookout for wildlife and slowing down for the horses and goats and sheep and cattle on the roadways.

Our ACT host put me in the front seat alongside the driver to give me some relief from my developing head cold. It meant climbing over the mid-mounted engine and dropping into the seat.

Our guide, Hishi, gave us a running commentary about the area and asked if we would like to visit a local family. Of course, we all said. So she had the driver turn off the road and drive cross country up a slight rise to two gers and a small pickup truck. We all piled out and were invited into the bigger of the two gers. The mother of the family hurried to get some refreshments for us and the father of the family collected his toddler twin daughters and took a seat behind the stove and table in the center of the ger.

The Russians called the portable home of these Mongolian nomads a yurt and that is the word most Westerners use. But the Mongolians prefer ger and that is what we tried to remember to call them. The people move several times a year to seek pasturage for their flocks. The ger can be stricken or set up in about an hour. Double poles with a wooden ring at the top are placed in the center. Rafters are inserted into the ring at the top and at the sides the rafters rest in the top of a lattice arrangement set in a circle.

A wooden door is placed on a side, always facing south. Felt made from animal hair covers the ger, one layer in the summer, three layers in the winter. The outside of the ger has study ropes to help hold the felt in place. Huge rocks are used to anchor it all in place when the wind blows, which is often. The inside walls of the ger are hung with patterned fabric curtains and the door is painted in bright colors. There are no windows but an open flap at the top allows for ventilation.

The floor may be dirt but more likely covered in carpets. The furniture in minimal but all brightly painted.

We ducked through the low door and found ourselves in a cozy home with beds, boxes to hold winter clothing and bedding, a table that served as a kitchen and a stove vented through the top opening. All 13 of us Americans and our guide set up our little folding stools and began to marvel at what it was like to be in and live in a ger, unchanged for centuries.

The mother of the family served up a bowl of fermented horse milk, airag, to share with us. We were to take it in our right hand, take a sip and pass it one. Also shared with us was a hard dried curd that looked like a biscuit. The nomads must endure this harsh climate and store enough food for the long winters. The live very close to the earth and use all of the products of their domesticated animals.

Their diet is very high in meat, dairy and animal fat with little vegetables or grains. This high-protein diet is necessary to endure the extreme winter conditions.

I had said that KFC just opened in Ulaanbaatar, but chicken is not a regular in their diet. It is just too hard to raise them here. Mongolian barbecue like we have here in the United States? Absolutely unheard of in Mongolia.

Cooking is done using dried animal dung, found in abundance on the steppes. We saw a small pile of it just outside the ger.

We also noted the solar collector panel and a satellite dish. Inside there was a small television, hooked up to a car battery for power. I had seen the same thing in Cambodia. The wonders of technology know no limits.

After asking questions of the man of the house, and answering his, we all picked up our little stools to sit around the table brought on the bus. Our cook served up a hot meal of soup and stew over rice. The family shared our meal and we then met the older son who rode up on a horse. Another son was in the city at school.

All too soon it was time to leave and continue our journey. We gave some little gifts that we found in our packs, took lots of pictures, piled into our little bus, turned back down the hill and back on the road. When we asked Hishi if she had told this family we would be coming, she said no and that she had never met them before. But this is Mongolian hospitality. Whoever stops by is entertained, a meal is shared, and stories are shared with the guests.

Join me next week as we continue to travel over the steppes of Mongolia.

Janet Landfried taught social studies at Redlands High School and Redlands East Valley High School for many years and retired in 2001.

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Munkhdul Badral Bontoi

Founder & CEO

Email: mogi@covermongolia.mn

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2 comments:

  1. That is so cute, I would of never thought of that. I am definitely making me one or maybe a few! Lolsolar panels

    ReplyDelete