Wednesday, November 6, 2013

[Current Account Deficit $2.64B, ₮ falls back under 1700, GoM hires Venn Strategies for investment PR, and AustCham Mongolia launching 9 Nov]

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Wednesday, November 6, 2013

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Local Market

NatSec MSE Trading News, 5 November: Top 20 -2.37%, Turnover 44.5 Million

November 5 (National Securities) The MSE TOP-20 Index dropped -2.37% to 15,064.29. Today's volume was 49,411 shares and trading amount value was 44.5 million MNT. 16 shares were up, 7 shares were down and 5 shares were un-changed.

The main gainers were Atar-Urguu (ATR), Gazar Suljmel (SUL) and Mongol Nekhmel (MNH), all 3 of which  were limit-up. Ikh Barilga (IBA), a construction industry play, was the main loser, down -10% to 4,500 MNT.  Remicon (RMC) was the most active share of today. It's 23,418 shares were represented 4 million MNT of value. It's price closed down -0.37% to 173.86 MNT and it's market cap was 13.6 billion MNT.

Please click here to see the detailed news

Link to report


MSE Weekly Review: Top 20 +8.84%, Turnover 178.8 Million

Ulaanbaatar, November 5 /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange on from October 28 to November 1.

In overall, 83 thousand and 836 shares were sold of 47 joint-stock companies totaling MNT 178 million 843 thousand and 355.00.

"Hai Bi Oil" /35 thousand and 545 units/, "APU" /eleven thousand and 448 units/, "Sharyn Gol" /six thousand and 660 units/, "Tavantolgoi " /three thousand and 481 units/, "Moninjbar" /three thousand and 400 units/ and  were the most actively traded in terms of trading volume, in terms of trading value--"Sharyn Gol" (MNT 48 million 634 thousand and 770), "APU" (MNT 43 million 795 thousand and 508), "Gutal" /MNT 17 million 857 thousand and 800/, "Tavantolgoi" /MNT 13 million 975 thousand and 648/ and "Hai Bi Oil" (MNT 12 million 888 thousand and 050).

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BoM Exchange Rates: November 5 Close



















October Chart:

Link to rates


BoM holds FX auction: CNY37.8 Million, US$5 Million Swap Agreements

November 5 (Bank of Mongolia) On the Foreign Exchange Auction held on November 5th, 2013 the BOM has received bid offer of USD and CNY from local commercial banks. BOM has sold 37.8 million CNY to the local commercial banks.

On November 5th, 2013, The BOM has received bid offer of USD for Swap agreement from local commercial banks and sold 5.0 million USD.

Link to release



November 5 (Bank of Mongolia) Auction for 3 years maturity Government Bond was announced at face value of 70 billion MNT and each unit was worth 1 million MNT. Face value of 70 billion /out of 75.0 billion bid/ Government Treasury bill was sold to the banks at premium price and with weighted average yield of 10.46%.

Link to release


Mongolia Balance of Payments Report, First 9 Months: US$2.64 Billion Current Account Deficit

November 5 --

Link to release


As Of Today, Mongolia's Foreign Debt Is 2 Billion USD, Notifies Prime Minister N.Altankhuyag

November 5 / On November 01, 2013, Prime Minister N.Altankhuyag made a briefing at the plenary session meeting of the State Great Khural (Parliament) regarding Mongolia's foreign debt as of today.

In his statement, Premier noted, "The Government of Mongolia borrowed 2.8 billion USD by hard currency in the period of 1990-2013 from international banks, financial institutions and partner countries. Of which, 990.9 million USD was repaid and as of the first half of 2013, there 2.0 billion USD or 2.9 trillion MNT (Tugrug) national debt are left, which is equal to 17% of expected 2013 GDP.

According to the Parliament Decree No.52 from October 25, 2012, Mongolia traded its Government Bond namely Chinggis worth of 1.5 billion USD on the international stock market in November 2012, whereas 5-year bond worth of 500 million USD was sold at its launch price of 4.125% yield and 10-year bond worth of 1 billion USD was sold at 5.125%.

Following the first half of 2013, Government paid 37.7 million USD or 54.4 billion MNT as for interest payment. As for Chinggis Bond coupon, it will be paid under schedule and the principal amount of 500 million USD will be covered in 2018, and the 1 billion USD will be repaid fully in 2022".

Link to article


Mogi: independent assessment of the program "less than successful". Hmmm.

Mongolia: Financial Regulation and Governance Program

November 2013 (ADB) --


Mongolia underwent a transition from monobanking to a two-tiered banking system in 1991. However, the transition was not smooth with the Mongolian financial system being beset by a number of financial crises in 1994, 1996, and 1999. In 2008, Mongolia was also affected by the global financial crisis and a drop in copper prices. The latter prompted the government to enter into a standby arrangement with the International Monetary Fund (IMF), which ended in October 2010.

The development of the financial sector has been central to achieving the transition from a centrally planned to a market-based economy due to the financial system's critical role in mobilizing and allocating resources within the economy in a market-oriented system. ADB has supported the development of the financial sector in Mongolia through loans and technical assistance (TA). The first phase of comprehensive financial sector reforms was launched in 1996 against the backdrop of a fragile banking sector with a number of illiquid and insolvent banks.

This report validates the completion report's assessment of the project. IED overall assessment: Less than successful


·         Project Basic Data

·         Project Description

·         Evaluation of Performance and Ratings

·         Other Performance Assessments

·         Overall Assessment, Lessons, and Recommendations

·         Other Considerations and Follow-up

Link to release

Link to Evaluation Report


De Facto: 'Latin Mongolia' and the imminent debt crisis

By Jargalsaikhan Dambadarjaa

November 6 (UB Post) The current total debt of the government of Mongolia (including external and internal debt, debt securities, loan guarantees and debt owed by state and locally-owned companies) has reached 10 trillion MNT, which is equivalent to almost half of Mongolia's entire economy.

Although Clause 6.1.4 of the Fiscal Stability Law states, "Government debt must not exceed 40 percent of GDP calculated by the annual prices," the authorities are currently planning to raise the debt cap to 60 percent of GDP in the 2014 public budget.

It is time to talk about what the acceptable amount of government debt is; what happens when a sovereign country suffers from debt pressure, and what Mongolians should do now.

Mongolia's debt today: Too much?

There are standard ratings that determine how much debt a country can handle and these ratings view soft loans provided to developing countries as external debt. The ratings measure external debt burden against the annual GDP, debt services against government revenue and exports. In total, there are five criteria that give a score from 1 to 6. The debt burden on the economy is categorized as low, average, or high depending on the score from the five criteria.

In the rating system, Mongolia scored 3.41 and was put under the "average debt burden" category, but the International Monetary Fund (IMF) advised that Mongolia's external debt (including loan guarantees) must not exceed 40 percent of its GDP. This rating system is called the Country Policy and Institutional Assessment (CPIA) Index, which assesses the economic policies and institutional capacity of government organizations.

You do not have to be an expert to see that Mongolia's economic policy and institutional capacity of government organizations are only average. For more than 20 years, the governments of Mongolia only talked about developing the market economy, but kept doing the opposite in reality. Mongolia managed to lay the basis for its future development by managing to continuously attract investors and having the private sector lead economic growth. However, our government is still ignoring the existing opportunity to develop the economy without having to put its citizens under a substantial debt.

In the last 10 years, the mining industry generated enough income for Mongolia to take basic steps towards economic diversification. If we were more cunning, government officials would not be competing to see who has the fanciest car, the biggest house, or who can bring the most expensive Arab horses from abroad.

If we treated the matter with more intelligence, the authorities would not have conspired with each other to make deals on the most expensive land in Ulaanbaatar, and jobs in the government would not draw so much obsession. But if we used the mining revenue wisely, we could have encouraged fair competition, started producing high quality goods and services, boosted our reputation in international circles and made investments in the economies of our two neighbors.

The government of Mongolia has been receiving a huge amount of financial aid as well as soft loans from international development organizations and foreign governments for the past 20 years. Last year, Mongolia released government bonds for the first time to acquire expensive loans from foreign banks and private companies. But can our government make the most out of the huge loan?

The Lost Decade

A financial crisis broke out at the beginning of the 1980s when certain Latin American countries, namely Brazil, Argentina and Mexico, failed to meet their debt obligations when their external debt far exceeded their earning capacity.

These countries borrowed a huge amount of money from the international financial market by issuing government bonds in the 1960s and 1970s to achieve industrialization and build infrastructure. They did not have any trouble finding loans because of their high economic growth catalyzed by natural resources. Oil prices skyrocketed in 1973, which made it easy for these countries to sell their government bonds to international banks.

The total external debt of Latin American countries increased by 20 percent between 1975 and 1985, and it reached 315 billion USD by 1983, which equaled half of the regional GDP at that the time (the same level of external debt in terms of GDP ratio as Mongolia has today). Those Latin American countries paid 66 billion USD for coupon payments only in 1982 alone. The coupon payments had grown five and a half times as much as they were in 1972. Their CPIA index at that time was 3.0 (Mongolia's CPIA index today is 3.41).

In August 1982, the government of Mexico declared that they were no longer able to meet its debt obligations, announced a moratorium suspending all payments for 90 days and called for their lenders to commence re-negotiations on loans. The move was followed by a significant fall in the credit ratings of Latin American countries, which resulted in the halt of international commercial bank loans to Mexican companies and demand for urgent loan repayments. The story repeated itself in Argentina later on.

The global economy suffered greatly from the Latin American crisis and the interest rates of the loans previously given to the Latin countries were raised, causing more debt burden. This crisis reduced the national income per capita considerably and expanded the gap between the rich and the poor. Also, there were other negative consequences such as increasing crime rates as the youth in countries of high debt became more involved in criminal activities including the drug trade and prostitution. The 1980s is referred to as "The Lost Decade" among Latin American countries. Some countries including Greece, Spain and Portugal have recently started a similar journey towards a very similar "Lost Decade."

Mongolia's choice

The government of Mongolia has already borrowed foreign loans that cannot be fully absorbed by the economy, let alone be repaid. Nevertheless, our politicians who do not see further than an election term are attempting to issue new Samurai bonds to acquire more loans from Japan. The authorities seem to be feeling proud, as if they have accomplished something worthy of praise and appreciation, when they manage acquire loans from foreign private companies.

No one is currently thinking about what we will do the year after the next parliamentary elections, when Mongolia has to repay the 500 million USD debt along with its six-month coupon payment of 35 million USD on December 5, 2017. We have not even started thinking about how to start creating accumulation for bond repayment. Moreover, one billion USD has to be repaid in 2022. In these dire circumstances, the politicians we have today are trying to acquire more loans instead of immediately setting up a loan repayment fund to start accumulation. Those politicians will probably be nowhere to be found by the time Mongolia needs to repay its debts. Not even Interpol will be able to find them then.

Any debt owed by the government of Mongolia is paid by the public budget. Therefore, I would like to urge the members of parliament to pass a law that registers bonds and government guarantees in the public budget balance and include public expenditure under a ceiling of two percent of GDP.

Let us include certain indicators in the law that measure and assess whether the infrastructure built with funding from government bonds has been used to improve economic competitiveness or not. This way, more loans devoted to building more infrastructure can be banned in the case where the previous ones prove to have been ineffective towards boosting economic competitiveness.

Instead of acquiring foreign loans, our government needs to create a stable legal environment that attracts investment, both domestic and foreign, into large-scale long-term projects and establish good concession agreements to be implemented on a timely basis. It is time for us to stop making investments with public funds in large industrial projects and restrict the issuance of government guarantee to the Development Bank.

The most pressing issues we have today still remain to be resolved. Public governance needs to be strengthened and there must be greater transparency in government activities. We do not have to become a "Latin" Mongolia who lost a decade of development under a debt burden.

Link to article


Discussion: Eurasian Transport Corridor Through Mongolia

Ulaanbaatar, November 5 /MONTSAME/ An international conference themed "Euro Asian Transportation-Regional Participation" has run at the Government House.

The conference ran November 5 with an aim to attract big investors of the region's countries, governments, international organizations to have them share experiences and ideas and unite policies under the regional frames.

It became the third big measure organized by the working group which has 11 members of parties and parliament and works on policy making regarding the transit transportation and logistics.

Many of them delivered reports at the conference such as "Mongolian participation in regional transport", "Transport corridors of North-Eastern Asia", "Possibilities and development future of Mongolian transit transportation", "Nowadays situation of Chinese and Mongolian transit transportation, its perspective" and so on. 

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GoM Hires PR Firm Venn Strategies to Promote Investment Opportunities in Mongolia

November 5 (Politico) --

VENN STRATEGIES GETS MONGOLIA CONTRACT: The government of Mongolia has hired Venn Strategies on a lobbying contract. Venn will work on "government and public affairs services," according to the filing with the Department of Justice. Specifically, they'll "educate key stakeholders regarding opportunities for trade and investment in/with Mongolia." Venn will be paid $45,000 per month for the yearlong contract — plus an additional $5,000 for expenses. See the filing and the contract here:

Link to article


Mongolia to Join World Skills International to Improve Labor Skills

Ulaanbaatar, November 5 /MONTSAME/ At its regular meeting on Saturday, the cabinet decided to join the World Skills International (WSI), an global organization best-known for its skills competition, jobs and careers event held in a member country every two years.

The above decision has come forward to provide the demand for new methods to enhance professional training in a short time.

With WSI, Mongolia will cooperate in certain activities that will follow Mongolian Skills 2013 competition organized by the Labor Ministry last September in order to implement WSI's standards for skill evaluation and convenient employment.

The proposal to establish cooperation with this organization was put forward by the Ministries and professional organizations of Mongolia, who had studied experiences during WSI's most recent competition that took place last July at Leipzig Trade Fair.

World Skills International (WSI) is a not-for-profit membership association open to agencies or bodies which have a responsibility for promoting vocational education and training in their respective countries/regions. It operates worldwide and is politically neutral.

WSI provides a unique means of exchange and comparison of world-class competency standards in the industrial trades and service sectors of the global economy. The continued growth of WSI attests to the fact that traditional trade and craft skills along with the newer technology multi-skilled vocations make an essential contribution to the economic and social well being of peoples everywhere.

As a free standing, the non-political organization provides a cost effective means for international government and industry cooperation in achieving higher standards and status for vocational education and training on a worldwide basis.

Over its 60 year history, WSI (formerly known as the "Skill Olympics") has come to symbolize the pinnacle of excellence in vocational training. Every two years hundreds of young skilled people, accompanied by their teachers and trainers, gather together from around the world to compete before the public in the skills of their various trades and test themselves against demanding international standards. They represent the best of their peers drawn from regional and national skill competitions held currently in 67 countries/regions.  

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Mongolian state leaders pay respect to Chingis Khaan Monument

Ulaanbaatar, November 5 /MONTSAME/ The President of Mongolia Ts.Elbegdorj, the Speaker of State Great Khural Z.Enkhbold and the Prime Minister N.Altanhuyag Monday paid respect to the Great Chingis Khaan monument on his 851st anniversary.

The ceremony was also attended by members of the State Great Khural, the Government and senior state servicemen. 

Celebrating Mongolia's Pride Day--the name of this day--the PMinister, the Speaker and the Economic Development Minister N.Batbayar, and S.Byambatsogt, S.Odontuya, L.Erdenechimeg MPs and others were present at a ceremony of setting fire to the State hearth.

At the ceremony, the Economic Development Minister reminded that Mongolian people make connection with the Sky through the Fire, and regarded the action as a beginning of a new Renaissance for Mongolians.

Previous years, the fire setting ceremony would be celebrated on the National Freedom day, December 29.

The most important event of the Mongolian Pride day in 2012 was putting the portraits of Mongolian Great Khans in the State Ger of the State House.

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The Day of Mongolian Pride: Year two

November 5 / This year, Chinggis Khaan's birthday or the Day of Mongolian Pride was held on November 4, which is the first day of winter in the Mongolian traditional calendar.

Mongolia's 14th Prime Minister and famed economist D.Sodnom was awarded the highest state merit Chinggis Khaan Star on Monday. In line with Mongolian tradition, the accompanying "red" carpet ceremony was organized with a white, felt carpet.

A traditional wrestling tournament was held in the wrestling palace. Additionally, a fashion show, representing the three stages of Mongolian history (ancient Mongols, Mongol Empire and Modern Mongols) was organized as a celebration.   

This is the second year the Day of Mongolian Pride is being celebrated. Mongolian President Tsakhiagiin Elbegdorj issued a decree last year to celebrate Chinggis Khaan's birthday as a national holiday, at the proposal of the Mongolia Academy of Sciences.

Despite numerous disagreements between scholars, the emperor's birthday was finally decided on the first day of the winter season in the Mongolian traditional calendar. This day would vary each year on the Gregorian calendar. 

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COSOL building Mongolia base

October 23 (HighGrade) AUSTRALIAN mining IT specialist COSOL has maintained its early growth momentum in Mongolia, where it established an office in June this year, winning an appointment as Ellipse support service provider for Centerra Gold at the miner's Mongolia and Canada operations.

COSOL said in a statement that after an initial project scoping phase being conducted in Mongolia, it would start providing Centerra with 24/7 support for its Ellipse ERP platform.

COSOL's specialist Ellipse team would provide functional and technical support – including end-of-month, health checks, compliance, Ellipse back-ups, performance of DBA functions and hardware monitoring – support, compliance and change management services, COSOL Mongolia LLC manager Trent Jackson said.

"COSOL is a reputable provider of Ellipse services, with proven capability to design, implement, optimise, transition and support our clients' Ellipse systems," he said. "By providing these vital Ellipse support services, Centerra Gold's internal IT support can focus on their upcoming system trials and upgrades."

COSOL specialises in optimising business processes and technology systems and has developed expertise around operational and ERP systems such as SAP, Ellipse (Ventyx) and IFS. Since forming in April 2000, it has worked in 18 countries with more than 130 clients, including Xstrata, BHP Billiton, Rio Tinto, Vale and Anglo-American. A history of working with Rio Tinto brought COSOL to Oyu Tolgoi in Mongolia, where it was engaged to provide services including the implementation of SAP, archiving and data warehousing of legacy Ellipse data, establishment of contractor management business processes, and solutions and mining materials planning optimisation services.

Opening of the office in Ulaanbaatar mid-year followed COSOL's earlier entry into Chile, via a new office opened in Santiago in 2009.

The company also provides Ellipse support to Pacific Aluminium at Gove in the Northern Territory of Australia, and to Glencore Xstrata for its Sagittarius mine in the Philippines.

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Media Release: Launch of Australian Chamber of Commerce Mongolia

To be known as: AustCham Mongolia

On 9th of November there will be the inaugural launch of the Australian Chamber of Commerce Mongolia, to be known as "AustCham Mongolia".

The formation of AustCham Mongolia creates a new focus for the advocacy for Australian Businesses operating in Mongolia.

With more than 50 Australian companies operating in Mongolia it will provide a platform for existing and new businesses to Mongolia, to showcase their businesses and demonstrate Australian products, services and talent in one of Asia's fastest growing economies.

The establishment of AustCham Mongolia will create engagement with the Australian and Mongolian Governments and knowledge sharing through working groups, networking opportunities and events.

The mission of AustCham Mongolia is to:

-       Represent Australian business and its members through advocacy and lobbying;

-       Promote cultural exchange to develop bilateral relations between Australia and Mongolia;

-       Connect members with potential business partners, professionals and government departments through open forums and networking; and

-       Organise social events for the benefit of the Chamber members and the wider community,

The Patron of AustCham Mongolia will be Mr. Bill Paterson PSM Ambassador to Mongolia.

Launch Date: 9TH November from 18:30 to 21:00

Venue: To held at MexiKhan Restaurant, Regency Residence, UNESCO Street, Ulaanbaatar, Mongolia.

For more information about AustCham Mongolia;

General Questions: Mr. Doug McGay, Executive Director E:

Membership Enquires: Mr. Michael Marshall E:  

Media Enquires: Mr. Travis Cunningham E:

Link to press release PDF


Mongolia: Ready to Be An Agricultural Empire?

November 5 (Mongolian Economy) As you know, agricultural sector in Mongolia has been and is still holding a significant share in the country's economy. The agricultural sector produces over 20 per cent of GDP and more than 10 per cent of the national hard currency income is generated from exports of products of food and agricultural products.

In the last 10 years, for instance, over close to 100 projects and programs have been and are being implemented by international organisations and foreign countries as aid and loans in the food and agriculture sector of Mongolia

These have played an important role in overcoming the difficulties related to Mongolia's transition from centralised economy to market economy. However, we believe the role of the private sector will increase in a future.

Below are to explain

1.      Government policy(Goal/Vision) toward the sector

2.      Analysis of the sector and sub-sectors within the industry

3.      Past/current supports from foreign countries

4.      Required supports from the Government

5.      Examples of ongoing projects

6.      The reasons why we like the sector

Government policy toward the sector

The goal of the MINISTRY OF FOOD AND AGRICULTURE is "to support the regional and rural development providing economical growth" and "to provide the favourable environment of stable development in the agricultural sector"

And, the VISION OF THE MINISTRY is "to form the intensive food and agricultural sector, which is able to compete in the external and domestic markets and overcome the natural and economical obstacles"

Analysis of the sector and sub-sectors within the industry

The agricultural sector comprises more than 80 percent of the rural economy and employs more than 60 percent of the rural population and is hence seen as the key strategic sector for rural development. In addition, the agricultural sector contributes 20% to Mongolia's Gross Domestic Product, of which 85% is derived from livestock husbandry. The importance of the sector should be even bigger "politically" as 60% of parliament members are elected from rural areas.85% of the employment comes from livestock sector and 15% comes from crop production sector. That implies productivity of the livestock sector should improve and the importance of the crop production sector which has just emerged.

Total number of livestock is 43.3 million (camels - 266.4 thousand, horses - 2.1 millions, cattle - 2.5 millions, sheep-18.4 millions, goats -19.9 millions). Crop farming is a quiet young sector relatively to animal husbandry in Mongolia. Main crops are wheat, potato. Sugar, vegetable oil and some fruits import food products. Because of short vegetation period (90-110 days), some type of fruit are impossible to grow. Wheat, potato, meat and dairy products are local products, which supply100% for local consumption. Main agricultural export products are leather, organic cashmere, sheep and camel wool, organic sea buckthorn and meat. 80% of total agricultural equipments are renewed by imported machines.

Domestic food production, especially packaged food production has been increasingly coming up with speed with investments from foreign companies.

However, because of Mongolia's harsh climate, it is not suitable for many agriculture products to survive. Only 25% of the land in Mongolia is cultivated with crops with most of other land either abandoned or unused. The agriculture sector therefore remains heavily focused on nomadic animal husbandry with 75% of the land allocated to pasture, and cropping only employing 15% of the industry.

However, recently, the crop production index has started to pick up. And, that is a positive sign for increased crop production in a future.

Crops produced in Mongolia include corn, wheatbarley, and potatoes. Animals raised commercially in Mongolia include sheepgoatscattlehorsescamels, and pigs. They are raised primarily for their meat, although goats are valued for their hair which can be used to produce cashmere. Therefore, the per head GDP of the sector has never exceeded the average per head GDP in the past. So, increasing incomes and creating better livelihoods for vulnerable rural populations have become national agenda for quite a long time. In order to realize these objectives, Government focuses on the following:

(i)    Improved productivity of herders and farmers; 

(ii)   Improved access to markets for herders and farmers; and 

(iii)  Improved livelihood security for herders and farmers.

In relation to increasing the productivity of farmers, emphasis will be placed on improving animal health, providing vegetable seed, and the establishment of market linkages.

Foreign supports

As you see below, international aid projects in food and agricultural sector have played important roles in the past in Mongolia. For example, the European Commissioner for Agriculture and Rural Development has recently visited Mongolia to discuss prospects for increasing cooperation with the Mongolian authorities in the fields of sustainable agriculture, food security and rural development.

"We have a strong interest in enhancing our bilateral relations in the area of agriculture and in discussing ways to address challenges such as ensuring food security while preserving natural resources and fighting soil degradation. We are also ready to share our experience in developing rural areas while preserving communities, protecting rural landscapes and traditional ways of living", stated the Commissioner of the institution.

In terms of agriculture, Mongolia faces challenges related to self-sufficiency, environmental degradation and desertification. Rapid urbanization and the growing mining sector have also brought important changes in the Mongolian nomadic culture. Building on the experience that the EU and EU member states have with addressing similar issues, the visit has focused on how to best answer these challenges. For example, the EU rural development policy has a successful track record in supporting farmers and the rural economy via agri-environmental measures, sustainable use of forestry land, encouragement of rural tourism activities, conservation and upgrading of rural heritage.

Required Support from Government

Despite of the foreign AIDs, because Mongolia has a colder-than-average winter following a harvest, they have failed to meet agricultural targets. Severe weather conditions are raising fears of a dzud, which in previous years decimated Mongolia's herds and sent agricultural output spiralling. However, while some crops have been lost to frost, others met or exceeded targets, paving the way for the government to work towards its aim of building food self-sufficiency, while also encouraging the key cashmere and meat sectors to improve husbandry and crop yield programs in the spring."

Improving self-sufficiency is a key aim for the Minister of Industry and Agriculture, Kh. Battulga, who lamented the current shortfall of local food supplies at a meeting with Mongolia's food producers. "I always found it strange that a country like ours, a country with vast land, more than 50m livestock and with a population of only around 3m isn't able to supply sufficient food material for its own people," he said. "This is disgraceful."

The government will be hoping that a deal signed to lease 10,000 ha of land in Laos for various uses, including cultivation, marks a significant step forward in its bid to tackle the issue of food security.

As the agricultural industry needs to improve efficiency, it is important for government to facilitate importers of agricultural machines as well.

Organic Farming, Potato Seeds and Livestock Project are examples within the industry which have started to be implemented.

Organic Farming

Traditional agriculture such as pastoral livestock, crop farming techniques has been inherited by centuries and they give us a possibility of basics modern Mongolian sustainable agriculture development. There is less risk of insect and disease for crop farming due to harsh climate condition.

The action to get the public awareness of Organic farming and organic production has been started from 2009 (Organic Mongolia Program initiated by MNCCI–Mongolian national Chamber of Commerce and Industry). Public relation and promotional actions to transfer international knowledge of organic farming to local procedures has been started since 2009. This effort can prove to be a success story of the industry in a future.

Potato Seeds

Quality potato seeds are paid attention by both small-scale and large-scale farmers recently. The introduction of the new and high-quality seeds, primarily imported from Germany and Holland, has resulted in higher yields and higher incomes for farmers. Since 2007, Mongolia has reached 100 percent self-sufficiency in domestic potato production, more than 40 percent of which are new and high-quality varieties - and this is largely the result of the contribution made by the foreign funded Mongolian Potato Program (MPP). Average potato yields increased from 8.62 t/ha in 2004 to 12.2 t/ha in 2010. The amount of imported and low-quality potatoes, mainly originating from China, dropped to 10 percent in 2010 from 30.9 percent in 2004.The Mongolian Potato Program has successfully completed its first two phases, reaching its goal of establishing a national delivery system of premium potato seeds. The MPP has now entered its final phase with an aim to contribute to "enhanced food security, better balanced nutrition and higher income of the population through enhancing the productivity of the Mongolian potato and vegetable sector". Implementation of the MPP is mandated to the Mongolian Farmers' Association for Rural Development.

Livestock Project

Major challenges facing the livestock sector include low animal productivity, poor-quality animal products, inadequate animal health services, degraded pastureland, an unsustainable stocking rate, limited access to markets and underdeveloped value chains, resulting in low overall sectoral competitiveness. Swiss funded SDC launched the Livestock Project (2008-2011) with the aim of increasing the incomes and livelihood security of poorer herder families. The project focused on training veterinarians, brucellosis disease control and piloting two value chains for camel and yak products. It also contributed to donor and policy coordination within the sector. The introduction of a world-standard brucellosis-control system proved to be so successful that Mongolia is now expanding its reach. The project also succeeded in linking and harmonizing the activities of the Ministry of Food, Agriculture and Light Industry and the Ministry of Health, both of which are mandated to regulate human and animal zoonotic diseases. In order to improve programmatic focus and more effectively address poor animal health and inadequate veterinary services in Mongolia, SDC transformed the Livestock Project into the Animal Health Project (AHP), which targets zoonoses control and supports relevant policy development, as well as education and training for veterinarians and herders. Educating and training veterinarians is an essential element of combating zoonotic diseases in Mongolia.


In the past, the main driver of the growth of the agricultural industry was the supports from foreign NGOs and governments. However, now is the stage for private sector (Both foreign and local) should invest more to the industry and harvest for the future. The growth rate of the industry has been around 20% in the last few years and the industry achieved the highest growth rate among all the industries in Mongolia. And, it has the potential to grow at such rate in coming years backed by the strong support by the government and the consistent demand from China.

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Mayor Bat-Uul Orders Relocation of Building Material & Car Markets to City Outskirts

November 5 / As a tactic to reduce heavy traffic in Ulaanbaatar city the construction, building materials and technical supplies markets in the city have been earmarked to be moved to the outskirts of the city. Construction, building materials and technical supplies markets in the city are the cause of heavy traffic in densely populated districts of Ulaanbaatar City so the City Mayor issued an А/980 order to remove the construction and building materials markets to Nalaikh district and vehicle and technical supply markets to near the 22nd traffic check point.

Instead of crowded markets in the center of Ulaanbaatar, a construction, building materials and technical supply complex is expected to be built outside of the City.

Due to the City Mayor`s order 1.7 km of paved road from the 22nd traffic check point to the targeted area is planned to be built in 2014.

The City Mayor`s order will be effective from November 20th by delivering notifications to individuals and entities that sell vehicles in public places without a proper permission announcing the ban of vehicle sale and service in public places by February 20th, 2014.

The process of land reclamation for the construction, building materials and technical supply entities will be organized in accordance with the law of Mongolia on land according to a statement from the Public Relations & Communications Division of Ulaanbaatar City.

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Japan's Mongolian connection in North Korea

Authors: Julian Dierkes, UBC and Otgonbaatar Byambaa, Waseda

November 5 (East Asia Forum) President Ts Elbegdorj of Mongolia became the first head of state to visit North Korea since Kim Jong-un came to power, even though initial reports suggest that the two leaders did not meet.

Japanese Prime Minister Shinzo Abe has staked a great deal of political capital on his commitment to resolve the issue of the North Korean abductions of Japanese citizensIn this Abe is placing at least a partial bet on mediation by Mongolia. But is the Mongolian government both willing and able to assist in achieving a solution to this long-simmering crisis? The answer to these questions is yes. Serving a mediating role in finding a way to engage North Korea fits squarely into Mongolian foreign policy. Historical and on-going links with the DPRK put Mongolia in a good position to at least gently push or assist in a mediation.

For the past twenty years, Mongolia has pursued a 'third neighbours' foreign policy that attempts to cultivate friends beyond China and Russia in order to balance the influence these two powerful neighbours have. This has enabled Mongolia to achieve a visibility in international affairs that belies its status as a landlocked nation with a small population of just 3 million people. Japan has responded to this engagement with significant development aid, and also through some limited investments in Mongolian industrial ventures.

In engaging the US, South Korea and Japan in particular, Mongolia has emphasised its long-standing relations with the DPRK which serve at once as a motivation for assisting Prime Minister Abe in his drive to resolve the abduction issue, as well as giving Mongolia the means to do so. There are several elements that add up to some capacity for the Mongolian government to continue and perhaps extend its engagement with the DPRK.

The first element is historical. Mongolia was the second country after the Soviet Union to recognize the DPRK. This year marks the 65th anniversary of diplomatic relations between the North Korea and Mongolia. During the Korean War, Mongolia dispatched 225,000 heads of cattle, meats, clothing, and wheat in aid to North Korea, and hundreds of North Korean children were evacuated and raised in a special orphan centre in Ulaanbaatar. This has produced a cohort of Mongolian-speakers and North Koreans with fond memories and appreciation of Mongolia.

Mongolia maintained its contacts in North Korea throughout the 1990s, initially largely out of habit, despite the Soviet collapse and Mongolia's democratic revolution (Mogi: more so due to Mongolia's foreign policy of not forgetting "old friends"). This would also have been the period when Mongolia-evacuated cadres in North Korea might have been at the height of their influence. For some time in the 2000s the relationship was somewhat threatened by North Korean defectors' success in fleeing to Mongolia, but that stream seems to have been stopped in recent years. For a short time, North Korea closed its embassy in Ulaanbaatar out of concern over closer relations between the South Korea and Mongolia, but it was re-opened in August 2004.

Mongolia began to recognize the strategic potential in its close relations with the DPRK in the 2000s. This potential has found its expression most noticeably in the hosting of Japan–North Korea talks in September 2007, March and December 2012 as well as repeated offers to host the six-party talks in Ulaanbaatar. The North Korean leadership seems to see Mongolia as enough of a friend to provide some neutral ground for negotiations.

Today, contact between Mongolians and North Koreans is sustained and frequent on an official and less formal basis. There are regular exchanges between the two militaries, but also of doctors, kindergarten staff, sports officials and so on. There are also some North Korean labourers contracted to Mongolian businesses, a matter that has raised human rights concerns in the past.
Looking forward, economic cooperation between North Korea and Mongolia has unrealised potential and can be seen as complementary to each other's economies. Without access to the sea Mongolia is keenly seeking to develop alternative routes for exporting its natural resources to the world market. Mongolia's dependency on Russian oil also prompts its glance beyond immediate neighbours. In July, Mongolian oil company HB Oil acquired a 20 per cent stake in the Sungri refinery in the North Korean northeastern free-trade-zone of Rason. Sungri is remotely connected to Mongolia via the Russian railway and has a refining capacity of two million tons a year.

During the Mongolia-DPRK business forum that was held on 30 October in Pyongyang, Elbegdorj emphasised the business opportunities that exist between the two countries. He announced that the two sides have agreed to establish a joint venture company. He hinted at the possibility of regular flights between the two capitals as interactions get more frequent.

A deeper engagement of the DPRK government by the Mongolian leadership would not only be appreciated in Tokyo. All East Asian neighbours seem at a loss on how to approach Kim Jong-un and might therefore be grateful for any opening that might lead to constructive engagement. Seoul, Tokyo, and Washington have backed themselves into a corner where constructive engagement does not seem an immediate possibility. Moscow seems to have largely lost interest, while Beijing at times has seemed tired of North Korean antics.

On the crucial issue of the abductions, however, it is still entirely unclear what solutions the Mongolian leadership might be able to conjure beyond perhaps brokering direct negotiations between Tokyo and Pyongyang. Still, there are some signs that the Mongolia connection is placed to bolster engagement between Japan and North Korea. The current Mongolian ambassador to Japan, S Khurelbaatar, was previously posted to Pyongyang. The current Japanese ambassador to Mongolia, Takenori Shimizu is on his fourth tour at the embassy in Ulaanbaatar and thus knows Mongolia very well and has excellent contacts in the Mongolian government. There has also been some speculation that Mongolia is moving on the wishes of the Japanese government in a bid on the foreclosed Chongryon (the DPRK-affiliated General Association of Korean Residents in Japan) headquarter building in Tokyo. In the auction, the highest bid came from a Mongolian company, Avar LLC, but this company seems to be somewhat of a paper tiger.

Mongolia has been receptive to Japanese requests, and President Elbegdorj's visit to North Korea is very strategic from a Mongolian perspective. The coming weeks will have to show whether the Mongolian government can point to any concrete movement in its discussion with North Korea, but Prime Minister Abe may be right to put some faith in these Mongolian efforts.

Julian Dierkes is associate professor at the Institute of Asian Research, University of British Columbia, Canada. Follow his writings on Mongolia Focus and Twitter.

Otgonbaatar Byambaa is a PhD candidate at the Graduate School of Asia Pacific Studies, Waseda University, Japan. 

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Lecture at Kim Il Sung University by President of Mongolia Tsakhiagiin Elbegdorj

November 2 – Foreign Policy of Mongolia and the Relations between Mongolia and the Democratic People's Republic of Korea

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Mongolians can travel without visas to 16 countries, 23 for diplomatic/official passport holders

November 5 / The cabinet meeting held on Saturday featured the topic of visa related issues specifically those regarding Poland, Serbia and Columbia. 

Currently Mongolia has agreements with 23 countries that allow travel reciprocally without a visa for both diplomatic and official passport holders. Ordinary passport holders are able to travel to 16 of these countries without visas.

The proposal of traveling to Serbia without a visa for 90 days within 6 months was voted  favorably at the Cabinet meeting. The cabinet members believe such a proposal to ease  visa requirements is a positive step to encourage bilateral relations with Serbia for tourism and to support business and enterprises of both countries since establishing diplomatic relations between Mongolia and the former Yugoslavia. 

During the cabinet meeting the agreement on mutual visa liberalization for holders of diplomatic and official passports between nationals of Mongolia and Colombia, signed at the 68th UN Assembly last September, was approved. 

According to the agreement, official and diplomatic passport holders of both nationals will be able to travel to the other country for up to 30 days without a visa.

There were also amendments into the protocol for the agreement on the mutual visa liberalization for holders of diplomatic and official passport holders between the Governments of Mongolia and Poland. 

The agreement was signed between Mongolia and Poland in June 2011. 

Some problems had arisen as an official passport is translated into English as a "service passport" meaning some official passport holders faced misunderstandings at Polish Customs. 

Additional clarifications into the agreement were needed to specify the type of passport the agreement referred to. 

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Honorary Consulate of Mongolia Opens in Samsun, Turkey

November 5 / The launching ceremony of Mongolian Honorary Consulate in Samsun city of Turkey was held on October 31, 2013, where representatives of the city administration, business, and culture and defense sectors have attended along with Mongolian students studying in Turkey.

In the opening ceremony, Governor of Samsun Province O.Nuri Cobanoglu, Ambassador Extraordinary and Plenipotentiary of Mongolia to the Republic of Turkey B.Batkhishig, Honorary Consul of Mongolia M.Sungur have delivered their opening remarks and noted that the Honorary Consulate would contribute greatly to the bilateral relations and cooperation of the two countries.

During the ceremony, Mongolia's photo and national costume exhibitions were displayed.

Samsun is the provincial capital of Samsun Province and a major Black Sea port, about 410 km away from Ankara city. Over 20 students are currently studying in this province. As of today, Honorary Consulate of Mongolia is operating in Istanbul, Izmir, Bursa, Antalya, and Kayseri cities, and now opens in Samsun of Turkey.

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Mongolia signs WHO protocol against illegal tobacco trade

Ulaanbaatar, November 5 /MONTSAME/ A Permanent Representative of Mongolia to UN O.Och Friday signed the protocol on Eliminating Illicit Trafficking in Tobacco Product.

The document was approved by the 5th session of the Conference of the Parties to the World Health Organizations /WHO/ framework convention on Tobacco control in Seoul of S.Korea on November 12 of 2012. Mongolia joined this convention in 2004.

The protocol aims to put control on chain of illegal tobacco supply and to improve an international cooperation in this matter, moreover, it has a main role in reducing a number of countries which have been involved in this kind of trade and in creating a control system to eliminate it. This protocol has an importance in fighting with the illegal industry of tobacco product and contraband.

Mongolia has become the 37th country to sign this protocol. It will become valid upon being signed by 40 countries.  

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Social, Environmental and Other

Mongolia Copper Mine at Oyu Tolgoi Tests Water Supply and Young Democracy

Mining boom in South Gobi influenced by local and global citizen activism

KHANBOGD, Mongolia, November 5 (Circle of Blue) – Though it is well before noon, the hot light of the South Gobi desert sun punches through the ventilation openings at the peak of Byambasuren's white ger.
The door of her teepee-like home, a single round room built of felt and canvas, is open to a dirt compound surrounded by a fence made of rough-cut wood. Beyond that, cattle and horses churn a small grid of unpaved streets to powder. Herders on foot follow behind, their features obscure in yellow clouds of dust.

Byambasuren's ger lies 700 kilometers (434 miles) from Ulaanbataar, Mongolia's capital. The trip overland is mostly on hard-packed dirt roads and takes 15 hours across treeless steppes and sand. Much of the world's second largest desert remains remote from the world, even forbidding.

That is not the case for Byambasuren, a young herder and mother, or for Khanbogd, an expanding livestock and desert town in Omnogovi, Mongolia's largest province, which lies along the border with China.

Not far away, about 40 kilometers (25 miles) south, mining giant Rio Tinto and Mongolia's young, free market government are developing one of the planet's sizable reserves of copper and gold. The $6.6 billion, 80-square-kilometer (30-square-mile) Oyu Tolgoi mine is the largest industrial enterprise ever constructed in Mongolia, and, with 7,500 workers, the nation's largest employer.

Along with the oil-producing tar sands mines in Alberta, Canada, Oyu Tolgoi also is among the most thoroughly scrutinized resource extraction projects on Earth. The reason: It's located in one of the most water-starved regions of Mongolia.

Unlike earlier eras, when industrial companies descended on unwary regions to mine and log and drill with scant resistance, resource development in the 21st century faces new operating rules, many of them imposed by people like Byambasuren.

She and seven other herders, who have access to cell phones and the Internet, belong to Gobi Soil, a year-old environmental group. Byambasuren and her colleagues are the on-the-ground local hub of a national and global network of policy strategists, environmental scientists, and communications specialists that elevated Oyu Tolgoi and Mongolia's capacity to manage its mining sector to the nation's top political issue.

In June, Mongolians re-elected President Tsakhiagiin Elbegdorj of the Democratic Party, who campaigned on attracting foreign investment and strengthening environmental oversight of mining.

There are two big ecological issues. The first is preventing water pollution, principally in northern and central regions of the country caused by gold mining practices that use mercury and cyanide.

The second is sharing the South Gobi's limited water supply between livestock herders and the country's biggest hard rock and coal mines. "We need water," Byambasuren, who like most Mongolians uses only one name (Mogi: I'm tired of these western media saying "most Mongolians uses only one name". This is completely false. Anyone who says so has no clue what they're talking about. That goes for Mongolians too. Every Mongolian citizen has three names: given name, parent's name (mostly father's given name) and family name) , says through an interpreter. "Before Oyu Tolgoi came here, we had enough water for our animals. Now we don't. Things are different."

High Stakes, Major Players

Several big players, including Mongolia's government, the World Bank and Rio Tinto, the world's second largest mining firm, have a stake in the mine's development. Rio Tinto, based in London, is well aware that its record of environmental management at a number of its mines is routinely criticized by prominent international environmental groups as abusive.

One example is the company's big and closely scrutinized Grasberg copper and gold mine in West Papua, Indonesia, which it operates jointly with Freeport McMoran. The mine uses more than a billion gallons of water a month and unloads 230,000 metric tons of waste into the Ajkwa river daily, which kills plants and contaminates drinking water, according to Corporate Watch, a London-based investigative oversight group.

Among its many objectives, Oyu Tolgoi represents a new opportunity for Rio Tinto to introduce Mongolia and the world to state-of-the-art mining practices, including water use and recycling techniques that conserve water and limit pollution. The international mining sector, mindful of its global reputation, regularly commends Rio Tinto, which last year earned total revenue of US $55.6 billion, for responding to technological trends and heightened civic expectations here.

The Mongolian government, which owns slightly more than one third of Oyu Tolgoi, counts on the mine to finance its ascent to economic and political influence in Asia. The country's newly elected Democratic Party leaders also want to prove they have the smarts and moxie to manage Mongolia's mineral treasures and work as an equal partner with a global industrial giant.

The World Bank and its affiliated financial institutions, which helped to fund Oyu Tolgoi, weigh new loan requests to expand the mine against Rio Tinto's record in the South Gobi in achieving the United Nation's Millennial Development goals. And environmental and human rights organizations, with offices networked from Ulaanbataar to Beijing to New York to London, make a strong case that the Manhattan-size mine, tearing a big hole in the South Gobi, is producing permanent damage to land and water, and eroding the region's irreplaceable culture of tiny human outposts, livestock herding, and seasonal wandering.

Oyu Tolgoi, in effect, is at the center of a globe-circling vortex of competing ambitions. It's more than the mine's location in a mineral rich and environmentally sensitive, water-scarce region or its immense dimensions. It's more than the huge price tag and the mine's prominent and stubborn developer. It's more than a young government's insistence on oversight and fair economic returns, or the substantial pressure from the world's environmental community to restrain damage.

It's all of these facets, mixed and modulated on a global motherboard, that have amplified Oyu Tolgoi into an internationally significant case study of the fierce and increasingly transparent civic conflict over tapping the earth's natural resources.

Little more than a decade ago, this was territory so vacant it rivaled Antarctica, Siberia, and the Australian outback as places farthest removed from the global mainstream. Now there's an airport outside Khanbogd. The money to be made here lures thousands of workers and attracts regular convoys of television producers, magazine writers, and documentary film crews.

Oyu Tolgoi's executives are sensitive to the attention. "We are very aware of almost everything that's said about this mine, wherever it comes from," says Mark Newby, Oyu Tolgoi's 42-year-old environmental manager, in an interview with Circle of Blue. "You have to listen. You have to respond. You can't go eye to eye with the country or the community. A number of large mines worldwide did that, and they lost their mines as a result."

'Singing Well' Sounds Alarm

Along the west wall of Byamba's ger is a display cabinet with glass doors. Looseleaf notebooks, standing on end like encyclopedia volumes, occupy one shelf. They are sections of the mine's environmental and social impact statement produced under contract for Rio Tinto.

Joining her are: Battsengel Lkhamdoorov, a 40-year-old herder who founded the Gobi Soil environmental group; Paul Robinson, a mining reclamation expert from New Mexico; and Batnasan Damdinsuren, a travel industry manager and interpreter who's toured mining regions in Russia, Mongolia, and the United States.

Byamba rises from a stool at the center of a room that is getting steadily warmer and draws a binder from the case. It contains maps of the area with an assortment of red, blue, green, orange and pink dots. Each dot designates a well that supplies water to Oyu Tolgoi, or a well that monitors levels in underground water reserves close to the surface or 60 meters (180 feet) deep. The wells were drilled by Rio Tinto, or by Oyu Tolgoi's previous managers, BHP and Ivanhoe Mines.

Byamba is particularly interested in one map with pink dots. She points to a well designated GHW4X6. "Here it is," she says, "This is the problem."

The day before, in a meeting in a local government office, Byamba told this story about the well. It is, she said, the "singing well" discovered by camels sometime in 2008 or 2009. She wasn't sure. With their hooded eyes and dual humps, the big ungulates huddled day after day around a brown length of steel well casing, about eight inches in diameter, a foot tall, and open at the top.

Their behavior was so unusual, and so persistent, that some of Byamba's neighbors rode into the desert on motorcycles and small trucks to investigate. The men didn't see anything wrong with the pipe — no holes, no cracks. But when they dropped to their knees and put their ears to the well what came back wasn't the drip, drip of a leak. What they heard was the unmistakable sound of a stream flowing deep underground. It was a cascade of water, startlingly loud in a land so dry that even when rain or snowmelt caused springs or streams to flow, it hardly made any sound at all.

"It was like bells ringing," Byamba says. "It was a sound that you never forget."

There are many places in southern Mongolia — a nation larger than Spain, France, Germany and Britain combined — where economic intent and water scarcity converge. None, though, illustrates the confrontation with more clarity or urgency than in Omnogovi, where Mongolia's largest and thirstiest hard rock and coal mines are located. For several years Mongolia's economy has grown more than 15 percent annually, faster than all but a handful of countries, largely due to the mineral exploration and development in this province so close to China's steel and coal-fired power plants.

West of Oyu Tolgoi, hundreds of trucks loaded with coal from mines in and around Tsogttsetsii head to China on a two-year-old paved highway. In July, Oyu Tolgoi began its first shipments of copper concentrate to China. A 250-kilometer rail line (155 miles) from the Omnogovi mines to China is planned.

Omnogovi also is a place where domesticated camels outnumber people, where springs are rare, and rivers run intermittently. Just as gas prices in the United States serve as either a measure of national well being or a gauge of societal stress, water supply serves as a meter for uneasiness between Omnogovi herders and mining companies, and as a proxy for a range of other concerns.

The story of the singing well is illustrative. It was one of a group of production and monitoring wells drilled in 2003 by Ivanhoe Mines, a Canadian company, in anticipation of developing Oyu Tolgoi. Marked in white paint — GH4X6 — the well is surrounded by much older wells, dug by hand and no deeper than 20 feet, to tap what herders call "soil water," the moisture stored closest to the surface and used to water livestock.

Byambasuren says she is one of the herders who were forced to reduce the number of animals they cared for because some of those hand-dug wells dried up. Nobody knew why until camels discovered the singing well. Byambasuren and her neighbors suspect the cascade they heard was soil water somehow pouring into the deeper aquifer and drying out their wells.

Robinson, a mining expert and research director at the Southwest Research and Information Center in Albuquerque, New Mexico, inspected the singing well and explains to Byamba that GHW4X6, as constructed, is different than what was described on the well's technical document. "This picture shows only one pipe," Robinson says. "The actual well has two. The second serves as an outer casing. What we saw is different than what's shown here in important ways. This picture doesn't show the outer ring."

Robinson explains in English as Batnasan, who was raised in the South Gobi, translates for the two herders. Robinson concludes that the actual construction of the monitoring well is flawed. It was built with a sleeve of rock and gravel packed alongside the well's steel casing that may be allowing soil water to drain from the surface to the deeper underground reservoir. "This is the low point," he tells them. "It's like a bathtub drain." Robinson, an exacting professional, cautions that his view is a thesis based on his visual inspection and the document.

Mark Newby, the mine's environmental manager, is well aware of GHW4X6. He says it is theoretically possible that it could drain the soil and shallow surface wells close to it. But that seems unlikely, he says. He says the company monitors the shallow wells in the area closest to GHW4X6, which was drilled before Rio Tinto took over the mine, and they aren't losing water.

"We do acknowledge that the well wasn't installed in the best manner possible," Newby says. "But the effects that people think are going on wouldn't be expected. And we haven't seen anything like that in shallow wells."

In September, Rio Tinto posted online a mass of new environmental studies that noted what it called "cascading behavior" in GHW4X6 and five other nearby wells, "indicating possible cross-connectivity of aquifers at these locations." The new data pointed to a drainage problem with six wells that was stronger than Rio Tinto has acknowledged previously.

Regardless, in 2010, a year after Rio Tinto assumed primary management and ownership of Oyu Tolgoi, the company proposed pouring grout into GHW4X6 and the surrounding monitoring wells in a project to decommission the wellfield, he says. The regional government, which has jurisdiction for projects outside the mine's perimeter, wouldn't issue a permit for the work.

Instead, the local government turned to a citizen-government working group, which was established at the direction of the World Bank to oversee aspects of Oyu Tolgoi's operations, including the decommissioning project, which still hasn't happened.

The back and forth exemplifies most of the interactions between mine executives, local government officials, and herders. Newby asserts that Rio Tinto operates Oyu Tolgoi with exceptionally ambitious standards of water conservation, safety, and pollution prevention. Critics say the company can do much better.

A Contentious Project

Everything is an issue at Oyu Tolgoi. Robinson notes, for example, that Rio Tinto was exceptionally late in preparing a mine reclamation plan to secure overburden and rock wastes during the mine's operating life, and after Oyu Tolgoi closes. Rio Tinto finally introduced the plan in late September, years after the first ridges of mine spoils appeared at the edges of the open pit.

Herders complain that dirt roads constructed by the mine owners are barriers to their animals and cause excessive levels of dust. Oyu Tolgoi excutives say the issue is exaggerated. Rio Tinto is building a new 107-kilometer highway (66.5 miles) from the mine to the Chinese border. Company executives, mindful of the civic distress about dust, said in October said the first 80-kilometers of the new highway will be paved by the end of the year. The final 27 kilometers will be paved by the end of 2014.

Most significantly, herders worry that Oyu Tolgoi is draining the region's water supply and making it difficult for their animals to find water. The steel fence that surrounds the gaping mine has blocked traditional herding corridors. Oyu Tolgoi also cut off a freshwater spring within the fenceline that herders used for generations.

The company substituted a manmade spring for the natural spring and installed it along the mine's southern fenceline. Water bubbles from two pipes there, pools in mud, flows to a shallow pond, then vanishes into the dry sand of the Undai riverbed. Rio Tinto executives said the two pipes are temporary measures to keep water flowing past the mine's boundaries so that livestock can drink. The project's completion, they said, has been held up by local officials who want a review by the citizen committee.

On the afternoon that Robinson and two herders visit the artificial spring, they express skepticism that it will be as effective in watering livestock as the natural spring. "Just moving water to a new place won't serve the need," he says. "You can't create a spring without the right geologic conditions. Oyu Tolgoi can't just move water to a place that is convenient. They have to move the spring to a place that holds the water or it will become soil water, not surface water. "

Democracy Driving Growth

In the summer of 1990, as its Soviet neighbor to the north slowly collapsed, Mongolians held their first free election, a signal act that ended 70 years of socialist control. Almost nothing in this big country of surpassing vistas, a huge southern desert, and a treasure chest of mineral and energy resources has been the same in the 23 years since.

Skycranes hoist men and materials to the summits of new office towers in the capital city, where 1.4 million people live. The population of Ulaanbataar has nearly tripled since 1990 and is almost half of the national population of 2.9 million. Outside Ulaanbataar, across the green steppes, cell phones and solar panels connect and power the country's rural herding families.

As the U.S. and much of the developed West experience a damaging unraveling of institutional capacity and public confidence, Mongolia is ambitiously pursuing an economic development strategy that is founded in modern goals of environmental sustainability, income growth and nation building.

"We are a large country with a small population," said Chuluunbat Orchibat, the 55-year-old deputy minister for economic development, in an interview with Circle of Blue. "Our economic goals are very high. We are working to improve the quality of life here. We also are trying hard to establish environmental standards that are high. We've had difficulties. But we know both can be done."

In interviews with herders and shopkeepers, activists and executives, Mongolians expressed similar views of the country's potential. Two clear advantages make the economic formula possible: Copper, gold and coal lie beneath Mongolia's South Gobi desert — hard rock and energy wealth that international mining companies are tapping; and Mongolia shares a border with China, the world's largest processor and consumer of such materials.

There is, though, considerable skepticism among environmental specialists in and outside Mongolia that an economy dependent on mining can marshal the policymaking and enforcement apparatus to reach its environmental goals. Mining industry executives also are growing deeply suspicious of the Mongolian government's ability to oversee their sector's operations with consistency and fairness.

Just as in the other nations Circle of Blue has reported from in recent years — China, India, Qatar, Australia, and the western United States — some of the most significant issues center on water supply. The overriding concern: Can Mongolia safeguard its fresh water and grow the hard rock and coal mining sectors in a region of the country where water is in short supply?

"People care about this. Actually, young people are eager to make sure we have enough water. They want to protect the motherland," said Bailgalimaa Nyamdawa (Mogi: Baigalimaa I'm sure), a 25-year-old lawyer at the Center for Human Rights and Development, a Ulaanbataar-based legal group that prosecutes civil cases against water polluters in the mining sector, most of which are owned by the Chinese.

"We need good regulations," Nyamdawa said through an interpreter. "We need good enforcement. We need more people who know how to influence good policy. Before the mining started we didn't have such problems."

Growing Pains

In the first years after throwing off socialism in 1990, Mongolia's rush to generate hard currency from mining was a familiar story of boom and pollution. While converting from a centralized economy to the free market, Mongolians suffered through dire seasons of food shortages, energy shortages, hunger and joblessness.

Desperate to generate revenue, Mongolia's authorities in 1997 enacted the Mineral Law and opened most of the country to mineral development. More than 6,000 licenses were approved, including those for the big copper and coal mines in Omnogovi.

The first mineral mining boom occurred in northern and central Mongolia, where rivers and streams were colonized by gold miners and companies, many from Russia and China. They dropped backhoes and pumps into waterways, turned high pressure hoses on river banks, and used mercury and other toxic substances to separate gold from mud and sand. In short, they made a colossal mess.

Mongolians fought back at the grassroots. As a herding culture, Mongolians understood the ties between their well being and the health of water and land. Local non-profits allied themselves with international environmental organizations. Mongolia's news media, aided by video and photographs taken by citizens and posted on the Internet, turned the damage into a national and international story.

In 2007, Tsetsegee Munkhbayar, a herder, was awarded the Goldman Environmental Prize, a prestigious American public service award, for his work to organize opposition to mining pollution in the Onggi River, one of the country's longest and largest.

Mining and environmental damage also became an election issue. In 2009, Mongolia enacted the Law on the Prohibition of Minerals Exploration in Water Basins and Forested Areas, which outlawed many forms of placer mining — the extraction of mineral deposits from streams, rivers and protected wild lands. In 2010, the government suspended almost 2,000 mining licenses and tightened provisions for securing licenses.

In 2011, Mongolia began to overhaul its mining law. In December 2012, the government circulated draft rules that alarmed industry executives. The new provisions called for higher financial returns for the Mongolian government and greater scrutiny of mining licensees.

The proposed regulations also offered greater security for water resources. The justification, say most industry executives and environmental authorities, is sound. Though smaller gold mining operations in the wet North and central regions led Mongolia's mining boom in the first decade of the century, the country's development authorities anticipate that the big and thirsty coal and hard rock mines in the South Gobi will generate the huge revenue streams, and employment, that will drive Mongolia's economy.

Water Supply At Risk

Water supply is an impediment to increased mining. In 2010, the World Bank published a study of water use in Omnogovi and two neighboring South Gobi provinces. The study said that 3.8 million head of livestock consumed nearly 32,000 cubic meters (8.3 million gallons) of water daily. That was less than a fifth of the almost 100,000 cubic meters (26.4 million gallons) of water used daily by coal mines around Tsogttsetsii, and the nearly 70,000 cubic meters (18.5 million gallons) that was consumed daily by Oyu Tolgoi during its construction. At that rate of consumption, the bank estimated, the region's groundwater supplies would last 10 to 12 years.

Rio Tinto reached different conclusions in its environmental studies. Oyu Tolgoi's water source, explains Mark Newby, is an aquifer called Gunii Hooloi, near Khanbogd, that is 300 meters to 400 meters deep (1,000 to 1,300 feet). The aquifer was discovered by the Rio Tinto's hydrologists and contains tens of billions of gallons of saline water, according to the company.

The Mongolian Water Authority permit allows Oyu Tolgoi to use 870 liters of water per second (20 million gallons daily), which is pumped to the surface and transported by pipeline 35 kilometers to serve mining operations. Newby says the mine recycles 80 percent of its water and uses under 500 liters per second (11.5 million gallons daily), far less than the permitted amount. Even at the higher permitted level of water use, he says, Oyu Tolgoi will consume about 20 percent of the water contained in Gunii Hooloi.

Rio Tinto's study conservatively estimated that aquifers in the South Gobi were capable of supplying 500,000 cubic meters (132 million gallons) of water daily. A cubic meter is 264.4 gallons. That level of consumption, according to the company study, could be reached by 2020 as more mines open in the region, and more people arrive in Khanbogd and other towns to work and live.

Like the U.N. report, the Rio Tinto study concluded that water shortages are a barrier to mineral development in the South Gobi. The company study said "there may eventually be a need for the construction of water pipelines from the Kherlen or Orkhon rivers." Those are two of Mongolia's largest rivers and lie 1,000 kilometers (621 miles) away in the country's forested North.

Proposals to pipe water from the North to the South have popped up periodiocally in Ulaanbataar since construction of Oyu Tolgoi began in earnest in 2009. But they aren't generally taken seriously.

The cost of a building and operating a lengthy water pipeline would be enormous. The Kherlen River flows into China, and Orkhon's waters reach into Russia. Both countries would be expected to exert significant diplomatic opposition to such large water diversion projects.

What's more, by the time water shortages become an emergency in the South Gobi, climate change may well have dried up enough of the nation's surface water to significantly deplete the supply carried by the Kherlen and Orkhon rivers.

Climate Change Hotspot

A 2010 United Nations report found that since 1940, average annual temperatures in Mongolia increased 2.14 degrees Celsius (4.42 degrees Fahrenheit), a rate of increase that is higher than almost any other country. The number of droughts in Mongolia has increased 95 percent since 1950, and 680 rivers and 760 lakes have dried up since 2006, according to the U.N. study.

The drying trend is most pronounced in the South Gobi, according to the U.N. report. That's also where the Oyu Tolgoi mine is located.

"In southern Mongolia, characterized by Gobi desert, the impact of climate change is expected to be extremely challenging," according to the report. "It will be in the form of extreme events — sand and dust storms, flash floods or heavy snowfalls, droughts, desertification, land cover changes and water stress."

In Ulaanbataar, Deputy Economic Minister Chuluunbat Ochirbat described the cross-cutting economic and environmental trends, unfolding in multiple dimensions, that confront his young nation. National ambition, he said, is expressing itself in new public pressure to gain more control of foreign industrial projects. The country's mineral abundance can be developed with stricter environmental oversight and enforcement, which he said is occurring. But he acknowledged that the one big barrier that has not been adequately recognized or addressed is water scarcity.

"We've taken some actions," Ochirbat said. "We suspended mining leases to control water pollution. We approved a new law four years ago to protect rivers and forests. I think what's important right now is that our mentality has been upgraded. But we know we aren't using our water resources properly."

Tough Choices Ahead

Heading south to the Gobi Desert, and not far from Ulaanbataar, the sole paved two-lane highway dissolves into multiple hard-packed, single lane dirt roads. They criss-cross each other and from a distance resemble braided strands that rise to the peak of wind-tossed ridges and fall to treeless green valleys. Every now and again lone dirt roads peel off to the East or West, their destination known to local residents and expert drivers who are familiar with the territory.

The multi-tracked roads, unique in the world, form a powerful metaphor for Mongolia's national development. The sheer mass of unmarked roads that bound across the grasslands and desert reflect the fast-growing number of drivers and vehicles, and rising personal incomes fostered by a free market economy and just two decades of mineral development.

Multi-tracking also represents the complexity of Mongolia's choices. Follow the tracks and eventually they lead to Khanbogd, a desert town that is both enthused about mineral development and concerned sufficiently about dust, water, and the durability of a generation's old herding culture to support Gobi Soil, an activist citizens group.

The South Gobi is a frontier of economic development and a laboratory of environmental consequences and social responses. It's the sort of place that attracts people like Sara Jackson, a young American who is a human geographer and doctoral candidate at York University in Toronto. Jackson has traveled often to the South Gobi to study the effect of Oyu Tolgoi on the region's residents. "I spend time thinking about how people feel," she said in an interview with Circle of Blue.

In preparing her dissertation, Jackson conducted 80 interviews and held five focus groups to understand how Mongolians in Ulaanbataar, Khanbogd, and several more communities perceive Oyu Tolgoi. The idea, she said, is to promote communication between stakeholders.

In a draft report she wrote earlier this year, Jackson found persistent distrust among the stakeholder groups: Citizens felt they were being ignored and Rio Tinto officials felt their work to support independent review groups at Oyu Tolgoi was not appreciated. Dust from new roads and a dwindling water supply are viewed by stakeholders as chronic problems that haven't been addressed to the extent that residents feel their complaints produce actual results.

Jackson's conclusion: "Without resolution of the issues discussed above, feelings of marginalization and exclusion will continue to cause local, regional, and national tensions about Oyu Tolgoi and mining development in general. However, mining has had the positive effect of politicizing citizens, who are now more aware of and active in local politics."

"I've spent a lot of time thinking about what I learned in Mongolia," Jackson added in the interview. "Cautiously, what can be said is that what's happening in the South Gobi is different than in other developing places. Oyu Tolgoi is a big target. They do get picked on more than other companies. But at the same time, if they are pushed that raises standards. And they are being pushed."

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MGL - Back to basics for basketball obsessed Mongolia

ULAN BATOR, November 5 (FIBA) - Exciting times lie in wait for aspiring basketball players in Mongolia after the country's national basketball federation implemented a root and branch overhaul of its approach to both growing the game at grass roots level and building for future national team success.

Speaking as part of a delegation from the Mongolian Basketball Association (MBA) which visited the FIBA House of Basketball in Mies, Switzerland and attended a tournament for Mongolian ex-pats living in Europe, MBA Vice-President of Operations Sharavjamts Tserenjankhar confirmed their revised outlook.

"We are dreaming of one day being one of the top four or five teams in Asia," he said.

"Right now though, we are working on our fundamentals and starting again at high school levels and in our university competitions, before eventually going up to our national leagues and national teams.

"We previously made the mistake of focusing on the leagues more than growing the sport.

"Basketball is the number one sport in Mongolia, whether it is participating or watching. We have 1.5 million people interested in basketball even though our population is just 2.9 million."

"We had 51 teams playing at a three-day tournament in Geneva made-up from Mongolian men and women living all over Europe. It was a tournament with two age categories: under-40 level or over-40 level.

"It was a great for our national federation because we had even more teams than last year and a lot of people from Mongolia are now getting involved in basketball in different countries, especially in Europe, meaning we can get some help from them.

"I also found one girl who is under 16 years old and one day could maybe be good enough to be our national team leader."

The ambitious review and delivery programme which aims to put Mongolia firmly on the basketball map in Asia will be overseen by American coach and consultant Alan K Walls, who has almost two decades of coaching experience around the world at various levels.

Walls has been tasked with realising the primary objective of transforming Mongolia into a regular participant in the FIBA Asia Championships from 2015 onwards and ensuring an active structure of competitive teams for both men and women from the U16 age group and all the way up to the senior level.

Under new leadership since the start of the calendar year, MBA President Ganhuyag Hutagt, Secretary General Orgil Bathuyag and Special Advisor Eddie Ganbat have devised a range of other objectives which re-enforce the impressive magnitude of the transformation project being undertaken.

These include the drafting of a four-year business and sport development strategic plan, a complete re-branding process, establishing regional satellite branches of the MBA in various cities throughout the country, setting up nationwide "Blue Wolves Basketballs Schools" for kids between the ages of six and 18, forming the Mongolia Collegiate Basketball Association with an NCAA-style tournament, creating the Mongolia High School Basketball Association, putting together a FIBA 3X3 National Team programme to compete regionally and globally, as well as conducting summer camps and clinics for players and coaches lead by foreign coaches.

There is also a strong desire to strengthen links off the court too, by increasing the participation of MBA staff and board members on various FIBA Asia and EABA committees, organising international competitions on all levels in Mongolia, including one FIBA Asia or EABA event annually and fostering partnerships with other associations in different FIBA regions for coaching, player and best practices exchanges.

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EAP264: Preservation through digitisation of rare photographic negatives from Mongolia

Mr Bayasgalan Bayanbat, Monsound and Vision Foundation 
2009 award - Major project 
£42,850 for 12 months

Archival partner: Archives for Cinema, Photography and Sound Recording, Ulaanbaatar

Project Overview

The Archives for Cinema, Photography and Sound Recording in Mongolia houses over 160,000 photo negatives, including 10,552 glass plate negatives. This project aims to digitise all these glass plate negatives, the majority of which contain images taken between 1921 and 1945 and have never been printed. The collection covers a wide range of topics such as the army and military, public health, animal husbandry, archaeological finds, nature, prominent Mongolian people, people who were politically repressed during the 1930s, historical documents, construction works, industrial development, Mongolia's contribution to the victory of WWII, culture, religion and politics.

The collection is housed in the Archives building, which has no adequate and controlled preservation environment and lacks humidity and air control. The glass plates are kept in paper envelopes on shelves where they are exposed to physical mishandling and deterioration in image quality. Only 3,000 have been catalogued. Since no digital images are available to researchers and the general public, these glass plates are in danger of being exposed to frequent printing which represents a threat to the physical condition of the originals themselves. Once degraded in quality or detroyed due to frequent printing and mishandling, this unique pre-industrialised history of Mongolia will be lost for ever.

As the originals will eventually be too fragile for frequent handling, the only way of preserving and providing access to users of this valuable collection is through digitisation. The remaining 7,000 glass plates will also be catalogued. Training schemes will be developed to preserve and further restore archival photographs and the introduction of this digital archive will inspire the Archives, the MSV Foundation and other individuals to carry out further projects to help preserve and digitise the remaining archival holdings.

Project Gallery

Project Outcome

Research and a visual inspection have been carried out on over 7,000 uncatalogued "orphan" glass negative plates and a bulk of them have been cleaned from dirt, dust and paints.

A total of 10,089 glass negative plates have been digitised. Uncatalogued digitised images have been sorted out either into existing or new collections of the Archives thus enriching its catalogued photographic contents.

Some Archives' staff have received professional training in digitising technology as well as in digital archives handling. The successful implementation of the project serves to testify that cooperation between the Archives and other national cultural bodies, including MSV Foundation, is vital for the future in preserving and restoring the Archives' stocks.

This has been the first ever major project funded by foreign institutions and a great challenge for the MSV Foundation. It is considered that the project has been a great success which will certainly add to the good reputation of the Foundation locally.

Thanks to the project, the MSV Foundation will be able to bring more and more historic film and photographic enthusiasts closer together in safeguarding the nation's cinematographic and photographic heritage.

The original glass negative plates are still housed in the Archives for Cinema, Photography and Sound Recording. Digital copies have been deposited with the Archives, MSV Foundation and the British Library.

The records copied by this project have been catalogued as:

·         EAP264/1 Digital copies of glass plate negatives preserved in the Archives for Cinema, Photography and Sound Recording, Mongolia [1910s-1950s]

The catalogue is available here.

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Learn About The Ethnoarchaeology of Mongolia's Reindeer Herders

November 5 (Basin Radio Network) The public is invited to attend the monthly meeting of the Pumpkin Buttes Chapter of the Wyoming Archaeological Society on November 6th at 7:00 p.m. to hear a fascinating presentation titled "The Ethnoarchaeology of Mongolia's Reindeer Herders" by Dr. Todd Surovell

Todd Surovell is Director of the George C. Frison Institute of Archaeology and Anthropology and an Associate Professor of Anthropology at the University of Wyoming.  He specializes in the first peoples of the New World, geoarchaeology, lithic technology, and quantitative methods.  In addition to working throughout the Rocky Mountain west, he has worked in Israel, Denmark, and Mongolia.  He has published almost 40 articles and a book about Folsom lithic technology.  His most recent work is an area of study known as ethnoarchaeology where he researches living peoples in order to understand the archaeological record of the past.  This research led him to northern Mongolia to study Dukha reindeer herders

Dukha are nomadic reindeer herders who live in northernmost Mongolia near the border with Siberia.  Initiated in 2012, the Dukha Ethnoarchaeological Project is designed to study the factors governing the spatial organization of human spatial behavior in a nomadic context.  Using observational mapping in interior spaces and time lapse photography coupled with photogrammetry in exterior spaces, Dr. Surovell is able to examine in great detail the spatial distribution of activities, individuals, genders, and ages within Dukha summer camps.  In this presentation, Surovell will be discussing some initial results of the project and how they may help to inform us about the prehistoric archaeological record.

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