Wednesday, August 6, 2014

[MMC in talks to raise funds, MNT back to setting new lows, MSE seeks legal actions against 196, and Altankhuyag facing increasing pressure]

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Wednesday, August 6, 2014

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Headlines in Italic are ones modified by Cover Mongolia from original


Overseas Market

Mogi: Talking about raising funds. Don't believe that's the real reason here. MMC rose +20.3% Tuesday to HK$0.71 with 78.35 million shares traded vs 7.86 million daily average.


August 5, Mongolian Mining Corporation (HKSE:975) --

This announcement is made at the request of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to Rule 13.10 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

The board of directors (the "Board") of Mongolian Mining Corporation (the "Company") has noted the recent increases in the price and trading volume of the shares of the Company. Having made such enquiry with respect to the Company as is reasonable in the circumstances, save as disclosed below, the Board confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company's securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (the "SFO").

The Board wishes to state that the Company is in discussions with financial institutions regarding a possible fund raising exercise. However, no binding terms or agreements have been entered into in such respect as at the date of this announcement. The aforesaid fund raising exercise therefore may or may not proceed. The Company will make further announcement in compliance with the requirements of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the SFO as and when necessary. Shareholders and potential investors of the Company are reminded to exercise caution when dealing in the shares of the Company.

This announcement is made by the order of the Company. The Company's Board collectively and individually accepts responsibility for the accuracy of this announcement.

Link to release


XAM rose 21.4% to A$0.085 Tuesday. Trading flat in first-half Wednesday

Xanadu Mines Investor Presentation, August 2014: Unlocking Mongolia's Copper Belts

August 6, Xanadu Mines Ltd. (ASX:XAM) --

Link to preso


GUF trading -0.1c to A$0.052 on midday Wednesday

Guildford Coal: 85.5% Shortfall in A$2.5 Million Fully Underwritten Entitlement Offer

August 6 -- Guildford Coal Limited (ASX:GUF) (Guildford) advises that the underwritten, nonrenounceable pro rata entitlement offer (Entitlement Offer) announced on 10 July 2014 has concluded.

Guildford received valid applications for 6,032,868 shares from shareholders under the Entitlement Offer and the remaining 35,633,799 shares will be subscribed for by Maiora Asset Management Pte Ltd (the Underwriter), each at the agreed price of $0.06 per share, which will result in Guildford receiving $2.5 million by the end of this week.

Link to release


NRU dropped -33.3% to A$0.002 midday Wednesday

Newera Resources: Entitlement Issue Prospectus

August 5, Newera Resources Ltd. (ASX:NRU) --

Link to prospectus


ASX:WOF trading flat today at A$0.052, up 30% in the last month

Wolf Petroleum Chairman: If government lights up a path, businessmen will find their way

August 5 (UB Post) The following is an interview with the Chairman of Board Directors of Wolf Petroleum T.Lkhagvadorj about the oil sector and investment environment of Mongolia. Wolf Petroleum is currently conducting oil exploration in Sukhbaatar and Bulgan Provinces.

Wolf Petroleum established a product sharing contract for Sukhbaatar oil field in Sukhbaatar Province in January 2013. How is exploration work progressing?

Many things have been accomplished since establishing the product sharing contract with the government but drilling work is yet to begin. Two to three million USD is required to set up a drill. Currently, 2D seismic survey and above ground exploration studies are being carried out. Setting up drills without any research or study results in complete failure as it brings a 100 percent risk. Considerably well conducted research studies is necessary to define drilling spots accurately. Despite being a considerably new company, we hired a US experienced advising company, named MNA, to work as project leader in order to work carefully. MNA is leading all exploration work and manages Mongolian companies operating the project. The data we accumulate is processed in the USA.

For seismic survey, MNA drills shallow holes, takes results to the USA for research on oil discovery probabilities and if there's a probability of oil deposits, they research the oil quality. A report on analysis and processing is sent back to our company. Information and reports we receive are completely independent, without any sort of interference from third parties. Simply put, interferences are impossible. We're very satisfied with the work results. Regardless of having no drillings, by evaluating from possibilities, it's possible to get oil resources of one billion barrels. Drilling this amount of oil depends only on the company's experience, and technological and financial capacity.

In May, Wolf Petroleum made preliminary reports stating that there are approximately 460 million to 2.2 billion barrels of oil reserve. Just now, you mentioned one billion barrel of oil. Compared to other Mongolian oil fields, how much of a reserve is this?

It's possible to extract ten to 15 percent of identified oil resources. For example, PetroChina extracted 4.5 million barrels of petroleum in 2013 and are planning to extract approximately five million barrels this year. If we extract five million barrels a year, one billion barrel of oil resources can be extracted in 1,000 years. This amount is considerably small compared to oil extraction capacity of other big Mongolian oil fields like Oirkhi Dornod because on average, a petroleum extracting company extracts four to five million barrels a day when our company does it in a year. This may seem very little but it's a huge opportunity for us. Resources should be identified carefully. Our main objective is to detect correct spots, drill, extract oil, and then analyze oil quality. If the oil is thick and of bad quality, it doesn't jet out like oil from Oirkhi Dornod and requires different extraction technologies and more funding. Information about state-owned company of China, PetroChina isn't open to the public and makes it difficult to know oil quality. In accordance with the product sharing contract, Wolf Petroleum hands half of the revenue to the government, making it possible for state budget revenue to increase.

After the reserve amount is identified and approved, will extraction amount be determined?

This depends on drilling, which requires a significant amount of time. Let's take Oyu Tolgoi as an example. They successfully found abundant supply of copper after conducting 163 drillings. From one side, it's a matter of luck, but from another, the success rate depends on experience and skill of experts.

When will drillings start?

We're looking for partners. Although, there are many oil drilling companies all over the world, it's difficult to find capable partners able to do proper drilling and find enough financial opportunities.

Are investors interested in Mongolian oil reserves?

Yes. However, we're still searching for markets to supply our extracted petroleum. Our primary market is Mongolia. Although, petroleum product needs are increasing, the market is very small. Additionally, there aren't any oil refineries in Mongolia. Investors are interested in places where extracted petroleum is transported to. Russia is ranked first in the world through oil resources. China has oil resources but imports oil in large quantities. Selling oil in world standard prices to China is a major work. Competing in such a large market will require a lot of intelligence.

Oil reserve of Wolf Petroleum has advantages of having well-developed infrastructure and being near China, right?

Infrastructure from Sukhbaatar field in Sukhbaatar Province to China is well-developed. Nevertheless, we don't plan to give everything to China. At current conditions, it's necessary to ultimately supply domestic markets.

Apart from Sukhbaatar field, your company operates at two other fields. Have product sharing contract been established for those fields?

We have joint petroleum survey contract with the government. This contract has been valid for three years. In five years, exploration and study of oil fields will become possible. If we want to conduct a large-scale exploration work, we can request for product sharing contract. The legal environment was slightly unclear before because it took companies two to three years, or more, to establish product sharing contract, which lessens risks, with the government. Any investor would be fed up from negotiating contract conditions for uncertain period of time. A new law was approved which set the time limit to 180 days. This makes it more understandable and convenient for investors who're taking up risks to organize work and financial schedules. We still need to discuss when to submit the proposal and establish the contract. Product sharing contracts will be established soon.

Where are these two fields located?

Jinst field is in Bayankhongor and Gobi-Altai region and Baruun-Urt field is in Sukhbaatar Province.

Is it possible to make estimations of their reserve?

It's not yet at the stage for identifying resource amounts. Geological formations that suggest oil reserve have been detected. The field is enormous. Sukhbaatar field takes up 23,000 square kilometers. Jinst field covers 41,000 square kilometers. Doing exploration work for such a big land is a major work.

The long awaited new petroleum law was put into effect in July 1 this year. How effective is this law?

We can notice that a clearer environment was created by revising the law. The new law clarifies several unregulated aspects including time limit for investment and time limits for the establishment of product sharing contracts and how much tax should be paid. This is its merits.

In September, a large conference will be held for the first time for the oil sector. What are your anticipations for the conference's outcome?

The oil sector requires huge amounts of investment and gives off profit several times higher. Wolf Petroleum is making preparations for the conference. We're looking for investors and parners. Many companies interested in investing are also inquiring about the conference. It was supposed to be held in last spring but due to the Petroleum Law approval, it was postponed. All matters will not be resolved in one conference. The conference is significant as it'll reveal information about the Mongolian oil sector and influence decisions of investors.

In the first half of 2014, foreign direct investment fell by 70 percent. How do you assess the current investment environment of Mongolia? To return lost investments to investors, what should the government do?

Only after losing and winning, we were able to reach stability. Mongolia has had a free market economy for only 25 years. Mongolia did show a "newly rich" attitude and bragged about discovering mineral resources. While making amiable investment environment, Mongolia became arrogant as if to say that we don't need them and that we can find money from anywhere and kicked out investors. After overcoming many hurdles, Mongolia is now at the stage to accumulate experience. Even if investment environment is improved, investments will not revive so easily. Now, our two neighbors are expressing their interests to invest first. They may have been waiting for this situation. The world economy is darkening at the moment.

Money doesn't disappear; it transfers from one place to another and circulates in the market. During this difficult time of economic crisis, investors should select places to invest after evaluating available opportunities on how stable it is and whether returns will be high. Everything will not become better by establishing international major agreements or by shaking Oyu Tolgoi. The foremost important duty of the government is to make business environment for private businesses stable and then receive taxes from them. If these conditions are met, within the next two to three years, investments will revive. A few days ago, I watched Bloomberg channel and liked the phrase, "If the path is lit, people will find their way." Just like this, the government should light up the path.

Compared to the first half of 2014, has the stock value of Wolf Petroleum increased or decreased at the Australian Stock Exchange?

It's constantly dropping. Currently, it's stagnating. At first, it was sold at 20 cents at the exchange but now it decreased by four-fold and doesn't even reach five cents. But we will not give up. We have deposits with abundant amount of oil resources and several investors that want to invest. Only research work for legal, technical, and personnel related issues are consuming time.

Source: Unuudur

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Local Market

MSE News for August 5: Top 20 -0.03% to 15,753.72, Turnover 16 Million

Ulaanbaatar, August 5 (MONTSAME) At the Stock Exchange trades held Tuesday, a total of 14 thousand and 277 shares of 14 JSCs were traded costing MNT 16 million 959 thousand and 080.40.

"Remikon" /5,380 units/, "Hermes center" /4,930 units/, "Tavantolgoi" /1,662 units/, "Mongolia Development" /1,000 units/ and "Hai Bi Oil" /607 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Tavantolgoi" (MNT seven million 952 thousand and 760), "Atar-Orgoo" (MNT three million and 264 thousand), "Gazar suljmel" (MNT one million and 710 thousand), "Hermes center" (MNT 838 thousand and 100) and "Gobi" (MNT 816 thousand and 510).

The total market capitalization was set at MNT one trillion 589 billion 346 million 060 thousand and 359. The Index of Top-20 JSCs was 15,753.72, decreasing by MNT 5.38 or 0.03% against the previous day.

Link to article


MSE Requests FRC to Take Legal Actions Against 196 JSCs Who Failed to File Q2 Reports

August 5 (MSE) Mongolian Stock Exchange transferred official letter to Financial Regulatory Committee. The letter requested to take appropriate legal action against 196 Joint Stock Companies, who have failed to comply with their legal obligation to provide transparency.

Link to release


MSE Investigating Suspicious Trading in Khuvsgul Altan Duulga JSC

August 5 (MSE) On 24 July 2014, through MSE's 4779th trading session, according to "MIT Surveillance" system's warning signal, "Khuvsgul altan duulga" (MSE:ADU) JSC's 120 shares traded at MNT 874.17 and price fell by 15.00%. it is considered as suspicious transactions and started relevant inspections. 

If inspection report determines that price manipulations were made on these transactions, these transactions will be reported to FRC for re-inspection. 

Link to release


MSE Talks with Bloomberg on Using Trading System for Government Securities Trading

August 5 ( On July 30th, the Mongolian Stock Exchange (MSE) had been obliged to conduct required investigation and report back to the Ministry of Finance of Mongolia in nearest future regarding the MSE's current work-breakdown structure on its' availability and acceptable assuranceof software solution, clearing, payment withdrawal and balance statement in accordance with the laws and regulations; as well as, to ensure potential readiness of overall broker dealer companies listed in Mongolian stock market when the Government Bonds inactive auction through the MSE's daily stock trading operation.

In regard with this issue, the Acting CEO of Mongolian Stock Exchange JSC D.Angar had received the representatives from the Bloomberg Asia-Pacific financial market on August 4th through which they exchanged their views and opinions regarding the post-adoptive usage of Bloomberg Terminal electronic trading system in terms of issuing Government Bonds as a first phase auction trading in Mongolian Stock Exchange.

As of today, the Bloomberg Terminal electronic trading system is under active facilitation in the stock markets of Great Britain, Sweden, Belgium, South Africa, Finland and Georgia.

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Mogi: back to record-setting days, yet another historic low for MNT today against USD, CNY

BoM MNT Rates: Tuesday, August 5 Close





































August MNT vs USD, CNY Chart:


Link to rates


BoM FX auction: US$16.3m sold at 1,873, CNY101.6m at 303.11, accepts swap $6.5m bid, $85m ask offers

August 5 (Bank of Mongolia) On the Foreign Exchange Auction held on August 5th, 2014 the BOM has received bid offer of USD and CNY from local commercial banks. The BOM has sold 16.3 million USD as closing rate of MNT 1873.00 and 101.5 million CNY as closing rate of MNT 303.11.

On August 5th, 2014, The BOM has received MNT Swap agreement bid offer in equivalent to 6.5 million USD and USD Swap agreement ask offer of 85.0 million USD from local commercial banks and accepted all offer.

See also:

·         FX Auction Statistics

Link to release


Finance Minister Ch.Ulaan: Working to Include DBM in Budget

August 5 (UB Post) A conversation with the Minister of Finance on current issues.

How will the exchange rate be calculated in budget re-planning?

According to the supplementary budget made last spring session, diplomatic organizations working abroad were challenged by the rate changes, so we found some solutions. We are working on a supplementary budget project. In regards to current economic conditions, we will accurately estimate exchange rates. On the other side, according to directions from Parliament, we will take savings measurements with budget expenditures. But the most important thing we are working on now is to include the Development Bank's Chinggis Bond in the budget.

What is your opinion on the policy interest increase at Mongol Bank?

Increasing policy interest creates limits for people at a certain income level. This won't activate the economy directly. However, it will help keep economic indicators at an appropriate level. So, I think it can bring positive changes to the economy in the short-term. Therefore, there will be a need to strengthen the economy in the long and mid-term.

How will the implementation of EZEN-100 be concluded?

This is the 100-day program for strengthening the economy. In other words, creating something new. The goal is to increase effectiveness and results. The government, especially the Ministry of Finance, has worked hard on this project. At the end of the spring session, in order to intensify the economy and create pleasant conditions, we solved many issues.

For example?

Tax cuts supporting small and medium-sized businesses. Thanks to this, we have an opportunity to import foreign equipment without taxes and create new jobs. For businesses implementing major projects, we created conditions to defer equipment taxes for two years. Also, thanks to this plan, industries and entities will have a chance to pay attention to their investments. I think investment will grow in relation to this. In the banking sector, we decided to support the activities of banks that are offering low-interest loans and offer tax cuts. This will create pleasant conditions for more people to enter the market and increase the influx of capital. It will also improve the currency exchange supply and is important for balancing the exchange rate of the tugrug.

Likewise, the Ministry of Finance approved 11 laws in the spring session. We made big changes in policy, all aimed at intensifying the economy and resolving difficulties for entrepreneurs. During this period, we have been consulting with businessmen. At least we changed methods to increase coal exports. It pretty much supported the activities of this sector's factories and businesses. Also, the Stock Exchange has been transferred to operate under the Ministry of Finance. We hope that the second market of stocks will become more active. Generally, the three pillars on which markets and economic policy stand are: budget, monetary policy and the financial market. Before, we were paying attention to the budget and monetary policy, but not the financial market. Focusing on the three pillars of the market by creating working conditions with classic market principles will provide results for the 100-day economic intensification program.

It's been said that governmental organizations were unable to pay salaries, but somehow, they paid salaries from the Chinggis Bond. Can you explain this?

It's not true. We haven't been unable to pay salaries yet. The current financing to be paid is being provided on time. There is a law that says budget holes shouldn't be filled-in with Chinggis Bond money.  Also, it shouldn't be distributed as social welfare. Perhaps some organizations were unable to pay salaries on time. It could be self-governed organizations. In the case of the state and unified budget, there were no such cases and won't be in the future.

Link to interview


Strict monetary policy's long-term effects on the economy – expert opinions

August 5 (UB Post) On July 30, the Bank of Mongolia made a decision to increase its policy interest rate to 12 percent in order to relieve the balance of payments difficulty, maintain medium and long-term economic stability, avoid further risk facing the Mongolian macro economy, protect the public's income, and to curb inflationary pressure.

Below are opinions from economists on the interest rate change.

D.Jargalsaikhan: Tightening monetary policy will pose challenges for businesses

The Central Bank of Mongolia did what it ought to do in the current situation. The policy interest rate of the bank was 14 percent during the 2014 economic crisis. The bank has since been reducing the policy rate. The rate was 10.5 percent as of February 2014. Increasing it by 1.5 percentage points is indeed a huge number. But the loan criteria became more challenging. As a result, the amount of loans on the market will decrease. This will pose challenges for businesses. Otherwise, everyone will face difficulties. The bank made such a decision. The amount of USD in the box called "the economy" is decreasing. Accordingly, the rate of the MNT is depreciating. Ultimately, we are paying the costs of erroneous government policy.

D.Batjargal, Ph.D: Government spending should be curtailed

Increasing the policy interest rate is a measure to curtail inflation. Since 2013, the Central Bank of Mongolia has been implementing lenient monetary policy in order to support the economy and the public, and to decrease the interest rate of investment loans for businessmen. However, on July 30, the bank decided to tighten its monetary policy, which means an increased policy interest rate. In my opinion, the interest rates for loans at commercial banks should be increased. The paramount problem in Mongolia is weak management of budget revenue and expenditure. This should be resolved first.

L.Oyun, Ph.D and Lecturer at National University of Mongolia: The Central Bank of Mongolia has no other choice than to increase the policy interest rate and implement strict monetary policy

I see the measure the Central Bank of Mongolia took as an effort to maintain macro economy stability. Although the Central Bank says it will restrict demands by increasing the policy interest rate to fight inflation, demands outside of the state budget aren't enough to subside inflation. Therefore, state spending should also be decreased.

D.Lkhagvadorj, Ph.D and Head of the Economics Department of Mongolian State University of Agriculture: It was a decision that protected the economy from crisis

Although tightening monetary policy might curtail the operations of enterprises and the private sector, the decision was inevitable to maintain economic stability in the long term. Mongolia's economy is hugely dependent on the mining sector, which accounts for 90 percent of overall exports and 83 percent of foreign direct investment. This magnificent reliance on one sector is making our economy vulnerable and sensitive. Also, according to the preliminary balance of payments for the first six months of 2014, the current account deficit stands at 915.1 million USD. Foreign direct investment to Mongolia decreased by 70 percent from the previous year. The Central Bank stated, "It has still been crucial to enhance foreign exchange inflows through increasing export proceeds and promoting foreign direct investments, and maintain fiscal stability in order to neutralize the balance of payments pressure and to overcome current economic challenges."  Therefore, measures to increase foreign exchange inflow should be taken.

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August 5 (IMM&MR) According to, General Secretary of MPP J.Munkhbat has 

·         reiterated that on August 20th official conclusion for Government since 2012 up to now will be issued

·         said Head of Mongolian Government breached laws of Mongolia by visiting his Senior Advisor in jail

·         informed that the MPP has delivered statement to Parliament Speaker to convene irregular session and account political responsibility has reported "talk" in the DP on issue of convening National Consultative Committee to conclude current situation and what to do next. 

According to, MP R.Amargargal (who said that Mongolian Parliament did not want him to resign on unprecedented governance issue) has said

·         "100 days plan was a joke on society"

·         "society will be shocked and depressed"

·         "100 days plan and Smart State are show games put up by leaders in hurry"

·         "voters are getting what they voted for- consequences of populism"

·         "the very first priority to get out of current situation is that Government should resign immediately"

·         "there is other way but to let OT go, it is more convincing then 1000 laws"

Commentator B.Musun of views that 25 years ago there were no rich folks in Mongolia. 25 year later the rich folks born from poor mass are showing, ultimately, that they are "show -offs" 

Link to update


Lawyers of embezzlement suspects issue complaint to National Human Rights Commission

August 5 (UB Post) The General Authority for Implementing Court Decisions (GAICD) banned all visit, including lawyers, to embezzlement case suspects L.Gansukh, advisor of Prime Minister, L.Gansukh's former assistants M.Tulga, E.Tumurbaatar and G.Batkhuyag who are currently detained in Tuv Province, on the request of the Independent Authority Against Corruption (IAAC).

M.Tulga's lawyer Ts.Baasandorj went to Tuv Province to meet his client, but was not allowed as IAAC didn't issue permission.

Following the incident, Ts.Baasandorj submitted a complaint to the National Human Rights Commission and the GAICD about the ban on visits.

The banning of visits to detainees not convicted of a crime contradicts both the Constitutions of Mongolia, which states that all citizens have the right to defend themselves and be defended, and the Criminal Procedure Code of Mongolia, which states, "A suspect and/or convict has the right to hire a lawyer and meet one's lawyer in private."

The IAAC is yet to formally report specific reasons for banning visits to the suspects.

The IAAC's statement requesting a ban on visits sent to the GAICD notes, "Families of the suspects have not signed any contracts with lawyers to defend them. We request to refuse to let the suspects meet anyone until we send the names of the suspects' lawyers to the GAICD."

Link to article


Resident's report on Chinese labor protest over unpaid wages

By David Chace

(Source: amateur video of alleged Chinese Embassy officials speaking with the small crowd that gathered, as local police record footage (via Facebook))

August 5 (UB Post) On Saturday, 7:30 a.m., August 2nd, I was running and saw a group of Chinese laborers, about 30 to 40 in my estimation, walking east on the road next to the Best Western-Tuushin Hotel. They were flanked by police, who were guiding them with batons.

I went home and got my camera. As I returned, I saw a police car by the Chinese embassy. The group of Chinese protesters were gathered at the street corner in front of Zoolon restaurant. There were two marked police cars and an unmarked car.

There was a woman taking video. I introduced myself and we agreed to stay together.

There were four to five police and Chinese-speaking people surrounding the laborers. There was also a plain clothed man in a black tank top, camouflage pants and army boots. He had a long knife in a holster on his leg and he was walking among the police, making calls on his phone. I later realized that he was a nationalist activist.

After a few minutes, a short man in a dark suit approached the protestors. He started to address them. He started to raise his voice and point at them.

A Chinese-speaking person watched the video of the interaction and translated it for me. He identified the man in the dark suit as a Chinese embassy official. The man in the grey sweater, representing the protesters, identified himself as a construction director working at the building next to the workers protesting.

The Chinese embassy official told the group, "Mongolian police dogs have arrived… The Mongolian police have to arrest everyone who protested. You are Chinese, you have to explain yourselves and get permission before protesting."

The representative said that the protesters were construction workers. Their head director had shorted the workers more than one million CNY.

The Chinese official asked for documentation that they had been promised a certain amount of money. The representative showed the official the document.

The Chinese official said, "I will speak with this director face to face. If he has broken his promise he will be punished and put in prison." He continued, "If you protest, it is against the law. Mongolian police have the legal right to arrest and deport you. Every reason has been made clear to you. Decide for yourselves."

As the official walked away, he continued to yell and point his finger at them: "If you don't disperse now we might send someone else to deal with this. First, go home!"

The director representing the workers told them, "If Chinese workers get in trouble here, I can't take responsibility for their families."

The police signaled for the Chinese to start moving north towards the Chinese embassy. The group moved quietly and in order. The police surrounded the group with squad cars.

The workers were standing in file on the sidewalk next to the Chinese embassy entrance. A tall, plainclothes officer arrived and took charge. A Chinese person came out of the embassy and spoke Mongolian to the police. They decided to put the Chinese laborers inside a construction compound behind a corrugated fence. The laborers were lined up and entered the concealed construction yard through a small opening. Police were guarding the entrance.

During this time, the nationalist with a knife asked me and the woman why we were taking video. We said we were interested and it was our right. He said, "Aw, aw, okay, take videos." He also assisted in leading the protesters to the construction yard.

A translator was called for. A few moments later, the Mongolian police started debating about what to do with the protesters. Some wanted to keep them in the construction yard. One officer insisted there was room in the Chinese embassy. A few minutes later, the protesters were ordered to exit the construction yard and stand in file next to the embassy entrance. The embassy officers and plainclothes officer met and began ordering the protesters to enter.

The plainclothes officer began asking, "Who is this foreigner taking videos?" I began to speak with him. He asked me what I was doing there. I said that I had been running and saw the group and started taking pictures. He asked the woman why she was taking video. She said she was interested. She asked if I was with her. He looked at my camera. He asked me where I lived. I said, "I was running at Sukhbaatar Square." He asked me my name and I said I didn't want to tell him that. He asked me what my citizenship was, and I said I didn't want to give him my profile. I said it was my right to take video and asked him on what grounds he was questioning me. He said he wanted to know why a foreigner was here in this foreigner matter. I said I was a journalist and I asked him why they had moved all the laborers in the construction zone, out of sight. He said that they wanted to hide them from the public to avoid problems. I asked if he was trying to avoid confrontations, and he said, "yes."
He asked me what publication I worked for and I said I was freelancing that day. He asked me if I lived close to here, and I said I didn't like him asking me those questions. The lady I was with asked me to leave with her. We started walking together through the grass path and toward the street, when I turned around and saw a police officer following us and videotaping us.

I approached the officer and asked why he had taken footage of us. He denied it and said, "I didn't," but would not look at me or respond. I went to the plainclothes officer, who was seemingly in charge, and demanded to know why they were videotaping us. He said they weren't. There was a police officer standing right there videotaping me and I pointed it out. I said they were spying on me, and one officer laughed. He said, "But I want to know why you are here," I said they did not have the right to take video of me. He said they did. I demanded to know on what legal justification they had the right and asked to record his response. He said he didn't want to.

I and the lady left again, and as we reached the corner at Mongolian State University, the man in sunglasses and another man greeted us. "Hi. We are nationalists and we don't like the Chinese gathering together and protesting. We don't want anyone taking videos of them." We asked why and said it was our right to take videos if we are interested. The man started wagging his finger at me and said, "A foreigner should not be around taking videos." He started to get confrontational and demanded to delete the videos, and I walked to the police officers. One of the nationalists followed me, and as I neared the officers, grabbed me. I put my hands up and called to the police, then the nationalist group member let go.

I said that the nationalists had knives and were bothering us, that they were not police officers but they were making demands. I said I wanted to be left alone by them. The nationalist said that they wanted to delete our video. Another officer tried to take me aside and said, "You took videos!" and asked to see our camera. I said he did not have a right to see the videos. He did not respond. I told the officers that we were being threatened and he said, "okay, just go then." I repeated that the nationalists were following us and I wanted a police officer to separate us and let us walk away. He asked if the police officer should take us home. I said no, we just want to walk away. He sent an officer and we walked away towards Sukhbaatar Square.

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IRIM Annual Report 2013/2014

(The Independent Research Institute of Mongolia)

Link to report


Canrim Resources July 2014 Monthly Letter

August 5 --

To the Shareholders of Canrim Resources Pte Ltd.,

The month of July was another period of continued progress and forward momentum in Mongolia. July began with much needed, and expected, positive news from the Government of Mongolia stating amendments to the Minerals Law, lifting the four-year moratorium on the issuance of new licenses and extending the life of exploration licenses from nine to twelve years.

Internally, Glenn Griesbach, VP of Resource Development and our team in Mongolia continued their detailed due diligence on potential licenses for acquisition, predominately in copper/gold and other base metal resources. With renewed interest in the secondary license market, Canrim has also identified value in several projects currently under review. Preferring to be scrupulous with assets the Company acquires, we are moving cautiously in order to mitigate a rise in capital expenditures as there is little competition at present. We believe our prudence will keep Canrim in an attractive position.

From July 10 Mongolia was largely consumed by the Naadam festivities, an annual celebration of Mongolian sports which takes place in each Aimag (Province). This led most individuals in Ulaanbaatar to leave the city for the countryside in order to spend time with family. Having recently returned, we anticipate August to be a more productive month for Mongolia.

VP of Corporate Development Celebrating Naadam in Countryside

Mongolian Economic Update:

1.    July 7: Viking Mines: Third MOU Signed for BerkhUul Coal Project in Mongolia

2.    July 7: Guildford Seeks to Raise A$10 Million via Entitlement Offer, Underwriting Agreement

3.    July 14: Mongolia extends its CNY10 billion currency swap facility with China for another three years

4.    July 22: Mongolia and Japan formalize a Free Trade Agreement (FTA)

5.    July 30: Central Bank of Mongolia increases interest rate by 1.5% to 12% to mitigate inflation

We look forward to updating you again on our progress and developments in Mongolia. If you would like to learn more about Canrim Resources, I encourage you to contact us directly at Our team will be delighted to speak with you.

Sincerely Yours,

Ranjeet Sundher,

Director and CEO

Canrim Resources Pte Ltd.

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FX rate, end of stabilization, Chinese supply to blame for jump in cement prices

August 5 (UB Post) Prices of consumer commodities have increased because of the exchange rate increase. During this construction season, the price of cement has increased. During Naadam, the price of one ton of cement rose to 200,000 MNT. That was the highest price for cement this year. The average price for one bag of cement in construction markets is between 10,000 to 13,000 MNT. Before Naadam, the cost of one bag was around 7,500 to 9,000 MNT. But after Naadam, the price rose significantly and experts say the increase was related to demand during the construction season, average consumer demands and the increased exchange rate. Cement prices have now decreased, but market analysts say they are likely to go up again.

The best solution for this price problem is addressing the influence of domestic production. Head of Ministry of Construction and Urban Development Ts.Bayarsaikhan says government is planning to change the situation of import products and prices dependent on import products in 2015. "Mongolia has its own cement industry, which is able to produce at least 1 million tons of cement a year. Also, two more factories will be built, so we will not buy imported cement in 2015," he added.

We tried to understand the specific reasons for the price increase, so we spoke to government organizations and non-governmental organizations about the changing price of cement.

Domestic suppliers

B.Tsedevsamba, Head of the Building and Construction Materials Policy Coordination Department at the Ministry of Construction and Urban Development:

Today, the price for one ton of imported cement is 200,000 MNT. Domestically produced cement costs around 170,000 MNT. In the Mongolian market, cement that is imported is leading in sales.

Construction companies require an average of two to 3.5 million tons of cement a year. Cement demand has risen, so we need to import cement. In relation to the exchange rate, cement sellers did not increase its cost suddenly. Honestly, it is possible for cement costs to be lower than today's. As far as I know, factories in China have increased their cement prices. But this is not a definite fact.

Last year, the government implemented a policy to stabilize costs. It was effective and cement cost 145,000 MNT per ton last year. But the policy received criticism and its implementation has failed. The price of cement is getting higher because of this. The government decided to support domestic production instead of make policy like before, so Khutul's chalk and cement factory opened. This factory is able to supply 50 percent of cement needs in Mongolia. If MAK opens its cement factory, we will be able to fill our cement needs by ourselves and prices will be stable in 2015. So we should not concentrate on price, just focus on the numbers of domestic suppliers. If domestic suppliers increase, costs will become stable.

Exchange rates

B.Baatar, Chairman of the Board of Directors of the Federation of Cement Producers:

The increase of exchange rates causes cement price increases. Also, Chinese cement factories stopped working and that became another reason for it. Vendors who sell cement usually import cement from three factories in Erenhot, China: Taigo, Mengo, and Tunkhui. These three Chinese factories stopped work for five days in the middle of June. Demand for cement rose and its price went up to 195,000 MNT. When the factories started working again, they increased the cost of their cement. The exchange rate is increasing hour by hour, not day by day. So cement prices increase along with the exchange rate, because 75 percent of cement is paid for in cash.

Companies start construction work in mid August. During this time, the cost of cement will increase again.

Construction costs

E.Usukhbold, Supply Manager at Undur Buyant:

Increased prices during an economic crisis are becoming a strain. People are doing business by barter, not in cash. This is not only happening in Mongolia, it occurs all over. Because of the qualifications for their products and consumer standards, Chinese factories that we import cement from were closed for several days. During this time, it was difficult for Mongolian importers and the cost of transportation was high, so cement suppliers say they raised cement prices.

If we don't focus on this issue, and try to resolve or lower cement prices, it will eventually influence the costs for construction projects.

Source: Unuudur

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Mongolia introduces digital terrestrial broadcasting

August 5 (Rapid TV News) Mongolia has launched its DVB-T2 based digital terrestrial television (DTT) network, with dual illumination of its old analogue TV network until 1 January 2016.

The chairman of the Information Technology, Post and Telecommunication Authority (ITPTA), Ts Jadamba reported the successful introduction of Mongolia's digital system during an online broadcast from Chinggis Khaan Square on 31 July 2014.

Initially, ten DTT transmitters will be installed in Ulaanbaatar and 244 transmitters in municipal districts or soums, with further installations in soums and settlements to follow to achieve full digital TV coverage across Mongolia in 2016.

Officials believe that Mongolia will be able to perform a complete transition from analogue broadcasting within two years. Initial reports suggest the DTT transmission in eastern and western regions of Mongolia has been successful, according to the UB Post.

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Mogi: well, an oldie by a guy who used to live in Mongolia, writing for a Russian blog/news site about Mongolia, now that's interesting in itself

Mongolian Image Problem

By Scott Houston

June 26, 2013 (Mongolia Now) Mongolia, if you look at the numbers, has a large percentage of its citizens still living in poverty, but to look at things while in the capital city of Ulaan Baatar, one certainly wouldn't think so. Living in "UB" (as it's known), you get an entirely different impression than what might be technically true of the entire country. Most people you see are either middle class, or even rich - driving around in Hummers, or exotic sports cars, and wearing designer clothing and dark, stylish sunglasses.  Of course, you still see a healthy amount of homeless drunks, but most of the city's "poor" live outside of the city center in what are called "The Ger Districts".

And as impressive as it may be to see these former nomadic herders driving around the city center in such expensive vehicles and wearing designer clothing, Mongolia is however, suffering now from a severe International image problem.  Last year at this time, Mongolia was an investor's darling, and the international community was starting to read extremely encouraging things about the Mongolian economy, but that was last year. Now, investors and even tourists are staying away - in droves.

Having a bad public image is nothing new to Mongolia, as even the great Chinggis Khaan himself still suffers from a bad international image, but this time it's being caused by recent actions and legislation by the recently dominant Democratic Mongolian government, which came to power last July 1st, headed by President Ts. Elbegdorj, and it's beginning to have a catastrophic effect on the Mongolian economy.

Now before reading further, bear in mind that I will discuss both sides to the story, so expect a big "but" later in this article.

Now there's a good reason for the bad public image - at least as far as potential investors are concerned. For one, most "news" coming out of Mongolia is whatever is reported by the China Daily, which is an extremely biased reporting agency when it comes to reporting Mongolian affairs. Yet for some reason, respected publications like the Wall Street Journal, the New York Times, CNN, and the BBC still consult this rag as their most significant source for news from Mongolia. But another reason is that indeed, times have been tough this past year for both foreign investors and businessmen alike, in Mongolia, especially in the months after the elections - until the present time.

To illustrate just how catastrophic the economic effect has been, and may well continue to be - if drastic measures are not put in place to stop it, in addition to mentioning the fact that Mongolia's impressive GDP growth projections for the balance of 2012, and 2013, have actually plummeted from a whopping 17%, to a reality of a -.05%, I will also discuss the recent fates of some individual foreign investors, companies, and independent businessmen.

Obviously, the single biggest reason that has investors running away from Mongolia to more recently foreigner-friendly, and investment-friendly places like Myanmar, is what is happening with "negotiations" between the government and the Oyu Tolgoi mine, owned by Australian mining mega-giant, Rio Tinto.  The O.T. mine (as it's known), is perhaps the second largest copper deposit ever found in the world - not to mention the huge deposits of gold that's there too, and the giant mine represents a huge chunk of the Mongolian annual GDP.

From the perspective of Rio Tinto (formerly managed by their Canadian leg, Ivanhoe), they believed they had a solid deal struck with the Mongolian government in late 2009.  In fact, this deal was rumored to have been negotiated by then Russian President, now Prime Minister, Medvedev.  And this deal called for a lot of front-loaded money from the mining company, into the coffers of the Mongolian government (and pockets of its politicians), with the government then agreeing to supply lots of infrastructure (mainly to build a railroad) in the future. 

It's not unusual for Mongolians (most formerly herders) to spite their future in favor of the here and now, and immediately, news of this deal made a positive impact on the overall economy of Mongolia, which subsequently started off the super-heated economy which culminated in the 17% growth as of June 2012 - and all this at a time when GDP's in most of the rest of the world were experiencing a sharp slowdown.

I can still remember Medvedev's visit.  He was travelling in a motorcade, with no other cars permitted on the road, with police cars and official vehicles leading the way, and he, riding in a car bearing the Russian flag.  It was a bit comical since if there really was anyone who wanted to do harm to the President, the Mongolian security may as well have painted a bulls-eye on the top of his car that read "aim weapon here".  But such is how it is in Mongolia.  Really, this is the charm of it - that the people here really are still quite innocent in many ways. 

But they're certainly not known for being able to keep their end of an agreement.

And to that end, brings the current conflict and debate.  From the side of the mining company, and the O.T. mine, the Mongolians are just being irresponsible and not willing now to honor their end of the agreement they signed in 2009.  And certainly, this is also now the same opinion shared by the international investment and business community, and hence, the recent mass exodus of foreigners and foreign investment money.  It took the mining company over 8 years to finally negotiate that deal, then only to have the government want to "renegotiate" when it came time for them to pay their share. And this sent out a loud and clear message to the world: "The Mongolian government cannot keep their word".  In fact, in March of this year, Rio Tinto enlisted the help of former British PM, Tony Blair to come to Mongolia and "mediate" in order to try to teach the Mongolians a lesson in how to respect a contract.

And it's not just this contract the Mongolians are not respecting these days.   An associate of mine had a contract to have his restaurant put in front of the Sky Department Store, which was put through by his long-time friend, the majority shareholder in Sky Holdings and Altai Holdings, and former PM Batbold, only to have Mr. Batbold, after losing in the elections, then decide to sell out much of his Mongolian holdings and name a new GM of the Sky department store, who in turn, did not like the look of James' restaurant, and immediately decided to renege on their contract. This after James had invested almost $150,000 of his own money in the project, only to have to close the restaurant shortly after it opened.

Then there has been other decidedly anti-foreigner legislation, such as the recent law requiring all foreign attorneys to be fluent in Mongolian and pass the equivalent of a Mongolian Bar exam in order to practice law there.  According to Russell Murphy of Harris Moure associates, who, along with most other foreign attorneys, had to close up shop, "This is not unlike what they do in any developed country. In America, a Washington State attorney can't practice in another state, unless he passes the bar there.  However, the government will not tell us their new requirements specifically, or issue a "test", and their requirement to be fluent in Mongolian is just wholly unreasonable".  So without any foreign representation possible, and Mongolian concerns being favored in more than 95% of all litigated adjudications, foreign investors also now feel that they cannot have security, or fair representation to protect their interests in Mongolia, anymore - thus keeping yet more of them away. 

And this mass exodus and wave of nationalism is also having a sharp effect of the tourism industry in Mongolia.  I recently took a train from Zamyyn Uud, at the Chinese border, to the Capital city, which last year was so busy that scalpers were selling tickets at premium prices, which you had to buy, or else wait two days to buy a ticket from an agent.  But this year, it's June already, and that train was about half empty.

And this is actually sort of a classic case study against even having a "democracy" in a country such as Mongolia.  The Democratic Party of Mongolia is also one which is extremely Nationalistic, and this is how they were finally able to wrestle away the vote from the voters in the countryside, in the most recent election.

Democracy is not the perfect system by any means.  Case in point, if you were charged with murder, and the jury was to be made up of all 10 year olds - would you still feel confident that they would be able to come up with a fair decision?  If everyone who votes is ignorant (and Nationalistic, as is the case with Mongolia), then prudent results might not be possible. 

The founding fathers of America were concerned about this issue, and initially declared that to be able to vote - you needed to be an educated land-owner.  And in India, Democracy certainly seems to be failing for basically these same reasons.

Then there is additional legislation to go along with a renewed sense of "Nationalism" which is helping to drive away foreign concerns.  According to Will of Hancock Prospecting, "The way the new law is written, even after we buy the mine, the government can then, at any time, whimsically decide to change their mind and declare the mine to be a "strategic" mine, thus causing (say, us) the current license holder to suddenly lose 51% of their interests in the mine and prevented from operating it as they feel is best."  Then, as far as selling mining licenses to foreign concerns - which was responsible for almost all of the recent sudden growth in GDP, the government, in July of last year, set a moratorium on the selling of all mining licenses - thus driving away any investor interested in acquiring a mining license, or for that matter, any investment firm who was wooing foreign investment money into the country.

And all this mass exodus of foreign interests is starting to have a dramatic effect on the economy, as inflation is going through the roof now.  And the bad economic picture is looking even more bleak, as there is suddenly a severe real-estate bubble as well (of course - a typical bi-product of over-heated boom-times), which will no doubt have to burst sooner, rather than later. And many foreign countries are planning to cut back their foreign aid to Mongolia by 2016, citing that they no longer consider Mongolia to be a "developing country" - and what with all the expensive vehicles and designer clothes to be seen in the capital, there's no wonder they'd feel this way.  And foreign aid still represents the largest chunk of the total GDP for Mongolia - so to lose this as well…well, I shudder to think what the results might be.

So the overall economic picture for Mongolia, which one year ago was hailed as the most promising of all UN member nations, now looks quite bleak, despite what the 2013 Oxford report might say about it.

And even at already established, major mining companies in Mongolia, according to one executive who deals with procuring permits from the government, there is grumbling from the ex-pat community in Mongolia about all the recent legislation and restrictions.  "This is certainly not how they did it, and what it was like in Chile, or Cote D'Ivoire", they say.

However, the executive goes on to say, (and this is where we get to the big "but" I had mentioned earlier), - more to the point, but this is not Chile, Cote D' Ivoire, or even Kazakhstan, or Venezuela; this is Mongolia.  And they have a right to do things their way, and most importantly, they have a right to protect their rights to sovereignty over their own land. And not just executive jurisprudence over the civilian population, but also to protect their lands, their borders, and all the mineral resources contained therein. 

And according to this executive, there is a silver lining and definitely a method to their (what seems to be), madness.  He has been here many years and is actually surprisingly optimistic. And this caused me to think about it more, as he certainly should have sufficient experience to know what's really going on.  According to him, he says that it's actually project deadlines which cause them to try to hurry the process, which is what causes the problems, otherwise, what information they require is no more than what any developed country does.

And this is actually what the Mongolian government is trying to do now.  Mongolia is trying to make their laws more in line with the USA, and other developed nations, albeit perhaps going about it in the wrong way, with equally wrong timing.

Then, according to this official, in regards to the O.T. deal, he says "You could take any contract and make an issue with it. New laws do not mean 'instability". And "instability" is exactly how foreign investors are viewing Mongolia these days as an investment destination.  They are beginning to see Mongolia as being exactly like investing in Africa, with constantly changing governments, which constantly want to cancel or "renegotiate" all major agreements made by the previous government - and usually for frivolous reasons - mainly just to glorify the new regime. This is exactly what the Tan Sri Sayed Mokhtar Al Bukhary, a billionaire from Malaysia, who I was personally involved with bringing to Mongolia in 2011, according to an associate of mine, cites as his reason for why he has now put all of his previously enthusiastic plans to heavily invest in Mongolia, on the back-burner.

But representatives of the new Mongolian government say that these new laws are necessary for the long-term best interests of Mongolia and the Mongolian people, as well as it being necessary to renegotiate the O.T. agreement.  They say that in Mongolia's case, the O.T. mines represent potentially so much of what might be the total GDP of the country for the next 30 years, that it's imperative to have a fairer deal in place - and that's it's worth it to try to renegotiate it even at the expense of all the bad press it's creating.

And this is where we can make comparisons to what essentially happened in Venezuela and Kazakhstan; i.e.  Mongolia is a land-locked country stuck in between two giant super-powers, so it is quite vulnerable to being unduly influenced, or even financially dominated, or even eventually taken over by one of these huge super-powers. 

In Venezuela, there was a similar situation.  When Hugo Chavez took over, he found a nation which had sold most of its resources (mainly oil) to the World Bank, for pennies on the dollar, according to current fair-market prices.  These interests were sold by greedy and corrupt politicians who were only interested in further lining their own greedy pockets.  And this is also a typical problem in all "developing countries", and especially steeped in the culture that has existed in most all Asian countries for thousands of years.  But in South America, Chavez sought to change all that. He said that his, is a new government, and that it was his right to look out for the best interests of the citizens of Venezuela. He was a rebel in this regard.  And he further tried to explain that a G to G contract is different than a contract with an individual - because if an individual reneges, then he just seems to be very irresponsible.

But why should a new and improved government of a nation of people be bound to honor an agreement made by greedy, self-serving political predecessors? He argued that the previous agreements were irresponsible - that his predecessors just wanted to profit personally, as well as get some front-loaded money to immediately put a boost in the local economy and improve their own political standing, while putting millions upon millions into their own pockets.  I mean, this is how it was done in these kinds of developing countries. It was standard practice, and the world-class foreign negotiators who were sent there to negotiate the past agreements, were accustomed to basically exploiting and fleecing these countries out of their mineral resources by appealing to the greater sense of greed of their leaders and negotiating a lopsided agreement favoring the interests of the super-power. 

And this is exactly what the 2009 O.T. deal was like.  When I first read it when it was published while I was working as the Editor of the UB Post, I immediately could see that this was indeed a bad deal for Mongolia.  But, since there was a lot of front-loaded money coming from Rio Tinto, this put an immediate boost in the economy, and the economy started on its mad growth spurt and it was all good. And the orchestrators of the deal were hailed by most as heroes.  And this, they thought, would be enough to power their way to victory in the next elections. 

But Mongolia is a different place.  Mongolia is the only beacon of Democratic light in all of Asia, and Democracy may not be a perfect system, but it's the best one we have so far.  And the people of Mongolia are fiercely proud and protective of Mongolian interests - so despite this new agreement and the economic growth spurt - especially since most of the new money did not find its way into the personal pockets of most Mongolian citizens, and since they are not so influenced by their own media, they surprised the powers that be, and overwhelmingly elected a new government, anyway.  And then, just like in the case with Chavez in Venezuela, the new powers that wanted to "renegotiate" the unfair and lopsided agreements made by the previous administration, were blasted by the Super-powers and the international media (which the Super-powers greatly influence and manipulate), as just being rouge, and irresponsible.  And they responded by putting sanctions and punishments on Venezuela, and sent their economy into a tailspin as well - just like what is happening now in Mongolia. 

And like with Chavez, this is not Chile (with a recently prosperous and growing economy), or Cote D'ivoire, or even their pseudo-neighbor, Kazakhstan, for that matter.  The leaders of the new Mongolian government are not like other developing counties, or countries in the region, and they are not like the corrupt leaders who were previously in power in Mongolia – like Mr. Enkhbayar.  They are Democratic, and though, like with most all other countries in Asia, for the most part, most people still get involved in politics for the purpose of improving their own financial status, and not to serve their people, in a Democracy, corruption, though it can still exist (just look at India), nonetheless, by the very nature of the system, it is at least, somewhat limited and checked - and that's why Mongolia is not like Kazakhstan (which like Chile, is also better economically developed), and this uniqueness will certainly come at a price.  Yes, Mongolia will have to eventually pay a dear price for not tolerating fascism, or corruption.  But their people seem optimistic, and willing to pay it, no matter what foreign countries, or foreign investors, or even foreign tourists, and the international media thinks about it.

Kazakhstan is much more beautifully developed and modern than Mongolia - but most all of this has been done by the Chinese. And as a result, the Chinese are literally taking over the country in insidious ways.  They have an agenda, and they are aggressive about it. The Chinese do not make war, they do it in more sublime ways - and this is how they took over places like Tibet. But in predominantly Muslim Kazakhstan, their workers are forced to sing China-glorifying songs in large groups before work begins - just like in China. And Kazakh workers earn less than the Chinese workers who speak Chinese. And the Chinese are even coercing the government to pass Chinese-oriented laws. And all this is possible due to the extreme greed and corruption of a few who are in power, and this situation is being completely exploited by the Chinese.

And it's actually no different than what the US has done in Iraq, or the Soviet Union tried to do in Afghanistan; etc. - there's countless examples.  China would have been more than happy to help Mongolia out with fulfilling its most recent obligations in the 2009 O.T. deal (which is essentially to build infrastructure - mainly a rail line from the O.T. and T.T. mine sites to connect to existing systems to export the minerals conveniently to the existing and bustling port of Tianjin, China, where they already grant Mongolia "free trade zone" status), but the new government decided to pass on that offer.  They decided for once - to not sell out to the money dangled as a carrot from a super-power.  And this seems to be a new tact for a "developing" nation to endeavor to do.

And maybe there is a better way to manage both objectives.  Sure, you want to protect the future interests of your own country and its citizens, but you must also be acutely aware of what the economic damage could be as a result, publicly, of this kind of an agenda, and how it will be viewed by the world.  The world-wide media is a very powerful motivator for developing countries to be compliant with the interests of the super-powers, and their mega-corporate entities.

But for whatever the consequences may be, Mongolia is trying to be different. The minerals are still there, and they will be for another 50-100 years, but now they are essentially saying, "This is our land, and these are our minerals, and if you want them, then we must work together to draft or more equitable agreement which can be a win-win for both of us. And if you don't like that, then go ahead and leave".  And this is a new thing in Asia - but it may well come at a steep price.  The upcoming elections will help determine what the voting public thinks about making such potential sacrifices.

Mr. Houston has traveled extensively all over the world and has visited every continent, except Antarctica. He has now lived in Mongolia for 6 years.  He was born and raised in Baltimore, Md. USA and majored in Marketing and Communications at Towson University.  After a successful career in direct sales, he later lived in Tampa, Florida where he created a profitable referral business, which he sold, and then moved to Southern California in 1994 where he started a wholesale distribution business to convenience stores. 

He then became a writer and worked in Hollywood for 4 years as a member of the Screen Actors Guild. Mr. Houston worked on many productions on the crew as a stand-in, appeared on screen in many other productions, and wrote several scripts, all registered with the WGA. Then subsequent Union strikes by both the WGA and the SAG, as well as an impending economic crash inspired him to accept a position in Inner Mongolia, China, as the General manager of a company which produced text books for teaching English.  He later accepted a position teaching English at Raffles in Ulaan Baatar, and then moved on to be the Editor in Chief for City Night Magazine, and then the UB Post, also in Ulaan Baatar.  After a stint teaching in Bangalore, India, he returned to UB to develop the Kmany website, as well as other websites based in Mongolia, which either specialized in teaching English, reported on local economic news, or introduced foreign investors to local business concerns.  Mr. Houston has also written several other movies in Mongolia, served as a News Presenter at Channel 25, as well as working on several other TV productions and served as a consultant for Arigu Media, in Mongolia.

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Some of his other interesting stuff: Mongolian State Election Results, Mongolian Elections, Developing Infrastructure in Mongolia, Light at the End of the Tunnel?

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Hunnu Music Festival to Promote "Friendly UB"

Ulaanbaatar, August 5 (MONTSAME) Under a slogan "Let's Thrive", a "Hunnu Music Festival" will take place Wednesday in the National Green Park of Ulaanbaatar city.

Aimed at advertising friendly UB city, developing tourism through a contemporary music, and propagandizing Mongolia throughout the world, the festival will be attended by famous DJs of the world such as Derrick Anthony, Benjamin Kim, Smith Agent Smith, Max Graham, and well-known Mongolian groups.   

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Troubles for the Khatan Tuul River

August 5 (UB Post) More than half of Mongolia's population is residing near the Tuul River basin, which takes up three percent of Mongolia's total land. The Khatan (Queen) Tuul River has provided clean, clear water since the time of our nomadic ancestors, whose lifestyle depended on the fresh water supply. Unfortunately, due to urbanization and industrialization, the Tuul River is now in need of protection.

Aside from the population of more than two million, various factors are harming the Tuul River's ecosystem, including some 20,000 factories and enterprises, 400 hectares of irrigated crop production, 330,000 livestock, and Mongolia's three major thermal power stations, which are the country's main source of energy.

According to statistics, Mongolia takes 77 million cubic meters of water a year from water reserves of the Tuul River basin to supply the residents of Ulaanbaatar. Damage, erosion and deprivation of the Queen River, vegetative cover along the river banks, and dwindling forests have reached levels of concern owing to the operations of factories, tourism, construction areas and mining. Operations at the Ulaanbaatar Central Waste Water Treatment Plant (UCWWTP) are constantly faulty as a result of overloaded conditions. This is making it impossible for residents in the capital to carry out the traditional lifestyle of following the clean waters of the Tuul.

Mongolia is one of the top five most polluted countries in the world according to the pollution level set by the Global Environment Agency in 2013. Environmental protection agencies say that Mongolian pollution is increasing, instead of decreasing. If this continues, the Queen Tuul River will become the "Trash" Tuul River. It's time for the government and relevant professional bodies to take notice of the fact that society and economic development may be harmed if ecological degradation continues.
The Tuul River is the sole source for drinking water for residents in Ulaanbaatar. Looking at research from the past two years, the technological capacity of UCWWTP is nowhere near overcoming increasing pollution.

Whenever Tuul River pollution is mentioned, we refer to the issues of the UCWWTP. However, it's an exaggeration if we say that all of the river's pollution is caused by the UCWWTP. Even if the UCWWTP upgrades its technology and boosts its cleaning power to 90 percent, it will not make significant changes because the plant is not the only source of pollution. The most significant sources of pollution of Ulaanbaatar's only source of drinking water are building construction, facilities and plants in random areas, and making infrastructure and pollution issues a low priority while putting together the general development plan for Ulaanbaatar.

The Central Laboratory of Environmental Monitoring took tests along the Tuul River, from Ulaanbaatar down to Songino soum in Zavkhan Province, and Khadan Khyasaa in Selenge Province. The laboratory conducted chemical and pollution analysis. They conducted tests repeatedly for three weeks on wastewater coming into the UCWWTP and processed water coming out of the plant. The results of the tests showed that water from the Tuul River in these areas was either very highly polluted or hazardous for consumption. Specifically, after processed water from the UCWWTP mixes with the Tuul River and reaches Songino soum, Shine Tseg, and Khadan Khyasaa, oxygen levels drop and waver from 0.05 to 2.79 milligrams a liter, allowing pollution to reach hazardous levels. Biochemical oxygen demand (B.O.D) amounts in the water exceeded the acquiescence standard amount by 27 to 28 times. Azotemia ammonia in the water surpassed the acceptable amount by 36 to 94 times, and phosphorus by 5 to 30 times, indicating high levels of pollution. Permanganate oxide exceeded safe levels by 1.5 to 5.7 times, proving the toxicity of water in these areas.

On the other hand, when combined tests from water coming in and out of the plant were taken and analyzed for daily cleaning processes, cleaning capacity had grown from 50.7 to 52.8 percent. Each day, 160 to 200 thousand cubic meters of partially cleaned water drains out of this plant and flows into the Tuul. There's no assurance that people living along the river and drinking its water can live on this highly polluted waterway. The same applies to animals.

In 2012, the government made Resolution No. 203 and approved the Khatan Tuul Program. In Chapter 2.1.3, it states, "Polluters must pay and consumers must protect." This principle isn't being followed, even to this day. It's even uncertain about whether the program, itself, is being implemented.

There should be a continuity of policies and decisions made by the government. If government policy is approved, its implementation should continue and the parliament should monitor it regardless of changes in ruling parties. This program is clear evidence, proving that the Mongolian policy system doesn't have continuity. Politics isn't necessary for protecting the Queen Tuul River. It should be protected despite gubernatorial and ruling party changes. It's time to let the public know who is implementing or hindering the Queen Tuul Program, where and how.

Sorce: Unuudur (Issue No.178)

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Putin to visit Mongolia on September 3

August 5 ( Russian President V.Putin will pay an official visit to Mongolia on September 3rd.  Former Prime Minister of Russia V.Putin visited Mongolia upon invitation by former Prime Minister of Mongolia, S.Bayar in 2009.

President Ts.Elbegdorj had a meeting with his Russian counterpart President V.Putin at  the Fourth Summit of the Conference on Interaction and Confidence-Building Measures in Asia (CICA) took place on May 20 and 21 in Shanghai, China.

During the Summit, President Ts.Elbegdorj invited Russian President to celebration for the 75thanniversary of Khalkh gol battle victory.  The 75th anniversary of Khalkh gol battle victory will be celebrated on August 27th.  And now it is certain that Mr V.Putin will not be present at the celebration of the anniversary.

Mongolia wants to expand traditional bilateral economic relations with Russia. During the visit by Russian President V.Putin to Mongolia, issue to increase trading volume, and other issues will be raised.

According to Russian ITAR-TASS news report, Mongolia and Russia hope to sign an agreement on visa-free regime.

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Selenge 2014 Russia-Mongolia joint military exercise takes place

August 5 ( Russian-Mongolian joint military field exercises will be held at Munkh khet military training base on 12-27 August.  500 military servicemen and 65 vehicles and equipments of Far East Military District of Russia and units of Mongolian Armed Forces will participate in the Selenge 2014 Russian-Mongolian joint military exercises on the occasion of the 75th anniversary of Khalkh gol battle victory in 1939. 

This year the joint military exercises will be particular with more participants than that of previous years.  At the end of the joint military field exercises the military units of both countries will take part in the celebration and military parade for the 75th anniversary of Khalkh gol battle victory.

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"Selenge-2014" Joint Military Exercises ApproachingMontsame, August 5


Mongolia, Austria Run First Foreign Ministry Consultative Meeting

Ulaanbaatar, August 5 (MONTSAME) The first political consultative meeting between Foreign Ministries of Mongolia and Austria took place on Monday in Ulaanbaatar.

The two sides discussed their bilateral relationship and cooperation, including ways of intensifying the economic ties, a fruitfulness of a EUR 40 million soft loan granted by the Austrian government, possibilities of exempting diplomatic and official passport holders of the countries from the visa requirements, and collaboration in enhancing the Diplomatic Academy of Mongolia at our Ministry of Foreign Affairs.

The gathered also exchanged views on the international and regional matters of mutual interest and considered as necessity to support each other within the multilateral cooperation fields and to regularize the political consultative meeting.

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Foreign Ministry Hands Exequatur to Honorary Consul of Netherlands to Mongolia G. Amartuvshin

(President of XacBank)

August 5 ( Deputy Foreign Affairs Minister of Mongolia, D.Gankhuyag handed over exequatur to Honorary Consul of the Kingdom of the Netherlands to Mongolia G.Amartuvshin  on Monday August 4th.

Deputy Foreign Affairs Minister D.Gankhuyag wished success to Honorary Consul G.Amartuvshin for his mission to expand bilateral relations of politics, economy, culture, and humanities between the two countries. At the meeting Director of the Consular Department of Ministry for Foreign Affairs of Mongolia Sh.Sukhbaatar was present.

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Honorary Consul Receives His ExequaturMontsame, August 5

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Social, Environmental and Other

Scenes From Mongolia's Changing Steppe

Posted by Hannah Reyes of National Geographic Young Explorers in Explorers Journal on August 5, 2014 (National Georgraphic)

National Geographic Grantee Hannah Reyes is a photojournalist curious about cultures in transition—how old traditions are surviving, what remains under broader social pressure, and the new forms emerging through the fusion, interaction and conflict of cultures.

Mongolia is the most sparsely populated nation in the world, and it is home to one of the last surviving nomadic cultures. Their way of life has been largely unchanged for generations, with some herding customs pre-dating the era of Genghis Khan. But the steppe's landscape is changing today. A large part of the nomadic population is moving to urban areas to seek employment, education, and modern conveniences, but the appeal of modernity draws not only those who have moved, but also those who have chosen to stay in the steppe.

Today those Mongolians who remain on the steppe merge old traditions with new means. They continue their lifestyle as pastoral herders, but many of them use motorbikes to herd cattle and horses. Gas stations dot the vast landscape. Ox carts for moving their homes are beginning to be substituted by trucks, as the availability of transportation and gas increases. A number of nomads have been able to acquire solar panels, a useful way for them to gain access to electricity without settling. They use solar energy to power television sets and to charge mobile phones. Their television sets are their main source of information and entertainment, and their mobile phones a way to contact their children attending boarding schools in the cities. Many Mongolians from nomadic families now study in the cities, but, during the summer, they come back to help their families maintain the herds, and a number go back to their nomadic lifestyle after having finished their education.

In a rapidly changing country, a change in people's way of life is almost inevitable. But these changes are also keeping old ways alive. Rather than leaving their life on the steppes, Mongolia's nomads are beginning to adapt in their own manner, and are able to reap the conveniences of modern society while still keeping an ancient and fascinating way of life alive.

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