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Tuesday, June 9, 2015
Headlines in Italic are ones modified by Cover Mongolia from original
276 closed +1.85% to HK$0.55, +41% YTD
MEC: Issue of New Shares Under General Mandate
June 8 -- On 8 June 2015, after trading hours, the Company and the Subsidiary entered into the Subscription Agreement with the Subscriber, an Independent Third Party. Pursuant to the Subscription Agreement, the Subscriber has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue a total of 11,055,179 Subscription Shares at the Subscription Price of HK$0.54 per Subscription Share.
The Subscription Shares represent (i) approximately 0.654% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 0.650% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares (assuming that there will be no change in the issued share capital of the Company between the date of the Subscription Agreement and Completion save for the issue of such Subscription Shares).
The aggregate Subscription Price for all the Subscription Shares in the sum of HK$5,969,796.66 is equivalent to the amount of the Debt, i.e. US$770,296.37 being the outstanding service fees due and owing by the Subsidiary to the Subscriber under the Mining Agreement for the mining and related services rendered by the Subscriber to the Subsidiary in March and April 2015. The Subscription Price shall be used to repay and settle the Debt. The Subscription Shares will be allotted and issued pursuant to the General Mandate.
Completion of the Subscription is conditional upon, among others, (i) the Listing Committee of the Stock Exchange granting approval for the listing of and permission to deal in the Subscription Shares; and (ii) a Mongolian legal opinion to the satisfaction of the Company that the Agreement has been validity executed by the Subscriber and the acceptance of the New Shares by the Subscriber constitutes a valid set off of the relevant service fees due by the Subsidiary to the Subscriber under the Mining Agreement.
Shareholders and potential investors should note that Completion of the Subscription is subject to fulfillment of the conditions under the Subscription Agreement. As the Subscription may or may not complete, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.
OT Shareholders Talking to 15-20 Banks on Project Financing
June 8 (news.mn) CEO of "Erdenes Oyu-Tolgoi Company" D.Ganbold said – We will undertake 80% of the Oyu-Tolgoi (Phase 2) underground mine preliminary work. For this reason, USD 6 billion investment is required to construct the underground mine for the period to 2016, USD 9 billion to 2017, and USD 4.2 billion for initial work.
Currently, stockholders are currently discussing terms with 15-20 creditors. If the agreements go successfully, it is hoped that the initial investment for the Oyu-Tolgoi underground mine will be obtained this year.
Prime Minister Ch.Saikhanbileg and others noted – It is possible to obtain loans from foreign banks, and financial organizations. Also, Rio-Tinto has expressed that they will be 100% responsible for the credit voucher obtained from the foreign banks.
Rio-Tinto is expecting that market demand for copper will increase during 2017-2018. This is because it is forecasted that copper use India and South Eastern Asian countries is very likely to increase.
If approval of the Oyu-Tolgoi underground mining plan is granted, Mongolia can expect to receive USD 30-40 million to Mongolia before the Naadam Celebration (July 11th). Also, "Erdenes MGL Company" has calculated that Mongolia will receive USD 1 billion annually.
MSE News for June 8: Top 20 +2.15% to 13,687.80, Turnover ₮24.6M, Binse (Primary) ₮100.8M
Ulaanbaatar, June 8 (MONTSAME) At the Stock Exchange trades on Monday, a total of 139 thousand and 914 units of 14 JSCs were traded costing MNT 125 million 438 thousand and 250.00.
"Tavantolgoi" /2,149 units/, "APU" /950 units/, "Gobi" /333 units/, "Aduunchuluun" /301 units/ and "Shivee ovoo" /175 units/ were the most actively traded in terms of trading volume, in terms of trading value were "Tavantolgoi" (MNT eight million 381 thousand and 100), "Bayangol hotel" (MNT five million and 060 thousand), "APU" (MNT three million and 325 thousand), "Gobi" (MNT two million 897 thousand and 100), "Darkhan nekhii" (MNT one million 014 thousand and 800).
The total market capitalization was set at MNT one trillion 318 billion 148 million 601 thousand and 129. The Index of Top-20 JSCs was 13,687.80, increasing 2.15% and the all index of MSE was 961.70, increasing 1.31% against the previous day.
MSE Glass Account Report, May 2015: Profit ₮137 Million, Revenue ₮584.6 Million
June 8 (MSE) As of 31 May 2015, "Mongolian Stock Exchange" JSC had revenue of MNT584,619,326.01 and expense of MNT447,658,232.89. Salary and related other expenses were MNT228,825,500.81 and maintenance and other expenses were MNT218,832,304.06. Overall, total profit accounted to MNT136,961,521.14.
MSE Organizes Capital Market Open Door Event in Erdenet, to Organize More
June 5 (MSE) Mongolian Stock Exchange and Government house of Orkhon province organized "Capital Market Open Door Event" successfully on 3 June 2015.
During the event, local citizens from Orkhon province provided information about Erdenes Tavan Tolgoi's 1072 shares that giving from the state to every citizen, pink and blue vouchers, and information about trading accounts, dividends. Plus, brokerage companies were opening trading accounts for citizens.
In addition, small and medium local business entities attended the "How to attract investment from local exchange" training conducted by specialist of MSE. Open door event of capital market went successfully in Orkhon province, and more Open door events of Capital market will be organized in future.
BoM MNT Rates: Monday, June 8 Close
MNT vs USD (blue), CNY (red) in last 1 year:
BoM issues ₮101.5 billion 1-week bills at 13%, total outstanding +8.7% to ₮1.26 trillion
June 8 (Bank of Mongolia) BoM issues 1 week bills worth MNT 101.5 billion at a weighted interest rate of 13.0 percent per annum /For previous auctions click here/
BoM issues ₮50 billion 4-week bills at 13.46%, total outstanding ₮50 billion
June 8 (Bank of Mongolia) BoM issues 4 week bills worth MNT 50 billion at a weighted interest rate of 13.46 percent per annum. /For previous auctions click here/
Oyu Tolgoi deal is just what the doctor ordered for a sick economy
By Terrence Edwards
June 8 (Mongolian Economy) The landmark agreement to push forward the underground expansion project at the tremendous Oyu Tolgoi copper mine has many excited that Mongolia's economy will return to levels similar to the boom years of 2011 and 2012. But while Oyu Tolgoi will help the central bank sidestep financial crisis and may help lift growth, an immediate turn around isn't likely.
The USD6 billion Rio plans to invest in a series of underground mine shafts will extend the life of the mine by as many as 50 years and is a much needed injection of cash during a period of fiscal strain. Prime Minister Chimediin Saikhanbileg has promised to push through planned expansion projects for the country's largest mines as a means of restoring the economy amid falling foreign investment and a softened commodities market.
"In our view, those big projects will move, the FDI (foreign direct investment) situation will revive, and then the BoP (balance of payments) situation should definitely improve," said Sandagdorjyn Bold, the chief economist at the Bank of Mongolia.
Mongolian officials this month signed an agreement for the Oyu Tolgoi mine with representatives of its joint venture partner, global miner Rio Tinto, after nearly two years of dispute.
Rio Tinto owns 66 percent of the mine indirectly through majority-owned Turquoise Hill Resources. The Mongolian government owns the remaining 34 percent. The agreement settles the question of USD30 million in tax the government claims Rio owes and ends the loggerheads over the initial USD6.5 billion spent for the open-pit mine.
However, there are some who still question whether Mongolia will ever benefit from Oyu Tolgoi. Despite some politicians' skepticism, Saikhanbileg said Mongolia will receive about 55 percent of the the mine's benefits from taxes and fees.
The new deal also gives Mongolia some new terms it has asked for. Turquoise Hill, which is also publicly listed on the Toronto exchange, has dropped a 2 percent net smelter royalty and will from now calculate a 5 percent royalty for sales on gross revenues, without some deductions. It also agreed to reduce the cap on management fees from 6 percent of capital costs to 3 percent.
No change overnight
But the effect won't be instantaneous. The Oyu Tolgoi mining unit still must submit a feasibility study for the project to the Minerals Council of Mongolia for approval. It will also have to return to lenders such as the World Bank's lending arm, the International Finance Corporation, to renegotiate terms for a USD4 billion project financing package that expired last year while the dispute carried on.
Given the time needed for mobilizing construction and attaining permits, it's questionable whether construction might begin this year.
The Asian Development Bank has projected for just 3 percent growth this year, and it doesn't believe Oyu Tolgoi can change that, according to its Asian Development Outlook for 2015. Instead, it predicts that consensus on the mine could lift growth to 5 percent in 2016.
While 5 percent growth in GDP is considered a lot to developed countries that tally in trillions of dollars every year, for Mongolia's USD12 billion economy it means no more than an additional USD600 million compared with last year. It's also a far cry from growth of the boom years in 2011 and 2012 – 17.5 percent and 12.3 percent, respectively.
Although the economy is still under strain, Bold at the Bank of Mongolia reported some signs of improvement. For one, commercial banks are no longer relying so heavily on the central bank for foreign currencies. "Fundamentally there is no demand for foreign currencies at the moment," he said.
That has reduced strain on foreign reserves as well, which has stood at USD1.3 billion for a year. Bold said the central bank had enough foreign reserves to pay for six months of imports, which is "far above the international rule-of-thumb for three months of imports," said Bold.
The Bank of Mongolia in 2014 introduced a tighter economic policy by increasing interest rates. Interest was raised to 12.5 percent in July 2014, and then to 13 percent last January.year.
"This country needed to survive. This country needed to softland," said Bold.
After the narrowing of the current account deficit last year to 8 percent of GDP, Mongolia reached a trade surplus for the first quarter of this year. However, the falling demand for goods typically purchased from abroad that caused the tilt is also a sign of economic weakness. Imports fell 32 percent in the first quarter of this year.
Undeterred, Bold said even without Oyu Tolgoi Mongolia was heading towards sustainable growth of 3 to 4 percent. He said Mongolia could continue to rely on industries such as agriculture and construction as drivers to the economy.
Investment into Oyu Tolgoi, and perhaps even other mines such as the Tavan Tolgoi coking coal mine, could lift growth to as high as 8 percent, said Bold. Although he said the bank's baseline projection for GDP growth was between 4 and 6 percent.
"The worse period is over," said Bold.
Parliament Session Agenda for June 8: Caucus, Working Group Meetings
June 8 (gogo.mn) Party Groups and Coalitions seated at State Great Khural have sessions today.
ONE.PARTY GROUPS AND COALITIONS AT STATE GREAT KHURAL SESSIONS:
· DP Group Session at Hall A;
· MPP Group Session at Hall B;
· Justice Coalition Session at Hall C.
TWO. WORKING GROUP SESSIONS:
· Draft law on criminal and investigation and affiliated other drafts discussion by Justice Standing Committee
· Draft law on children protection and children right discussion by Social policy, Education, Culture and Science Standing Committee
· Draft law on transparency of Mineral sector discussion by Economic Standing Committee
· Draft law on development policy and planning and affiliated other drafts discussion by Economic Standing Committee
· Scientists to give report to Working Group on TT deal which has duty to decide whether to discuss on TT deal by the State Great Khural and to come up with the report
· Draft law on administrative and general discussion by Justice Standing Committee
· Renewed state policy on science and technology discussion by Social policy, Education, Culture and Science Standing Committee
· Amendments to draft law on forest and affiliated other drafts discussion by Environment, Food and Agriculture Standing Committee
· Approval of State Policy on Energy, amendments to law on energy and amendments to law on renewable energy and affiliated other drafts discussion by Economic Standing Committee
· Amendments to draft law on taxes discussion by Budget Standing Committee
· Amendments to real estate mortgage law discussion by Justice Standing Committee
· Application Standing Committee meeting on damaging citizens while implementing ger area redevelopment project
· Draft law on property tax and affiliated other drafts discussion by Budget Standing Committee
· Working Group meeting of Economic Standing Committee on analyzing activities of civil aviation sector
DP caucus supports government's Gatsuurt proposal
June 8 (gogo.mn) DP group at the State Great Khural made an announcement today. Group members have agreed on supporting the State Great Khural resolution on Gatsuurt deposit state ownership settlement. State Great Khural has already made decision on utilizing the deposit now the issue lies within the disputes over state ownership portion.
Cabinet proposed to get the royalties instead of owning 34 percent of the deposit, which is the most profitable for the Government, as the ownership of the deposit implies the investment inputs from the Government. Therefore, DP group leader MP B.Garamgaibaatar has emphasized that DP group members agreed to support cabinet prososal.
In regards with utilizing the Gatsuurt deposit MP G.Bayarsaikhan is to submit the State Great Khural resolution on including the Noyon Mountain into state protection.
Democrats Support Gatsuurt Deposit Resolution – Montsame, June 8
Justice Coalition to establish working group on Gatsuurt economic benefit
June 8 (gogo.mn) Justice Coalition makes an announcement. Today the coalition discussed two issues during their meeting.
1. The coalition viewed that it cannot support the Economic transparency law draft as it provisions the tax exemptions, which has already been provisioned in the Economic Pardoning law paased in 2012 and the members of the coalition view the law draft as similar. MP Z.Bayanselenge emphasized that the purpose of the Economic Transparency Law is to ease the economic burden of the private sector, but the current draft is to add the confusion.
2. Members of the coalition agreed that the Gatsuurt deposit issue is not to be rushed. Coalition expressed their stance that cabinet is rushing to get approve the resolution, while the matter should be discussed throughly as the matter is related with the citizens' rights to equal access to mineral rights. Therefore, the coalition decided to form a working group to do studies on the economic benefits of the deposit.
Minister Ts.Tsolmon: Mongolia Is Not Spending Enough on Defense
June 5 (news.mn) During the weekly "Ministers' Hour" (Thurs. 4th June2015) the Minister of Defense, Ts. Tsolmon, talked about conversion and construction in the defense sector.
-The document, "Governmental Authority of Military Policy", which is being discussed by Parliament, is the result of colossal work by defense experts over the last 2-3 years. The armed forces, border troops, internal troops, and the National Emergency Management Agency (NEMA) are all organized separately. Therefore, the document proposes merging these organizations under the Commander-in-Chief, (President of Mongolia). After, approval of this policy, some laws will be updated: in particular, the "Defense Law"," Military Law", "Law of Military Duty and Serving in the Army", and others.
The Ministry of Defense (MoD) cannot update its weapons and equipment due to the lack of finance. Current defense spending is less than 1% of GDP. Therefore, we are concentrating on raising extra finance, from the "Armed Forces Development Fund ", "External Co-operation Support" , and participating in "Mongolian Soldier - Construction Program", approved in 2013.
Under this program, we are supporting internal producers of items required by the MoD. In this connection, we have signed a memorandum with the Minister of Industry. Earlier today we opened an exhibition in the building of the "Military Song and Dance Ensemble" in order to give priority to internal producers to market their products.
Also, the Government is providing citizens with various ways to serve in the army. For example: the "Student Soldier Program" which was inspired by President Ts.Elbegdorj, has been running successfully for two years now. Last year 500 students are involved in this program; this year the number will be increased to 1000 participants.
State and Private Universities have plans to establish their own Military departments. The Mongolian National University has requested permission to establish a Military department in order to improve military knowledge, ability and disciplines.
Since 2002 a total of 11 thousand Mongolian soldiers have actively participated in UN Peacekeeping Operations; currently there are 942 soldiers in 6 countries.
So far this year, the Mongolian MoD has signed memorandums with 7 countries. Minister Tsolmon participated in the recent "Meeting of Defense Ministers" and Mongolian soldiers participated in the "Victory Day - 70th Anniversary Parade" in Moscow. In addition, Mongolian soldiers have started their preparation for participating in the Beijing Parade this September.
Even though, soldiers are provided with apartments during their career, there are cases when retired soldiers have nowhere to live. Therefore, the MoD is launching a "Military Apartment Foundation" cooperating with banks and building companies to be repaid by mortgage credits.
At present a total of 531 Mongolian soldiers are studying abroad in total; most of them (357) in Russia.
DeFacto: Dunja Mijatović, OSCE Representative on Freedom of the Media
June 4 (Jargal DeFacto) --
Talk with Me: Jargal DeFacto
June 7 (Star TV Mongolia) --
Planning for 2016 УИХ Election
By Julian Dierkes
June 8 (Mongolia Focus) In June 2016, Mongolians will be voting for a new parliament, the Улсын Их Хурал. Having served as an election observer in the last four national elections, I'm thinking about what activities could be undertaken now to prepare for next year's election, specifically whether there are any projects that would need to be initiated long ahead of the election.
Overall, I would say that the 2008 (despite the riots that followed), 2009, 2012, and 2013 elections were reasonably fair and free. While many rumours of electoral fraud swirled around these elections, no concrete evidence has ever emerged. The fact that electoral fraud only makes sense on a large scale suggests to me that evidence of any such national-scale fraud would have emerged over time. Of course, election monitoring is primarily focused on what happens in polling stations, any behind-the-scenes manipulation would be difficult to capture.
Despite the overall quality of the elections, there is certainly room for improvement.
The main challenges I have observed in the past include
· lack of confidence in results and unproven allegations of fraud
· variability in the electoral system
· an increasingly active role of the media, but limited regulation, particularly regarding ownership of media outlets
· organization of collection of the results at the district level.
Here, I want to think out loud about projects that might address these challenges, especially the first, as well as the ever-present need for voter education.
My ideas would variously apply under some of the changes to electoral laws that are currently under discussion, whether that is the MPP's apparent proposal to turn to an all first-past-the-post system with 76 single-member electoral ridings, or any other specific set-up.
If I were to propose or carry out any efforts focused on the 2016 election, I would be guided by three principles:
1. Do no harm.
2. Remain independent and agnostic on outcomes.
3. Lay open all decisions and funding.
I am not Mongolian, I do not vote in the election, and I do not have a direct stake in its outcome. While I have personal contacts with politicians of various stripes, I don't have any particular sympathy nor loyalty for any of the Mongolian parties. I have no financial or other stake in Mongolia and election outcomes thus have no direct impact on me.
If I were to fear that any project I would undertake might have an undue impact (i.e. through manipulation or bias, rather than through information and education) on the results or on confidence in the results I would certainly not want to undertake such a project.
Goal: Confidence in Results
Mongolians' confidence in the results of elections is shaken by all the unsubstantiated rumours that swirl around the press and politicians following the election. Clearly, rumour-mongering is a general pattern in the press, but it is the absence of evidence/further information that also plays a role in the tendency to jump to conspiracies as explanations, rather than offer actual evidence.
What can be done? Sant Maral's Sumati is the only pollster in Mongolia, really. Yet, as he would likely readily concede, his polls are severely hampered by methodology (how do you poll a nomadic population?), the absence of a general social survey that would allow him to compare his results to such data to check representativeness, and – obviously – resources. The fact that credible, nation-wide pre-election polls are not possible, and that the number of exit polls is limited, means that election results stand on their own. In elections in many countries elsewhere, results are anticipated by polls and voters thus gain a sense that the election "came out right". When there are surprises (most countries can point to elections that had surprise results, I think), they are examined, re-polled and re-examined at great length to figure out why polls were wrong. Note that the default explanation is that the polls were wrong, not that there was electoral fraud.
Short of orchestrating a Kickstarter campaign to heap money on Sant Maral's head (if you orchestrate it, I will donate!), what are other options?
I have long thought that an election stock market would be a great option for Mongolia. You can find the concepts of an election stock market explained on WikiPedia and in numerous academic publications. Some colleagues at UBC have been involved quite actively in this as the UBC Election Stock Market.
The main benefit of an election stock market in Mongolia could be that its predictive power of results might bolster confidence in reported results. I.e. if there are enough reasons and indications to believe that the prediction generated by an election stock market has some validity (that's a big IF with many different elements), then reported actual results could be compared to this prediction. Overlaps would reinforce confidence in results, differences would need to be analyzed further.
However, there are massive obstacles and hurdles to establishing an election stock market that have me leaning away from proposing this as an avenue for Mongolia.
There are some quasi-legal hurdles. Election stock markets are meant to be driven by the predictive power of a large number of financially-motivated speculators. I.e. if you think you're prediction of the election outcome is a) solid, and b) different from the conventional wisdom, you could make a moderate amount of money by participating in the election stock market. No investment, no risk in making predictions, and thus little predictive value. However, participants are essentially betting on the outcome of the election, and thus might run afoul of gambling laws. There are legitimate fears about the manipulation of election stock markets, especially in a situation like Mongolia where few other predictions might exist and the stock market might thus end up influencing rather than predicting the result.
Goal: Voter Education
This goal builds on the assumption that better educated voters make better choices and hold politicians to account.
There are many different elements in voter education from promoting an understanding of the electoral system to registration processes, party platforms, party advertising, candidates' bios, polling station locations, etc.
The Mongolian General Election Commission (СОНГУУЛИЙН ЕРӨНХИЙ ХОРОО) has been challenged in recent elections by some fairly late changes in election system, such as the abandonment of the female candidates' quota in 2008, its institutionalization in the 2012 election, but also the introduction of a proportional representation national party list in the 2012 election. From my perspective, the GEC has done a good job under challenging circumstances, particularly when it comes to public information about voter registration and voting procedures.
The Mongolian parliament has also taken some quite progressive steps that facilitate voter education, such as the power of the GEC to check party platforms against their (fiscal) feasibility, i.e. "no unfunded promises". Candidates' campaign literature is also checked against approved and published party platforms. This is meant to give voters a chance to familiarize themselves with readily-available party platforms to inform their decision on candidates and parties. It presumably also provides an incentive to parties to pass campaign platforms that are clear and accessible to voters, as well as presenting policy choices.
Possible Efforts for 2016
I could think of two strategies that seem promising in the Mongolian context: 1. further facilitation of access to information about candidates and parties, 2. application of tools to facilitate voters' choices, particularly as they have been developed in German-speaking countries.
Facilitating Access to Information
While parties make information about platforms and candidates available, surely making access to this information easier could make a positive contribution. I am particularly thinking of the wide-spread adoption of smart phones in Mongolia that makes it possible to consider a voter education app to be deployed in 2016. Perhaps the GEC is already considering this, but it could also be an effort that would be organized privately.
An app as I imagine it could be based on different organizing principles, location, party, candidates. A map would allow a voter to select her riding and to then receive information about the parties and candidates competing in that specific riding, as well as locations of polling stations, etc. The information made available here would come entirely from public sources, possibly via the GEC or directly from parties.
Likewise, voters could be given the opportunity to search for candidates by name leading to standardized information about candidates' biographies, including past offices held, etc. Party information would reproduce campaign platforms, etc.
Facilitating Voters' Choices
A more ambitious version of such an app might facilitate a match of voters' policy preferences with party platforms. This is a model that is well-established in German speaking countries by now as the Wahl-O-Mat in Germany, or Wahlkabine in Austria. In English such apps are know as "voting advice applications", "voting aid applications" or "votematch tools" (Wikipedia). These applications, mostly web-based until recently, allow voters (anonymously) to fill out a questionnaire on important policy choices and then point to a match or mismatch between these preferences and party/candidates' platforms. The apps don't offer a recommendation per se, but instead typically point to the extent of overlap between voters' preferences and parties' stated intentions. After filling out such a questionnaire, a voter might thus see the result that his preferences match the intentions of Party A to 65%, those of Party B to 63%, and those of Party C to 40%. This leaves a lot of leeway for voters to decide what level of overlap between preferences and intentions serves as their personal "cut-off", i.e. is an overlap of 45% large enough that this voter wants to consider Party C or will he restrict himself to a choice between Party A and B? Since voters initiate the advice themselves, these are really tools to facilitate decision-making, not to influence voting behaviour.
Obviously parties have to be given an equal opportunity to clarify their positions on policy choices that are included in the list of the votematch tool, calculations have to be transparent and reproducible, and impartiality is essential.
Some votematch tools are compiled and hosted by public or quasi-public institutions such as Germany's Bundeszentrale für Politische Bildung (Federal Agency for Civic Education), Other examples such as Canada's Vote Compass are hosted by media organizations. Applications have been generally prevalent across OECD countries, but have not spread much beyond these countries. It would appear that the widespread adoption of smartphones in Mongolia, coupled with the pre-existing efforts of the GEC would make an application in Mongolia quite feasible and desirable.
Clearly, the success of votematch tools depends on the neutrality and credibility of the organization(s) that "host" the tool online. Maximal transparency in all processes would be essential and either all parties should be invited to sign on, or no party involvement should be allowed. Foreign involvement would also have to be treated very carefully and in a transparent fashion.
Despite some of the risks inherent in votematch tools, I could certainly imagine an effort focused on the 2016 parliamentary election that would take the first step, i.e. the compilation of information on party platforms and candidates into an app, to test technology and the interest in it. The 2017 presidential election might then be an ideal occasion to develop and deploy a votematch tool as the direct competition between a small number of nation-wide candidates would lend itself particularly well to some kind of questionnaire.
The Media and Elections
One of the joys and strengths of Mongolian democracy is the vibrancy of the media, traditional as well as online. However, the Achilles heel of this vibrancy is the lack of credible information about the ownership of media outlets, whether they are broadcast, print, or online media. In the context of many media outlets that are owned and operated privately, there are numerous such outlets that are directly tied to prominent politicians or parties, or associated closely with political actors.
Perhaps the 2016 election presents an opportunity at self-regulation by media owners, or otherwise legislation that would force media companies to disclose ownership structures.
Policy Series: Mining Policy Failures (I)
By Mendee Jargalsaikhan
June 2 (Mongolia Focus) Mining policy is a good entry point to understand the overall policy-making processes of Mongolia. For one, mining has been one of the dominant economic sectors of Mongolia since the early 1900s. Second, with extensive mining activities, mining has caused numerous political and socio-economic challenges for policy-makers. Today any policy decisions related to mining trigger diverse reactions from political parties, political-business factions, businesses, civil society activists, and citizens. Third, mining policies also have implications for global stakeholders such as IFIs, multinational corporations (MNCs), state-owned enterprises (SOEs), foreign governments, and transnational advocacy networks (TANs). Finally, mining requires policies with long-term consequences not only to ensure foreign and domestic investors business rights and property rights are protected, but also to assure citizens limit negative mining impacts on politics, economy, society and environment are prevented. For these reasons, the study of mining policy and its failures is useful to illuminate ways to manage the central challenge of democratic governance – how to promote long-term policy solutions in the face of short-termism(fractionalized, parochial interests) dominated politics. In other words, mining policy failures in Mongolia will highlight a key feature of democratic politics: politicians, who are on an electoral schedule are inclined to neglect the long-term consequences of their policies and only be interested in remaining in office at any cost.
The following examples illustrate the less successful policy-making processes in Mongolia. They are policy failures for a few reasons: (1) their negative consequences are still present; (2) both politicians and the public acknowledge them as failed policies; (3) succeeding parliaments and cabinets have not taken any long-term policies to mitigate their negative impacts; and (4) politicians and bureaucracies still introduce similar policies that would certainly repeat these failures.
The Gold Program [Алт хөтөлбөр] was introduced in 1992 to attract foreign and domestic investors and to alleviate the immense socio-economic challenges resulting from the economic transition of the early 1990s. Even though the program provided opportunities for domestic mining companies and the government to generate some revenues, the program brought many challenges. First, mining companies exploited the weak regulatory and institutional settings and the majority of miners did not properly close and/or reclaim their mining sites. Second, related to the first, it provided opportunities for the emergence of a Mongolian-type of 'gold rush' – the ninja miners – people who engage in artisanal mining activities at abandoned mining sites. Although the studies present different numbers, over 60 thousand people engage in artisanal mining activities and live within the informal (illegal) socio-economic structures of the artisanal mining. (Swiss Agency for Development and Cooperation, 2011, pp. 23-27; Grayson, 2004) Third, the negative environmental and socio-economic impacts of these small and medium-sized mining companies and artisanal miners are the most devastating to local community, environment, and herding livelihood (Swiss Agency for Development and Cooperation, 2011; World Bank, 2006). Although a few attempts were initiated, they did not succeed because of sudden policy changes.
Nalaikh Coal Mine [Налайхын уурхай] is a thermal coal mine partially closed following a deadly explosion in 1990. From 1954-1980, a Soviet-style mining town was built in Nalaikh to provide high-quality coal for the Soviet military facility (i.e., the largest joint military airbase, engineering and air defense units), power plants of the capital city as well as ger districts in the greater capital city area. At that time, the mine had state-of-art facilities and followed the Soviet mining standards for environmental and labor safety.The withdrawal of Soviet military forces and suspension of Soviet assistance contributed to the overall deterioration of the operation and maintenance of the Nalaikh mine. Because of economic devastation in 1990, the government partially closed the mine, but it could not fully restrict artisanal mining activities in underground shafts of mostly unemployed miners and their families. Today over 1500 people mine with the lowest safety requirements. Since its partial closure, on average 10-17 people die annually in Nalaikh mines. Despite periodic talk about the negative impacts of artisanal mining in Nalaikh, no government attempted to enforce the mining law, standards, and regulations or to provide a long-term policy solution even though it is the closest mine to the capital city.
Oyu Tolgoi [Оюу толгой] – was the first-ever and largest mining deal with multinational mining corporations (Jackson, 2014). After eight years of its discovery by the Canadian Ivanhoe Mines, the Mongolian government concluded the investment and shareholders' agreement with the Ivanhoe Mines and Rio Tinto in October 2009. Under the agreement, the Mongolian government obtained 34 percent ownership and the Turquoise Hill Resources (a name of joint mine of Rio Tinto and Ivanhoe Mines) 66 percent, with foreign investors agreeing to provide local employment, procurement, and to contribute to infrastructure development for the value-added production (e.g., copper smelter, power plant, rails, and roads). Even though this phase I (i.e., open pit mine) of the mine was completed in June 2013, the Mongolian government and Rio Tinto failed to reach agreement on the project costs, including its phase II (i.e., the underground block-cave mine). This disagreement caused both sides to take retaliatory measures against each other (e.g., unpaid tax claims by the Mongolian government and trimming Mongolian employees and some local procurement by the investors) while slowing the overall project development, sending negative signals for foreign, especially Western investors, and heating up domestic politics. Now many policy questions – how to deal with powerful, global investors over the ownership, management, and development of the large-scale projects and how to assure the public about long-term environmental and socio-economic challenges – remain unanswered. The most interesting fact is why politicians, most of whom were members of the 2004 and 2008 parliaments which approved the investment agreement, now have been attempting to change their policy choices.
Tavan Tolgoi [Таван толгой] is the largest coal deposit in southern Mongolia. Since 2008, Mongolian politicians, bureaucrats, and private businesses as well as foreign investors have hoped to generate quick, substantial revenue from the Tavan Tolgoi deposit for two reasons. First, it will be closer to Chinese and East Asian markets if the railroad to the Chinese border is built (247 km). Second, unlike the Oyu Tolgoi mine, the deposits are extractable with open-pit mining technology. Therefore, all stakeholders have been extensively competing over licenses for mining operations and development of infrastructure, especially the railroad. In 2010, following the recommendation of the National Security Council (NSC), the parliament directed the government of Prime Minister S Batbold to negotiate with potential foreign investors to operate the western section of the mine. A year later, the government announced its decision to divide the operating licenses for Chinese Shenghua Group (40%), Russian-Mongolian consortium (36%), and American Peabody Energy Corporation (24%). However this decision was recalled immediately due to concerns from Japanese and Korean bidders. At the same time, the government permitted the state-owned Erdenes Tavan Tolgoi to operate the eastern section of the mine with domestic and foreign mining companies. Then contracts of the Erdenes TT were revoked and re-negotiated by the governments of ex-Prime Minister Altankhuyag and incumbent Saikhanbileg. In August 2014, the government issued another resolution to finalize the bidding over the operation of the Tavan Tolgoi mine.
The Strategic Entities Foreign Investment Law was passed by the parliament in May 2012 and invalidated in October 2013 with the passage of the new Investment Law. In April 2012,the Chinese state-owned Aluminum Corp of China Ltd (Chalco) launched a bid to buy the stakes of Ovoot Tolgoi, a Mongolian coalmine, from the South Gobi Resources Ltd (SGQ). Since the deal was done without informing the Mongolian government, politicians and the public began to voice concerns about the country's sovereignty. A month later, the parliament passed the 'Strategic Entities Foreign Investment Law,' which requires foreign state-owned and private investors to obtain the parliamentary and governmental (cabinet) approval to operate in sectors of strategic importance (i.e., terrestrial resources, banking and finance, and media and communications). Just like the quick passage of the law within a month, it was amended in April 2013, and repealed in October 2013 with little study and justifications.
The Windfall Profit Tax Law was passed in 2006 and repealed in 2011. The law imposed a 68 percent tax on copper and gold concentrates. In accordance with this law, mining companies operating in Mongolia would pay 68 percent tariffs on copper and gold concentrates if the price of copper and gold exceed $2,600 per metric ton and $500 per troy ounce respectively on the London Metal Exchange. The threshold for gold was raised to $850 in 2008. Although the initial draft included only copper, gold was added later because of pressures from civil society movements. Interestingly, this law was secretly passed through a quick legislative process without proper consultation with major stakeholders – the copper and gold mining companies. By imposing the windfall profit tax, politicians intended to generate revenues to implement their election campaign promises (e.g., cash transfers), to assuage concerns of environmental and civil society movements concerning irresponsible mining, and to pressure the Oyu Tolgoi mine to build smelter facilities in Mongolia. The Windfall Profit Tax Law produced several unintended consequences. First, it faced strong opposition from the mining communities; many sought ways to evade taxation (mostly due to poorly institutionalized enforcement) and the scale of the artisanal mining increased. Second, the only implementer of the law became the Mongolian-Russian joint copper venture, Erdenet, which then needed to generate additional revenue for the state beyond its operational capacity. Third, it projected the image of an unstable regulatory environment for major foreign investors.
The Law on Prohibition of Minerals Exploration and Mining Activities in Areas in the Headwaters Rivers, Protected Water Reservoir Zones and Forested Areas (known as The Law with the Long Name [Урт нэртэй хууль]) – was passed by the parliament in July 2009 under pressure from civil society organizations and the environmental movement. Since the implementation of the aforementioned Gold Program, environmental damage, especially to rivers and forests, had grown noticeably and disrupted the livelihood of herding families and agrarian communities. The law caused strong opposition from the mining companies while bringing staunch support from civil society and the public. However the implementation process became difficult for two reasons. First, the law stopped all types of exploratory and extraction activities of mining companies near water sources, river basins, and forests. As a result, the government has been mandated to reimburse costs of all these mining companies. Second, the law still lacks effective enforcement mechanisms for artisanal miners, whose operations are not regulated under any mining and environmental legislation. Although civil society and environmental movements succeeded in pressuring politicians to regulate irresponsible mining activities, politicians failed to produce a well-thought, phased, and effective policy that considered the demands of all stakeholders, namely civil society organizations, mining companies, and local community.
These are a few examples of failed mining policies in Mongolia. Although politicians, parties, and bureaucracies have been attempting to improve the regulatory framework for mining activities, these laws, regulations, and standards are destined to be "momentary policies" due to the bargaining dynamics of major stakeholders – domestic and foreign investors, mining lobbies, mining companies, and IFIs on one side and civil society actors made up of domestic and international networks, environmental movements, and local community on the other side. Between these two forces, politicians, parties, and bureaucracies could not envision and enforce long-term mining policies.
 The mining sector of Mongolia has evolved through different historical stages: mostly Chinese dominated artisanal mining period (up to 1925), when Western companies were conducting small-scale exploration and extraction activities; the socialist period (1925-1989), when the Soviet Union and other communist bloc states (esp., Czechoslovakia, Bulgaria, Germany) had assisted establishing a large and medium scale mines and conducting geological surveys; the post-communist period (from 1990 onwards), when Mongolia has been using its mineral resources to attract foreign and domestic investors.
 Mining administration, mining rescue unit, recreational facilities, railroad, and mining vocational training college.
For more information on Nalaikh mine, see http://mining.time.mn/content/26292.shtml; www.eurasianet.org/node/63373; www.ibtimes.com/most-dangerous-coal-mine-world-mongolias-illegal-nalaikh-pits-1564916; ubpost.mongolnews.mn/?p=10802
 The 68 percentages was taken not because of the careful calculation, but of the commemoration of the Mongolian sumo records.
 The law was published in the State News (Төрийн мэдээлэл) 2009, No. 28. In 2011, the Head of the Mineral Resources Authority acknowledged the law was an important step towards responsible mining, but its implementation process was not clearly articulated. "The Law with the Long Name is a Good Legislation," ["Урт нэртэй" хууль бол сайн хууль] 27 April 2011, http://economy.news.mn/content/64451.shtml; the civil-society compiled information on the Law with the Long Name is available at transrivers.org.
Mongolian Properties: Real Estate Report 2015
June 2015 (Mongolian Properties)
Even/Odd Plate Restrictions Announced in UB City Center from June 15 – August 15
June 8 (gogo.mn) Vehicle restriction to be done by the last number of the license plate by odd and even numbers starting from June 15th to August 15th due to the construction and repair works on Peace Avenue during this period.
Central Post Office intersection is closed up to the Flower Center intersections starting from June 7th due to the repair works in the heating lines and created misunderstanding among the city residents that the vehicle liccense plate restriction is to start today.
City officials have confirmed that the license plate number restriction by odd and even numbers will start from June 15th and continue until August 15th during the announcement made by City Governor's Office last Friday.
The odd and even number restriction is to be valid for six days a week from 8AM to 8PM. Sundays will be free from license plate number restriction. Below is the area of restriction, it covers central part of the city at North restricted by University of Culture and Arts, at South by Narnii Road, at East by MUST all the way through Traffic Police Authority and at West by Geser Monastery all the way to Narnii Bridge.
Photos: Last Day of Ulaanbaatar Auto Expo 2015
June 8 (GoGo Mongolia) Ulaanbaatar Auto Show 2015 is being organized at the Misheel Expo Center through June 6-8. The expo is being organized by the Mongolian Auto Distributors Association. The participants are Hyundai, Kia, Jeep, Volkswagen, Nissan, Toyota, Subaru, Ford and other entities in the auto distribution business operating in Mongolia.
Today is the last day of the expo.
Mongolia - Selection of a contractor for power plant optimization project
The Bid selection comprises the following 2 packages:
· Modification of the Governor's system for the steam turbines at Thermal Power Plant No.4, State Owned Stock Company
· Modification of the automatic control system for the steam turbines at Thermal Power Plant No.4, State Owned Stock Company
· Replacement of existing mill rollers and tables to high advanced technological material for existing Boilers No. S-8 at Thermal Power Plant No_4, State Owned Stock Company
· Installation of soot blowers for Boilers No. 1-8 at Thermal Power Plant No_4, State Owned Stock Company
Please contact UKTI Mongolia for introductions.
Opportunity Type: General Procurement
Response deadline: 23/06/2015
Tourist Buses Exempt from Plate Restrictions
June 5 (news.mn) The Mayor of Ulaanbaatar has issued an Order to provide reliable, quality and prompt services for tourists. Under this Order (A/469) tourist buses of 8 seats or more are no longer subject to the number-plate restriction (Note. in order to reduce traffic congestion vehicles are restricted by their number-plates as to which days that can be used. Ed). This Order is also extended to vehicles delivering short-life food items such as milk and bread up until 12.00 am.
Parking places for tourist buses are located in front of Chinggis Square, the "GandanTegchenlin Monastery", and the " Buddha park". These are designated parking places and are signposted..
The above initiative is part of the "Hospitable Ulaanbaatar" program approved by City Representative Assembly.
Montsame Review: Mongolia-EU Relations
Ulaanbaatar, June 8 (MONTSAME) The European Union (EU) and its members have been supporting Mongolia's democracy since the diplomatic relations were established on August 1 of 1989, and Mongolia considers the EU as its one of the Third Neighbors.
The Ambassador of Mongolia to the EU presented diplomatic credentials in 1990, whereas the head of the EU's Permanent Office in Beijing was appointed the EU Ambassador to Mongolia in 1991, commencing the bilateral cooperation. As of today, the EU Permanent Representative Office in Beijing represents itself to Mongolia, the Mongolian Embassy works in Brussels. In 2006, the EU Cooperation Office opened in Ulaanbaatar.
Mongolia and the EU approved an agreement on trade cooperation in 1993, therefore Mongolia has become a country to receive credit from the European Bank for Reconstruction and Development (EBRD). Then the EBRD opened its Permanent Representative Office in Mongolia in 2006.
In 2010, Mongolia and the EU initialed an Agreement on Partnership Cooperation and signed it April of 2013. This agreement provides the legal framework for expanding EU-Mongolia relations and covers such issues as political dialogue, trade, development assistance, cooperation in the field of agriculture and rural development, energy, climate change, research and innovation, education and culture. In November 2013, the EU President Jose M. Barroso visited Mongolia. It was the first time ever a President of the European Commission has visited the country and was a further milestone in this blossoming relationship.
In accordance with the 1993 Agreement on Trade Cooperation, Mongolia has been given a right to export 7,200 kinds of products to the EU's 27 countries. However, the trade turnover between Mongolia and the EU is still considerably lower than the trades made with other countries according to statistics. For example, Mongolia exported to EU countries products of EUR 71 million, and imported from them products of EUR 510 million by end of 2013.
The sides hold annual meeting of the Ambassadors and Non-Resident Ambassador of EU countries to Mongolia since 2009. As of present, Mongolia has established contracts on investment with 17 countries out of 28 members of the EU.
President Leaves for Official Visit to European Parliament
Ulaanbaatar, June 8 (MONTSAME) President of Mongolia Ts.Elbegdorj left for France on Monday to pay an official visit to the European Parliament on June 8-10, as invited by the president of the European Parliament Mr Martin Schulz.
The European Parliament, headquartering in Strasbourg of France, is the legislature with 751 members elected from 28 member states of the European Union.
FM Delivers Report on Foreign Policy and Region Cooperation at ERIA Board Meeting
Ulaanbaatar, June 8 (MONTSAME) The Foreign Minister of Mongolia L.Purevsuren gave a report about Mongolia's foreign policy and the regional cooperation at the 8th governing board meeting of the Economic Research Institute for ASEAN and East Asia (ERIA) and at the ERIA's Dialogue Partnership held June 5 in Jakarta of Indonesia.
Mongolia is aiming to forward the cooperation with the ERIA in politics and economic spheres therefore the country intends to become a member of the ASEAN Talks and the East Asian Summit. It has been considered that the ERIA could be a way for Mongolia to fulfill these goals.
At the meeting, the FM said the President of Mongolia has proposed founding an Asian Forum that would unite the Asian countries in political, economic and developmental purposes, and underlined that Mongolia wants to contribute to the Asian regional developmental big issues such as energy, industrial cluster, infrastructure and economic corridor.
After Mr Purevsuren, the ERIA Executive Director Mr Hidetoshi Nishimura talked about cooperation projects and programs being implemented with Mongolia, and underlined an importance of Mongolian contribution to the development of the economic cooperation in Asia.
Japan Delivers ¥300 Million Worth Medical Equipment for Disabled
June 8 (GoGo Mongolia) Today the ceremony to hand over the 233 pieces of equipment of 22 types for the disabled has taken place at the National Rehabilitation Center and its branch entities, 116th special school and National Association for the Blind worth JPY 300 million. The ceremony held at 11AM today.
This aid helps to establish basis for the treatment and rehabilitation of the disabled citizens as the equipment is provided for six newly established rehabilitation centers.
The ceremony was attended by the Representative of the Japanese Government, Minister of Human Development and Social Welfare S.Erdene, Ambassador Takenori Shimizu and Management of the National Rehabilitation Center.
Mongolia and Japan to cooperate in peacekeeping operations
June 5 (news.mn) Defense Minister Ts.Tsolmon and Japanese Ambassador T.Shimizu have signed an agreement to co-operate in training in UN peacekeeping operations, provide humanitarian assistance and to work together on disaster mitigation. This was agreed on 3rd June 2015 at a meeting in the Mongolian Ministry of Defense (MoD). Relationship between the two countries is developing in co-operation programs, politics, trade, economics, culture, and defense. Since 2012 Japan has been assisting foreign countries in the field of defense. The Japanese Ministry of Defense is implementing its "Capacity Building Program" in foreign countries via a policy of exchanging their experience in education, HR and capacity building.
Japan is also currently co-operating with Mongolia, in the ongoing 2014-2016 sub program, including support to military doctors and surgeons as well as military engineers. This comes under the "Midterm Program of the Mongolian and Japanese Strategic Partnership" and includes, studying program to build a hard paved road (which will be extended 15 km to the MoD Training Center at Tavan Tolgoi), also to survey roads, and provide a modern state-of-the art military hospital.
Also, the Japanese Government is going to co-operate in "Khaanii Ereld" , an annual Mongolian international peacekeeping operations training event; this will involve by sending Japanese military division.
The MoD has suggested to the Japanese Government establishing an Intergovernmental Agreement to provide a legal framework for the exchange of soldiers, and cooperation in peacekeeping operations.
Robert Pires to lead Variety Club of France vs Mongolian seniors' football team
June 8 (news.mn) According to the Mongolian Football Federation – The Mongolian senior team will play a friendly match with French senior team "The Variety Club of France" headed by former French international footballer, Robert Pires. The match will take place on 19th June 2015.
"The Variety Club of France" was established in 1971 and is connected with many interesting facts, for example: it once played on every continent in the space of one month; it also entered the Guinness Book of Records for playing football non-stop for 35 hours 02 minutes continuously at the Marakana Stadium in Brazil back in 1985. Robert Pires was a famous mid-fielder who has played in 79 matches, and scored 14 goals till 2011.
Also, this "Friendly" match coincides with the 50th Anniversary of the establishment of Diplomatic Relations between Mongolia and France.
B.Batsaikhan has been appointed as coach of Mongolian senior team; he will introduce the squad to the public on 10thJune 2015 via the official site of the Mongolian Football Federation (www.the-mff.mn.) The Mongolian senior team will to start their training on 11th June 2015.
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