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October 8, 2013
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Turquoise Hill Resources Appoints Rowena Albones as Director
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 7, 2013) - Turquoise Hill Resources (TSX:TRQ)(NYSE:TRQ)(NASDAQ:TRQ) today announced the appointment of Rowena Albones to the company's Board of Directors. She is a Rio Tinto-nominated director that is replacing Jean-Sébastien Jacques.
Ms. Albones is currently Chief Financial Officer Copper at Rio Tinto and is a member of the Rio Tinto Copper Executive Committee. She joined Rio Tinto in September 1999 and has held a variety of financial and commercial roles across the company, including finance roles in operations and major project development and construction. Ms. Albones has also held leadership roles representing Rio Tinto in multiple joint ventures. The majority of her career has been in resources and mining, engineering and the oil and gas sectors. Ms. Albones is a member of the Oyu Tolgoi LLC Board of Directors and chair of the Oyu Tolgoi LLC Audit Committee.
Oyu Tolgoi Partners Resolve Some Differences on Expansion (2)
(Updates with board member comments in third paragraph.)
By Michael Kohn and Elisabeth Behrmann
Oct. 1 (Bloomberg) -- Mongolia and Rio Tinto Group made progress in resolving project financing and other disputes stalling the expansion of their $6.6 billion Oyu Tolgoi copper mine, a Mongolian board member of the venture said.
Negotiations will resume in Ulaanbaatar on Oct. 7, Ganzorig Temuulen, one of three Mongolian nationals on the Oyu Tolgoi LLC board, said at a press conference in the Mongolian capital today. His comments follow a meeting between the shareholders in London.
"We have agreed in principal on project financing" for the expansion, board member Chuluuntseren Otgochuluu said in an interview. Mongolia is "very confident" the terms of the agreement can be worked out by the end of the year, he said.
A point of contention is all of the funds raised should be invested in Mongolia, although the government is willing to concede that some Oyu Tolgoi assets can be used as collateral, he said. Mongolia is awaiting the completion of an updated feasibility study for phase two of the project, he said, indicating it would be completed early next year. The total cost for both phases may eventually reach $14 billion, he said.
Finance Discord
Oyu Tolgoi stalled on disagreements that include the financing of the mine's second-stage or underground expansion, which is expected to cost about $5.1 billion. Mongolia, which controls 34 percent of the project, claims cost overruns on the open-pit operation are delaying future dividends and wants the mine's extension funded with revenue from copper sales until the dispute is resolved. That's been a subject of debate with Rio, which has sought to raise debt to fund the mine's second phase.
The board members said today agreements are almost concluded on issues involving Vancouver-based Entrée Gold Inc., which owns part of the Oyu Tolgoi area via a venture with Rio Tinto. The Mongolian government will take 34 percent of the Entree license, based on a law that says Mongolia should have 34 percent of a strategic deposit. That will happen in two or three
weeks, Otgochuluu said.
Cost Guarantees
Otgochuluu said Mongolia is also seeking guarantees that the mine expansion won't be subject to cost overruns, and a reset of Rio's management fees, to be based on revenues earned rather than money spent.
Bruce Tobin, a Melbourne-based spokesman for Rio Tinto, wasn't immediately able to comment.
London-based Rio, the world's second-biggest mining company by market value, manages the venture through its 51 percent stake in Turquoise Hill Resources Ltd., which owns 66 percent of
the mine.
Rio in July decided to delay work on the expansion until wrangles with the government on funding and other issues are resolved. While open-pit work continues, the dispute has led to the suspension of underground construction and the layoff of about 1,700 workers.
The mine, located 80 kilometers (50 miles) north of the Chinese border, is forecast to account for about a third of Mongolia's economy when in full operation.
Mongolia confident of resolving Oyu Tolgoi battle by December 31
By Terrence Edwards
October 1 (Reuters) - The Mongolian government is confident it can resolve disputes with Rio Tinto (RIO.AX) over a $5 billion expansion of the Oyu Tolgoi copper and gold mine by December 31, the deadline for sealing financing for the project, an official said on Tuesday.
"I am very confident," the mining ministry's director general of strategic policy and planning, Otgochuluu Chuluuntseren, told reporters, when asked whether Mongolia would be able to resolve issues ahead of the deadline.
Rio Tinto started exporting from a $6.2 billion open pit mine at Oyu Tolgoi in July but halted work on Phase 2, an underground mine, in August and threatened to cut up to 1,700 jobs as the government refused to approve financing terms for the project.
The expansion is vital to Mongolia as it is expected to boost the economy by a third by 2020 and is key to Rio's effort to ease its dependence on iron ore. Rio's Turquoise Hill Resources Ltd (TRQ.TO) unit owns a 66 percent stake in the mine.
The Oyu Tolgoi board, including three new Mongolian directors, met in London last weekend to try to resolve about 15 concerns that the Mongolian government has raised.
Mongolia has yet to be satisfied on three major issues: terms for project financing, an analysis of cost overruns at Oyu Tolgoi and feasibility studies for the mine's expansion, Otgochuluu said.
The government hopes to see a feasibility study for Phase 2 by early 2014, he said, and wants a detailed breakdown of costs for each phase of the mine's development, rather than accepting a figure of more than $14 billion for the whole development.
"The Mongolian government has equity so we have to closely follow the costs," Otgochuluu said.
Mongolia has a 34 percent stake in Oyu Tolgoi, but will not receive any share of the profit from it until Turquoise Hill recovers all the costs of the project, which it has funded with Rio's support.
While key issues remain to be resolved, Otgochuluu said progress had been made in last weekend's talks, and the government would be willing to tackle some of its minor concerns after work resumes on the underground mine.
"We made good progress for the sustainability of mutual trust," he said. "I don't want to jeopardise trust because of minor technical issues."
Uncertainty over Oyu Tolgoi, as well as changing foreign investment rules, have led to a 43 percent drop in foreign direct investment in Mongolia this year and rocked shares in smaller companies with projects in the country.
Rio Tinto had no immediate comment on the Oyu Tolgoi talks.
Rio, Mongolia resolve issues in mine conflict
October 3 (The Australian) THE Mongolian government says half of the concerns about the development of Mongolia's massive Oyu Tolgoi copper and gold mine have been resolved and that a meeting will be convened next week to whittle away the remaining issues.
Rio Tinto, the project operator and major shareholder, and the Mongolian government held an Oyu Tolgoi board meeting last week in London in which they resolved 15 out of the 30 urgent issues that had led to the suspension of the $US5.1 billion ($5.46bn) expansion project.
The board agreed, among other things, that all Oyu Tolgoi licences owned by third parties should be transferred to Oyu Tolgoi, giving the Mongolian government a 34 per cent stake in the licensed deposit area.
This means that two licences part-owned by Canada-listed mining company Entree Gold will be transferred to Oyu Tolgoi.
As part of the transfer, the Mongolian government will receive an additional $US1.4bn over the duration of the project, the government said.
Anglo Australian Rio Tinto declined to comment. The Oyu Tolgoi project is 66 per cent owned by Canada-based Turquoise Hill Resources, which in turn is majority owned by Rio Tinto. The Mongolian government owns the remaining 34 per cent stake.
The Mongolian government and Rio Tinto have been at loggerheads over the investment terms of an agreement signed by both parties in 2009.
The government has been pressing Rio Tinto to improve the terms of the deal, amid escalating costs. For its part, Rio Tinto wants to ensure that the government keeps to the original investment agreement.
Earlier this year, Rio Tinto postponed the underground mine expansion and announced plans to lay off as many as 1700 workers after the government said any provisional financing for the project would have to be approved by Mongolia's parliament.
The board will meet again on Monday to address three key outstanding issues: how to monitor and reconcile project cost overruns, submit an authorised registration of the expansion project plan and review additional project financing.
At full output, Oyu Tolgoi is set to produce an average of 450,000 tonnes of copper and 330,000 ounces of gold a year, as well as silver and molybdenum.
The International Monetary Fund estimates the mine will generate up to one-third of Mongolia's gross domestic product by 2021.
Talks over the Oyu Tolgoi dispute to continue in Ulaanbaatar
October 1 (news.mn) The three Oyu Tolgoi Board Members who had talks with Rio Tinto on the issues and dispute over the project financing in London held a press conference today on October 1st.
The press conference was held by Ganzorig Temuulen, Deputy Director of the parent company Erdenes MGL LLC and Chuluuntseren Otgochuluu, the Director-General of the Ministry of Mining's Department of Strategic Policy and Planning.
Ch.Otgochuluu made the following statements:
"The Mongolian Government raised 22 different points of dispute regarding the project which you are aware of as these issues were introduced to Parliament. Rio Tinto suggested eight issues in return. Rio Tinto and ourselves as representatives of the Government of Mongolia have agreed on 15 of the 30 presented issues over the massive Oyu Tolgoi project with Rio Tinto. So we have reduced the problems by half.
The Media reported that the Oyu Tolgoi group of deposits are owned by a third party.
Representatives of Rio Tinto and the Mongolian Government discussed and agreed to transfer the special licenses of the Oyu Tolgoi group of deposits to Oyu Tolgoi LLC and let the Mongolian Government hold 34 percent of the total licensed area."
"The Ministry of Mining of Mongolia suggested to transfer two special licenses that Entrée holds to Oyu Tolgoi LLC in accordance with the Oyu Tolgoi Investment Agreement. The Parties also negotiated the issue and agreed to take urgent measures. Therefore the dividends for Mongolia will increase up to 1.4 billion US dollars within the project period."
But there are still three challenging issues. The project cost overruns, the authorized registering of the feasibility study and the Oyu Tolgoi group of deposits and project extension cost details. Both parties are to review the project cost overruns as the Mongolian Government and Rio Tinto have held and audit of Oyu Tolgoi discover the reason. Parties will negotiate again when both auditing results have been released on October 10th.
Board member Temuulen said that the talks with Rio Tinto were successful. Both parties made efforts to find a resolution. The parties will continue talks in Ulaanbaatar on October 10th.
Negotiation over Oyu Tolgoi continues in Ulaanbaatar
October 7 /www.news.mn/ Shareholders of the massive OyuTolgoi deposit met for talks over disputes between parties in London. The three board members of OyuTolgoi LLC representing the Mongolian Government, holder of 34 percent of the project, and the project developer Rio Tinto, holder of 66 percent stake in the mine, had challenging talks between 23rd and 27th September with little progress. The talks were delayed to continue the negotiation in Ulaanbaatar in October.
Today parties will sit behind the negotiation table for the disputes over the massive mine in Mongolian gobi, OyuTolgoi.
The three board members representing the Mongolian Government in the talks for the dispute over OyuTolgoi held a press conference saying progress has been made in the negotiation after their arrival in Ulaanbaatar. According to the announcement by the three board members, the parties agreed on 15 issues out of the 22 points of dispute over OyuTolgoi between the Mongolian Government and Rio Tinto. But parties still need to solve the remaining issues. There are now three working forces appointed to work on a study of the various disputes regarding the OyuTolgoi project.
Entrée Gold jumps on Oyu Tolgoi licence deal progress
October 1 (MINING.com) Entrée Gold (TSX:ETG) added 10% on Tuesday after the company announced progress in talks with Mongolian authorities over a disputed licence.
Mongolia in February suspended the Vancouver-based company's mining permits in an area adjacent to the Oyu Tolgoi, Rio Tinto's massive copper-gold project in the Asian nation.
According to Bloomberg the Mongolian government will take 34% of the Entree license within weeks, "based on a law that says Mongolia should have 34 percent of a strategic deposit," as part of the country's ongoing talks with Rio Tinto about Oyu Tolgoi phase 2 underground expansion.
Entrée Gold, now worth $44 million in Toronto, was more circumspect in its statement saying that talks are continuing and that any outcome must be acceptable to Entrée and its shareholders:
"While Entree has acknowledged that the transfer of the joint venture mining licences to OTLLC [Oyu Tolgoi LLC], as currently contemplated by the Entree-OT LLC joint venture, is important as these licences form an integral part of the future underground operations at Oyu Tolgoi, no final agreements have been reached and further discussions with all stakeholders are required."
Rio Tinto, directly and through its majority ownership of Turquoise Hill Resources, the operators of Oyu Tolgoi, owns 23.6% of Entrée.
Oyu Tolgoi near the Chinese border is one of the biggest mining projects in the world with a final bill that could reach as much as $14 billion.
MP S.Ganbaatar requests IAAC investigation of Oyu Tolgoi project
October 7 (UB Post) Member of the Parliament (MP) S.Ganbaatar submitted a request to the Independent Authority Against Corruption (IAAC) on October 3, to investigate the Oyu Tolgoi project. He sent the request based on his joint research and studies by experts on the project's implementation since the signing of the contract between Rio Tinto and the Mongolian government, and how much potential benefit exists for Mongolia to earn from the project over time.
Rio Tinto has been found to have spent a large amount of money and financing earned from Mongolian resources on funds provided to governmental and non-governmental organizations, company heads, other companies, as well as citizens not directly related to the Oyu Tolgoi project according to its expenditure report.
S.Ganbaatar believes the investments were actually intended bribes and they violate the Mongolian people's interests. His request proposes that the IAAC conduct inspections and investigations of six organizations that Rio Tinto, investor in the Oyu Tolgoi project, finances. These organizations are the Arts Council of Mongolia, which received 17.2 billion MNT; the General Authority for Border Protection, which received 129.2 million MNT; the NGO Mongolian Traditional Craftsmanship, which received 107.7 million MNT; the Mongolian National Mining Association, which received 89.4 MNT; ZIBRO Z, a company which received the financial backing of 1.4 billion MNT; and the NGO Ikh Us Tuul, which received financing of 600,000 USD from Rio Tinto.
Wolf Petroleum: Seismic Data Acquisition Programme Completed on Sukhbaatar (SB) Block
Wolf Petroleum has successfully completed 450km of 2D seismic acquisition with preliminary processed data being highly encouraging...
October 7 -- Mongolian oil explorer Wolf Petroleum Limited (ASX: WOF) is very pleased to announce that 450 km of 2D seismic data has been successfully acquired on the highly prospective "Tal Bulag" and "Toson Tolgoi" (Figure 1) sub basins of the Company's 100% owned block. Seismic data processing and interpretation is already well underway.
The seismic data is being processed by WesternGeco and Sterling Seismic Services in the US, and interpretation is being completed by Wolf Petroleum's technical consulting group MHA Petroleum Consultants in Denver, Colorado, USA.
MHA Petroleum Consultants has 30 years of industry experience from pre discovery of onshore oil fields to production and has been working with Wolf Petroleum in Mongolia since 2011.
Interpretation of seismic data is expected to be completed in the fourth quarter of 2013 to allow for the targeting of drilling locations for exploration wells to be drilled in 2014.
In addition to the 2D seismic acquisition programme, the Company has collected over 7,500 shot hole samples for a detailed geochemical analysis to confirm the presence of crude oil in the SB basins. Initial results from these samples are interpreted to be highly encouraging. Results are expected to be released in the coming weeks.
SB block background:
The SB block is one of the first identified petroleum exploration blocks in Mongolia and is located in a proven and producing region of Eastern Mongolia.
SB block is 23,000 km2 in size with approximately 60% or 12,000 km2 of the block being interpreted as Cretaceous in age with a high potential for oil source reservoir rocks at depth.
Geological and geophysical programmes, alongside HI-RES remote sensing programmes, have identified the largest sub basin within the SB Block, Toson Tolgoi (3,500 km2), as having a high potential to be one of the principle petroleum source kitchens of Eastern Mongolia.
Wolf Petroleum has 100% ownership of SB block for up to 14 years of exploration and 30 years of production.
During 2013, the Company focused its exploration programmes on its flagship project, the SB block and is currently ahead of its contract commitments.
Completion of the 450km of 2D seismic acquisition programme and the successful geochemical analysis of shot holes is a major milestone for the Company. This will result in multiple drilling locations and has highlighted the prospectivity of Toson Tolgoi Basin, which is located wholly within the SB block.
Guildford Coal: Approval Received to Build Haul Road to China Border
October 7 -- Guildford Coal Ltd (ASX: GUF) is pleased to announce that 100% owned subsidiary Terra Energy P/L (Terra) has received Mongolian Government approval to construct the 98km haul road connecting the Company's Baruun Noyon Uul mine (formerly North Pit) with the China border and coal distribution hub at Ceke. This very welcome announcement permits Terra to immediately commence the road construction project which is anticipated to take about 12 weeks.
As disclosed in August 2013 the cost of the road construction is $17M and will be funded by an extension to the existing Noble debt facility.
Coal sales to customers are now expected to commence in January. A recent visit to prospective customers with our marketing agent Noble in China by Managing Director Peter Westerhuis and General Manager Marketing Allan Dawson confirmed a strong interest to commence use of Terra coal in their coking plants.
Mining operations are progressing very satisfactorily. The initial box cut excavation is continuing to take shape and coal uncovery is ahead of schedule. Coal mining and crushing will be scheduled to coincide with the completion of the haul road construction.
Sentosa Mining gets set to drill Mongolia copper gold project, $1.14 million raised
October 4 (Proactive Investors) Sentosa Mining (ASX:SEO) has raised $1.14 million in an over-subscribed placement to fund maiden drilling at its Darvii Naruu copper gold project near Rio Tinto's(ASX:RIO) Oyu Tolgoi porphyry copper mine, Mongolia.
For Sentosa's fund raising initiative to attract more capital than originally planned $1 million, highlights the potential for a world class discovery at Darvii Naruu.
New shares were issued at $0.045, and free attaching options will be exercisable at $0.15 within three years of issue date.
An entitlements issue of options on the same terms as the placement will also be conducted with shareholders eligible for one new option for every two shares held, at a price of $0.005 per option to raise up to $130,000.
Sentosa has exercised its option to acquire a 100% interest in the 62,700 hectare project where 37 exploration targets have been identified, including several high priority "drill ready magnetic and potasic targets
Sentosa ageed to acquire Darvii Naruu in April from Australian private company, St Nicolas Mines, through the issue of 5,500,000 Sentosa shares and an 0.5% net smelter return royalty.
Since then preliminary exploration, including 1,620 line kilometers of aeromagnetic and radiometric survey and two independent technical reviews, have confirmed significant potential for large-scale copper-gold or nickel-copper-PGE mineralised systems.
Sentosa Mining acquires Darvii Naruu copper-gold project in Mongolia
October 1 (Proactive Investors) Sentosa Mining (ASX: SEO) has exercised an option to acquire a copper-gold project located within Mongolia's South Gobi Arc which hosts Rio Tinto's (ASX: RIO) world class Oyu Tolgoi porphyry copper gold deposits.
Work carried out by the company over the Darvii Naruu Copper Gold Project in Gobi-Altai Province, western Mongolia, has confirmed its potential for large scale copper-gold, gold or nickel-copper-PGE mineralised systems.
To complete the purchase, Sentosa will issue 5.5 million shares and a 0.5% Net Smelter Return Royalty as consideration for 100% ownership of Australia's St Nicolas Mines Pty Ltd, which owns the seven mineral permits that make up the 62,735.8 hectare project.
Darvii Naruu
The company signed a letter of intent in April 2013 to acquire the project and has since commissioned 1620 line kilometres of aeromagnetic-radiometric data and two independent technical reviews.
Local surface sampling had returned ore grade mineralisation peaking at 5.8% copper and 34.4 grams per tonne gold.
This and historic regional geological mapping has allowed the company to identify 37 exploration targets including several high priority drill ready magnetic and potasic targets.
Sentosa plans to conduct up to 3,000 metres of reverse circulation drilling at the project before the end of November.
Erdene Commences Exploration Program at Altan Nar Gold Project
Mongolian Parliament Approves Favorable New Investment Law
HALIFAX, NOVA SCOTIA--(Marketwired - October 07, 2013) - Erdene Resource Development Corp. (TSX:ERD) ("Erdene" or "Company"), is pleased to announce that it has commenced an exploration program at its wholly owned Altan Nar gold-polymetallic project in southwest Mongolia to further define the near-surface mineralization identified to date and prioritize new areas for the next phase of resource drilling. The Company is also pleased to report that on October 3rd the Mongolian Parliament approved a new Investment Law that will provide much greater stability in the taxation and legal regulatory system of Mongolia.
"The discoveries by our Company over the past two years in the Altan Nar area have established a new epithermal gold district in southwestern Mongolia. The objective now is to establish initial targets for open pit development at Altan Nar while continuing to explore this large area at surface and at depth where high-grade, gold-polymetallic shoots have been identified," said Peter Akerley, President and CEO. "The passing of the new Investment Law brings welcomed stability to the regulatory framework of Mongolia and confidence to more rapidly develop this exciting new project."
…
Prophecy Coal Signs Additional Coal Off-take Agreement
VANCOUVER, BRITISH COLUMBIA--(Marketwired - October 07, 2013) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX: PCY)(OTCQX: PRPCF)(FRANKFURT: 1P2) is pleased to announce that it has entered into a coal sale contract (the "Contract") for the sale of 30,000 tonnes of coal per month from the Company's Ulaan Ovoo mine (the "Mine") to a buyer at the Mine gate.
Under this Contract, 30,000 tonnes of coal per month will be sold by the Company and picked up by the buyer at the Mine gate. The buyer is a new customer with substantial presence in the region and this Contract is separate from sales contracts announced in news releases dated August 12, 2013 and August 28, 2013.
The first shipment date is planned in November per buyer's request.
Update on Restarting Ulaan Ovoo
The Company's mining operation of Ulaan Ovoo mine has been curtailed since July 2012.
Prophecy has started pit dewatering, recalling leased mining equipment, hiring, and diesel/parts procurement to bring the Mine back into production, with November 2013 as the target re-start date.
Update on Transportation and Sales
The Company has sold and transported coal to customers in September, 2013. The coal was loaded from existing stockpiles at the Mine site and was trucked to Sukbhaatar railway siding, and was then transported by rail to five customers. Full sales payments are collected as orders are filled on a first-come, first serve basis. The road and bridge conditions between the Mine and Sukhbaatar at the present time are normal.
Currently, the Company has executed coal sales contracts totaling approximately 60,000 tonnes per month (including the latest Mine gate Contract). Fulfilling all the off-take agreements is contingent on the Mine restart as the quantity and quality of the existing stockpile are insufficient to supply customer demand beyond October,
2013 Sales and delivery forecasts will be provided once the Company commences full mining and trucking operation.
Update on Zeltura border and Coal
According to the Mongolian government General Working Plan and Resolution 120 passed on September 11, 2012, the status of Zeltura border is officially listed as "Under Renovation", which means it is neither open nor closed. In the past months, Prophecy has been in discussion with various Ministries and has offered assistance to renovate associated Zeltura infrastructure including but not limited to customs clearing facility at the Mine site, and road improvement from the Mine site to Zeltura, all of which are necessary to enable coal transport through Zeltura. Road improvement, which requires a feasibility study and environmental impact assessment studies, are expected to be completed by the Company by year end. The road improvement project is expected to take 2 to 4 months based on the tenders received. The Company recently executed a coal sales contract of significant quantity with a buyer in Russia, which is contingent on the ability to transport coal through the Zeltura b order. While the Company is pleased with the overall progress, it cannot offer certainty or a definitive time frame to start transporting coal through Zeltura.
Forgotten Central Asia and Mongolia ETF in Focus
October 1 (Zacks Equity Research) The long overlooked Central Asia & Mongolia zone has recently caught investor's attention. This commodity-centric region is getting all the attention thanks to an upsurge in natural resource prices.
All the countries in this region are rich in deposits of various resources including petroleum, natural gas and mining commodities like Gold, Copper, Silver and Coal. Mongolia is one of the largest coal-producing countries, Kazakhstan is one of the major oil producing countries and Uzbekistan has the largest open-pit gold mine in the world (read: 3 Forgotten Ways to Play Mining Sector with ETFs).
When the taper talks began in May, market movement started to turn around, infusing fresh blood into commodity-oriented ETFs. The improving China data also helped in lifting these products as the country is a major user of the said minerals and one of the biggest importers of those commodities.
As per Global X, trade between the commodity depot Central Asia and China grew approximately $500 million in 1992 to $30 billion in 2010 indicating the dependence of this zone on China's recovery.
Following diplomatic developments in Syria, Gold may not be a good choice to bet on, but commodities like Coal are still offering good entry points. Moody's neutral to positive commenton Coal saying it "does not expect industry fundamentals to deteriorate further over the next 12 to 18 months, though business conditions remain very weak" sent coal stocks rallying.
The rating agency also raised its coal industry outlook to stable from negative (see Are Coal ETFs Back on Track?). In such a scenario, one could ride on the commodity strength in Central Asia & Mongolia.
ETF Impact
There is a new fund called Global X Central Asia & Mongolia Index ETF (AZIA - ETF report) which serves up exposure as a pure play in this forgotten region. The performance of AZIA mirrors that of natural resources and their outlook.
With coal stocks heaving a sigh of relief on the expectation of better pricing by next year, Mongolian exposure, albeit little, might drive the fund higher. Kazakhstan's abundance of coal should also be kept in mind.
Central Asia & Mongolia is a bit tricky part of the world to invest in since very few and not all five counties of central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) get exposure in the emerging markets or frontier market funds. This criterion brings AZIA in focus. In the last three months, the fund gained 8.5% as of September 30, 2013.
AZIA in Details
Debuted in April 2013, Global X Central Asia & Mongolia Index ETF (AZIA - ETF report) tracks the performance of the Central Asia & Mongolia Index. The fund doles out exposure to 22 securities from the various nations that have exposure to the central Asia and Mongolia region.
So far, the fund has been ignored in the emerging markets segment with just about $1.5 million in AUM. This leaves the fund with paltry trading volumes. Its daily trading volume of around 3,000 is also quite light compared to better known emerging market ETFs like (VWO -ETF report) or (EEM - ETF report).
The product puts as much as 74.0% of its total assets in the top 10 holdings, suggesting a very high concentration risk. Centerra Gold Inc. (12.04%), KAZAKHMYS (9.58%) and Bank of Georgia (9.47%) hold the top three positions in the basket (see all the Asia Pacific Emerging Market ETFs).
In terms of geographic exposure, the United Kingdom (41%), Canada (19%), and Kazakhstan (13%) round out the top three as well as take up the lion's share of the fund's assets. Greater exposure to the better-positioned United Kingdom in Europe also explains why it can be a prudent bet in sluggish global recovery.
Further, almost exclusive focus on blend style also calls for lower volatility in the fund. The choice is moderately expensive in the space, as it charges 69 basis points a year in fees which is a bit higher than the average expense ratio in the emerging market space, though definitely lower than some of the high cost picks out there.
Bottom Line
If mining rally holds up, in our opinion, investors can try investing in AZIA since the fund is new and offers lucrative valuation at the current level. Although the recent jobless claim data in the U.S. and the unanticipated "Zero Taper" will likely reverse investor attention again towards the stock market, the Fed's cut in GDP outlook implies that the picture is not as rosy as perceived by the most (read 3 ETF Winners from the 'No Taper' Shocker)
This sentiment may provide a boost to commodity outlook though, making natural resource picks interesting ones for the time being. Also, we expect AZIA to remain stable as long as China keeps staging a nice show, so this forgotten ETF might be worth a closer look by some investors who have a high risk tolerance.
Mongolia Passes Law on Investment Funds
October 3 /www.news.mn/ Parliament has discussed and passed the proposed draft laws on the Investment Fund, related amendments into the Entity and Organization Income Tax Law, laws on companies and the Stock Market Law and Innovation Law during Thursday's regular session meeting.
MP B.Garamgaibaatar introduced the summaries produced by the Standing Committee on Economy.
The Standing Committee meeting held the final discussion of the proposed draft laws summarizing the wording and principal changes as a result of a poll during the first discussion at the session meeting.
According to the Investment Fund law, two different Investment Funds are available: a Mutual Investment Fund and a Private Investment Fund.
The activity period of an Investment Fund should be up to 10 years no matter the type of Investment Fund.
Stock exchange news for October 7: Top 20 -0.48%, Turnover ₮32.2 Million
Ulaanbaatar, October 7 /MONTSAME/ At the Stock Exchange trades held Monday, a total of 66 thousand and 478 shares of 22 JSCs were traded costing MNT 32 million 237 thousand and 071.99.
Rates of shares of nine companies increased, of five decreased and share price of eight were stable.
The total market capitalization was set at MNT one trillion 412 billion 562 million 937 thousand and 527. The Index of Top-20 JSCs was 13,866.22, decreasing by 67.16 per cent against the previous day.
Stock Exchange Weekly Review: Top +3.8%, Turnover ₮166.4 Million
Ulaanbaatar, October 6 /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange on from September 30 to October 4, 2013.
In overall, 91 thousand and 558 shares were sold of 47 joint-stock companies totaling MNT 166 million 366 thousand and 135.01.
"BDSec" /16 thousand and 250 units/, "Genco tour bureau" 10 thousand and 160 units/ and "Silikat" /10 thousand units/ were the most actively traded in terms of trading volume, in terms of trading value--" BDSec" (MNT 47 million and 940 thousand), "Suu" (MNT 26 million 578 thousand and 640.00) and "Moninjbar" (MNT 14 million 666 thousand and 074.00).
MSE LISTED "ULAANBAATAR-BUK" JSC LAUNCHES THE FIRST CONCRETE SLEEPER FACTORY
October 1 (BDSec) Ulaanbaatar BUK JSC (MSE:BUK), a construction material producer, launches the first concrete sleeper factory in Mongolia. The factory will produce up to 350-500 thousand concrete sleeper annually. The factory is equipped with modern technology mostly bought from RMS LLC of England. The Company will produce 500 thousand concrete sleepers this winter to supply to Tavan Tolgoi - Gashuun Sukhait railroad project next Spring.
BDSec: Sharyn Gol expands operations into value-added products
October 1 (BDSec) Sharyn Gol (SHG:MO) is aggressively jumping into cleaner and more value-added products business to maximize potential revenue streams in coming years.
The Company announced yesterday that it has closed the previously announced tender offer for Naco Fuel (NKT:MO), with the acquisition of 11,723,989 shares, representing 92.9% of Naco. Transaction enables Sharyn Gol to expand its business into highly attractive market for coal bri quettes and to increase competitiveness in the Mongolian coal industry. Naco owns a coal enrichment and briquetting plant located in Darkhan, Mongolia. Sharyn Gol intends to return Naco's plant to operation in October 2013.
The air quality problems in Ulaanbaatar have raised the profile of the need for improved (smokeless) coal, and there is potential of at least 500 thou sand tonnes of such fuel market, with additional markets in the industrial cities of Darkhan and Erdenet, plus other industrial users. According to Na tional Statistical Office of Mongolia, 11 of 21 provinces of Mongolia do not meet air pollution standards. Naco's plant is ideally situated to enrich Sharyn Gol's coal into clean burning char and smokeless briquettes.
In 2011, the World Health Organization ranked Mongolia's capital Ulaan baatar (UB) the world's second most polluted city. Ger districts, who rely on coal-fired stoves for heating and cooking, are responsible for 90 percent of winter emissions in the city, according to the World Bank. The Mongolian government has intensified its efforts in improving air quality in UB since 2011, working together with international organizations and foreign donors.
Sharyn Gol is also bringing a wash plant for further expansion into value-added coal products. The purchase agreement of wash plant has already made and the Company started receiving shipments of the plant. The Company expects to complete the feasibility study soon and start pre-com mercial trials in November 2013, with full commercialization planned for in the first quarter of 2014.
There are dozens of industrial companies in Darkhan and Erdenet cities such as Erdenet Copper Mine, Darkhan Metallurgical Plant, Erel Cement who use coal products to create their products. Erdenet is the third largest city of Mongolia after "industrial city" Darkhan.
Coal washability test work, performed by Stewart Laboratory, indicated that a product with 6500 kcal/kg heat value, less than 10% ash and 0.5% sulphur (all air dried basis) can be produced with high plant yields. That means it can be improved to become equal with the Newcastle Benchmark, Australian thermal coal being exported to Asia.
Sharyn Gol's revenue doubled to MNT 9.3 bn in the first 6 months of the year from MNT 4.7 bn a year earlier. Gross profit increased 8 times to MNT 3.1 bn over the same period, whereas gross margin improved to 34% from 8%.
However, the Company reported net loss of MNT 1.4 bn for the six months ended June 30. We expect the Company to post positive earnings, because what matters for Mongolian thermal coal miners is that they post weaker number in the first half of the year than the second half due to more overbur den removal and less coal sales occur during the warm weather.
According to management, the Company may lower its production target for the year to around 800,000 tonnes from 900,000 tonnes. The reason is that some power plants that purchase Sharyn Gol's coal stopped making payments due to their financial problems and some customers had to do unplanned and unscheduled maintenance work, interrupting sales.
Sharyn Gol has mined and sold over half million tonnes of coal year to date, surpassing last year's sales of 477.6 thousand tonnes.
Sharyn Gol is a leading producer of high-grade thermal coal located in the northern Mongolia. It is a single asset company, owning 100% of the estab lished Sharyn Gol coal mine. A JORC report indicates 374 million tonnes of resource. The Company has been mining coal at Sharyn Gol for over 48 years, supplying domestic customers predominantly for power generation, but also for specialized uses, such as semi-coking end users. 65km long dedicated rail spur, which was built specifically to serve the mining opera tion, provides direct access to the Trans-Mongolian rail that connects China and Russia.
Frontier: Mongolian Investment Strategy, Sept. 2013
Frontier Securities -- After series of meetings with Government officials and business leaders in September in UB, we have confirmed that the economic activity in Mongolia is slowing down significantly in the latter half of the year. Also, we have newly forecasted the GDP of 2014 as 6% which is much lower than street consensus. Therefore, we have decided to lower our economic forecast for the latter half of this year to 5% (Mogi: seriously?). However, we have also confirmed that the investment climate in Mongolia will not deteriorate further. That is mainly because of the anticipation that more favorable policies should be taken by the Government in a near future .Also, the implied risk premium for major Mongolia related listed companies are too high for politically stable country like Mongolia and valuations are too low. Therefore, we are cautiously increasing risk weight of assets in Mongolia. However, we are not fully convinced of the friendly policies taken by the Government yet as the initiatives taken by the Government are still early stage. Therefore, we wish to see more positive signs before we will be more positive on Mongolia.
Buy full report in PDF format:
Mongolian Investment Strategy, Sept. 2013
World Bank Lowers Mongolia's 2013 GDP Growth Forecast to 12.5% from 13%
East Asia Pacific Economic Update, October 2013 - Rebuilding Policy Buffers, Reinvigorating Growth
Key Findings
· The economies of developing East Asia and Pacific are projected to grow at 7.1 percent in 2013, down from 7.5 percent last year.
· While the pace of growth is slowing, the region will still contribute 40 percent of global growth and one-third of global trade this year—higher than any other region in the world.
· In China, growth is moderating as the country rebalances to pursue a more sustainable growth path. In 2013, it is expected to meet the official indicative growth target of 7.5 percent.
· This is considerably lower than the 8.3 percent we projected earlier, primarily because the most recent expansion in credit has been less effective in generating growth.
· In the medium term, China's growth is expected to remain between 7.5 and 7.7 percent.
· Excluding China, growth in developing East Asia is expected to decline from 6.2 percent in 2012 to 5.2 percent in 2013, before rebounding to 5.3 percent in 2014 and 5.7 percent in 2015.
· Although high by global standards, domestic demand is also slowing, as large stimulus programs introduced in the post-global financial crisis period are being phased out.
· Global growth momentum accelerated during the second and third quarters of 2013.
· The second quarter of 2013 marked the first time in 30 months that the economies of the Euro area, Japan, and the US all posted positive growth.
· Net export has hardly contributed to growth in recent years, but the most recent data suggest a recovery in trade is in the making and open economies such as those in East Asia stand to benefit.
· Capital flows to developing countries rose strongly in September, partially reversing a decline between June and August.
· Commodity prices have been softening over the last year, in particular prices of metals ore, palm oil, rubber and non-oil energy, which affect export performance countries in the region.
· Rice prices have fallen 13 percent since May and are now at their lowest level since September 2010. Together with a drop in maize prices, important for feedstock, this could reduce food price inflation in the region.
· Immediate risks include:
o the uncertainty surrounding the fiscal deadlock in the US
o the impact of the withdrawal of monetary stimulus from advanced economies
o an abrupt slowdown of investment in China.
· The Federal Reserve's decision to delay tapering of quantitative easing stabilized markets for now, giving countries some reprieve and a second chance to take measures to lower risks from future volatility, including a reduction of reliance on short term and foreign exchange denominated debt and continued flexibility in the exchange rate.
· Tapering in the US could in part be offset by the planned monetary expansion in Japan. Japan's Abenomics includes a doubling of the money supply by the end of 2014, which would translate into some $55 billion per month in asset purchases by the Bank of Japan—almost as large as the US' $80 billion—and the regional impact could be considerable.
· In the long term, as higher global interest rates are likely to affect investment, accelerating growth and poverty reduction depends critically on structural reforms.
· China appears to be on the cusp of major reforms—including changes in the way they manage urbanization, the household registration system and financial sector. Such reforms would help China rebalancing of its economy, increase the efficiency of investment and maintain a relatively high growth rate.
· Countries need to improve their investment climate and invest more in infrastructure, while making public investment more efficient.
· They also need to address fiscal risks and create space to support long-term growth, with measures including reducing energy subsidies.
BoM Official FX Rates: October 7 Close
10/7 | 10/4 | |
USD | 1,663.88 | 1,659.12 |
EUR | 2,259.47 | 2,259.56 |
CNY | 271.81 | 271.03 |
GBP | 2,670.36 | 2,675.99 |
RUB | 51.56 | 51.64 |
DRAFT LAW ON 2014 BUDGET SUBMITTED TO PARLIAMENT
Ulaanbaatar, October 2 /MONTSAME/ On Tuesday, the Finance Minister Ch.Ulaan submitted to the Speaker of parliament draft laws on the 2014 budget, on budgets of social insurance fund and the Human Development Fund (HDF).
The bill on the budget reflects sizes of revenue and expenditure of the budget for the next year, the bodies that will accumulate the revenues, financial support for local budgets, income to be placed in local development funds, relations of authorized general managers of budgets to exploit the budget money, sources of recovering a budget deficit, and other matters.
In addition, the draft aims to form a system of protection for the vulnerable group against a deep poverty, to reduce an unemployment and poverty rates through a good allocation of salaries, pensions and allowance, to improve the social welfare, to ensure the income equality through a tax policy, to abolish a duplication of some kinds of allowances, and to decline the financing of some programmes and measures in order to spend the capital wisely.
The draft law on budget for the HDF states that cash allowance will be given to 1-18 year-old children. Moreover, the commission for them will be financed from the HDF in accordance with the other laws on civil health insurance, on financing of higher education and on social guarantee for students.
By the law on social insurance for 2014, a financial source will be formed for the cabinet to implement its functional works, and money will be placed in the budget of social insurance fund.
2013 budget amendment to be introduced to parliament according to a cabinet irregular meeting held on October 7
Төсөвт тодотгол хийх хуулийн төслийг УИХ-д өргөн мэдүүлэхээр тогтлоо
(Mongolia Cabinet to Submit 2013 Budget Amendment, Cutting Expenditure by ₮230 Billion)
Засгийн газрын ээлжит бус хуралдаан 2013 оны 10 дугаар сарын 7-ны өдөр боллоо. Ээлжит бус хуралдаанаар Монгол Улсын 2013 оны төсвийн тухай хуульд өөрчлөлт оруулах тухай хуулийн төслийг эцэслэн хэлэлцээд холбогдох хуулиудын төслийн хамт УИХ-д өргөн мэдүүлэхээр тогтлоо. Энэ оны төсвийн алдагдлыг дотоодын нийт бүтээгдэхүүний 2 хувьд барих зохицуулалтын саналыг Засгийн газраас УИХ-д өргөн барьж байгаа юм.
Төсвийн бүх шатны байгууллагын тэвчиж болох урсгал зардлыг энэ оны 9-12 дугаар сард бууруулан 240 шахам тэрбум төгрөг хэмнэх, үүний тулд санхүүжүүлэх арга хэмжээг ач холбогдлоор нь эрэмбэлж зардлын зүйл хооронд зохицуулалт хийх эрхийг төсвийн ерөнхийлөн захирагч нарт олгохоор төсвийн тодотголд тусгажээ. Түүнчлэн, ажил гүйцэтгэх гэрээ байгуулагдаагүй, дэд бүтцийн болон газрын асуудал нь эцэслэн шийдэгдээгүй байгаа 490 гаруй тэрбум төгрөгийн хөрөнгө оруулалтын төсөл, арга хэмжээг дараа жил хэрэгжүүлэхээр хойшлуулах санал оруулж байна.
Товчхон:
- Гэмт хэргийн тухай хуулийн төсөлд Засгийн газраас өгөх санал, дүгнэлтийг хэлэлцээд УИХ-д өргөн мэдүүлэхээр тогтлоо.
- Гадаад харилцааны сайд Л.Болдын ОХУ-д хийх ажлын айлчлалын үеэр баримтлах удирдламжийг баталлаа. ГХ-ны сайд энэ сарын 18-20-ны өдрүүдэд хойд хөршид айлчлах үеэрээ хоёр орны хамтарсан томоохон төслүүдийн талаар хэлэлцээ хийхээс гадна Москва хотноо болох Дэлхийн эдийн засгийн чуулга уулзалтад оролцох юм.
- БНХАУ-ын Засгийн газраас Монгол Улсын Засгийн газарт олгох 500 сая ам.долларын экспортын зээлийг ашиглах тухай Зээлийн ерөнхий хэлэлцээрийн хүчинтэй байх хугацаа дууссан байна. Иймд дахин хоёр жилээр сунгахаар гэрээнд нэмэлт, өөрчлөлт оруулах асуудлыг УИХ-ын холбогдох байнгын хороодтой зөвшилцөхөөр тогтлоо.
- БНХАУ-ын Засгийн газрын буцалтгүй тусламжийн 10 сая юанийн хөрөнгөөр хөдөө орон нутгийн хөгжлийг дэмжсэн жижиг, дунд үйлдвэрлэлийн загвар төсөл хэрэгжүүлэх нь зүйтэй гэж үзлээ гэж Засгийн газрын Хэвлэл мэдээлэл, олон нийттэй харилцах албанаас мэдээллээ.
Total outstanding 1-week bills reach a record ₮1.87 trillion
BoM issues 1-week bills
October 7 (Bank of Mongolia) BoM issues 1 week bills worth MNT 245 billion at a weighted interest rate of 10.5 percent per annum /For previous auctions click here/
BoM issues 1-week bills
Ulaanbaatar, October 4 /MONTSAME/ The Bank of Mongolia (BoM) issued Friday 1 week bills worth MNT 817.8 billion at a weighted interest rate of 10.5 percent per annum, thus the balance of 1 week bills reached MNT 1840.5 billion by October 4.
BoM holds FX auction
October 3 (Bank of Mongolia) On the Foreign Exchange Auction held on October 3rd, 2013 the BOM has received bid offer of USD and CNY from local commercial banks. BOM has sold 3.7 million USD and 67 million CNY to the local commercial banks.
On October 3rd, 2013, The BOM has received bid offer of USD for Swap agreement from local commercial banks and sold 151.0 million USD.
BoM holds FX auction
October 1 (Bank of Mongolia) On the Foreign Exchange Auction held on October 1st, 2013 the BOM has received bid offer of USD and CNY from local commercial banks. BOM has sold 15.8 million USD and 64 million CNY to the local commercial banks.
On October 1st, 2013, The BOM has received bid offer of USD for Swap agreement from local commercial banks and sold 35.5 million USD.
RESULT OF GOVERNMENT SECURITIES AUCTION
October 2 (Bank of Mongolia) Regular auction for 52 weeks maturity Government Treasury bill was announced at face value of 10 billion MNT and each unit was worth 1 million MNT. Face value of 10 billion /out of 15.0 billion bid/ Government Treasury bill was sold to the banks at discounted price and with weighted average yield of 9.22%.
Mogi: long-ish term MNT bonds must be a good way to get rid of some of the excess MNT in the market, evidenced by historical high amount of outstanding 1-week bills
RESULT OF GOVERNMENT SECURITIES AUCTION
October 1 (Bank of Mongolia) Auction for 3 years maturity Government Bond was announced at face value of 140 billion MNT and each unit was worth 1 million MNT. Face value of 140 billion /out of 483.25 billion bid/ Government Treasury bill was sold to the banks at premium price and with weighted average yield of 10.41%.
"Having the early mover advantage when entering frontier markets can make a difference"
Venkatesh Somanathan, director of regional trade finance product management at Deutsche Bank, discusses overcoming hurdles faced in frontier markets such as Mongolia and Myanmar.
October 1 (The Asian Banker) While frontier markets remain very much a hot topic among bankers, whether they can derive ample benefits out of risks prevailing in such markets is another issue. Currently, top frontier countries in Asia comprise Cambodia, Mongolia, Myanmar and Vietnam.
However, just like any other issue, frontier markets are a question of definition. A bank which has not penetrated Myanmar might label it a frontier market; a bank which already has presence there might label it an emerging market instead.
Drivers to penetrating emerging countries are aplenty and they include rapid GDP growth and the low correlation with developed markets. Such frontier markets house specific industries, for example, commodities in Mongolia and oil and gas in Myanmar. Because of the unique landscape of these markets, specific products are needed, such as structured trade finance. Vast economic opportunities exist; the same can be said about inherent hurdles and challenges.
For instance, Myanmar's banking system is still at its infancy, with Central Bank of Myanmar only recently launching a nationwide automated teller machine (ATM) network. An international banking network is completely absent in that market. For global banks like Deutsche Bank to enter the domestic market will be similar to putting the cart before the horse.
"The challenge is to clearly identify the market needs and requirements [in Myanmar] in the banking sector for cross-border trade activities. Having the early mover advantage when entering frontier markets like Myanmar can make a difference, so we want to start making use of the opportunity there," said Venkatesh Somanathan, director of regional trade finance product management at Deutsche Bank.
To effectively penetrate into these frontier markets, banks will need close collaboration between domestic state authorities and regulators. On a bilateral basis, banks should provide a global view of the banking industry to these authorities in exchange.
Unlike developed markets, where banks go in with a wide banking spectrum, offering a complete suite of market products from foreign exchange solutions to trade finance custody, frontier markets such as Mongolia and Myanmar have niche areas that banks have to identify and focus on until they become established enough to introduce a different range of products.
Depending on a particular market, the specific needs differ. For example, Mongolia has great connectivity with China with most transactions often settled in the renminbi. Therefore it makes business sense for banks interested in penetrating the country to establish a renminbi franchise.
"I think our strength lies in our ability to efficiently bundle our solutions together. We have to identify the needs in Mongolia, intermediate the existing risks between the commodity players exporting to other parts of Asia, and provide adequate solutions for this market, such as competitive financing," said Somanathan. "We have already developed the capabilities to help our clients who trade or do business with these frontier markets by being able to handle their letters of credit, guarantees and payment requirements into and from these markets."
To succeed in frontier markets, banks need a different mind-set from that of entering another market such as Indonesia. While challenges such as lack of regulations and substandard banking systems are bound to arise, they can be overcome by working closely with relevant authorities and understanding the specific differences of each frontier market.
Mongolia Sets Same Rules for Foreign Private Investors With Law
By Michael Kohn
October 3 (Bloomberg) Mongolia's parliament approved a law on investment that ends the application of different rules for domestic and foreign private investors and sets stable tax periods, overturning two earlier laws.
The Great Hural voted to pass the new Investment Law today, with immediate effect. It voids the Strategic Entities Foreign Investment Law, or SEFIL, passed in 2012.
The new law may help boost investor confidence as protracted conflicts with key foreign investors in Mongolia, including Rio Tinto Group (RIO), deters investments. Foreign direct investment plunged 47 percent in the first eight months.
It's "the most significant step forward for foreign investment into Mongolia in nearly five years," Chris MacDougall, managing director of Mongolian Investment Banking Group LLC, said by e-mail. "Tax stabilization measures and provisions that will help to prevent future changes to the legislation should provide investors with the confidence that they need to return to the market."
The new law sets stable tax periods based on the investment amount and the location within the country and will set tax rates for between five to 15 years. It makes no distinction between domestic and foreign private investors, eliminating earlier rules that were perceived as discriminatory against foreigners, and replaces laws passed in 1995 and 2012.
Rules would apply based on the day a contract is signed and not be subject to the changing legal environment during the lifetime of the deal.
Investor Concern
"The main concern among investors is that every four years the new government treats foreign investors differently," Ochirbat Chuluunbat, Mongolia's deputy minister for economic development, said in an interview in Ulaanbaatar yesterday before the law was passed. It means the "treatment of all investments will be done equally and there will be no need for the government to negotiate over every investment in Mongolia," he said.
Under the new law, any foreign-government owned entity that operates in the strategic sectors of mining, banking or communication, and wants to hold more than 33 percent of a company, will still need government permission, unchanged from the SEFIL law.
Foreign state-owned companies seeking a stake of more than 50 percent will still need government approval. A similar provision existed in the 2012 law, which blocked a bid by Aluminum Corp. of China Ltd. from acquiring coal miner SouthGobi Resources Ltd. (SGQ)
Mongolia eases restrictions on foreign investors
* New law aims to revive foreign investment
* Analysts say is step in right direction, but more to be done
* Mongolia's growth closely tied to its vast copper, coal resources
By Terrence Edwards
ULAN BATOR, Oct 4 (Reuters) - Mongolia has passed a law aimed at reviving foreign investment by easing restrictions on investors in key sectors such as mining and by providing greater certainty on the taxes they must pay.
The new regulations take effect on Nov 1 and replace two previous laws, including one that imposed restrictions on foreign investments in strategic sectors after state-owned Aluminum Corp of China (Chalco) made a bid to take control of Mongolia-focused coal miner SouthGobi Resources in 2012.
Investors and analysts said the new law was a step in the right direction following more than a year of uncertainty over investment rules, which many blamed for a slump of 43 percent in overseas investment in the first half of 2013, on an annual basis.
Economic growth in the sparsely populated and landlocked country is heavily tied to its vast copper and coal resources, and reinvigorating foreign investment has been a top priority for its government.
"Without a doubt, it is a very positive development," said Sam Spring, chief executive of Mongolia explorer Kincora Copper .
Under the new law, which had been on the cards for a few months, private companies will no longer need government approval to invest in the so-called strategic areas of mining, telecommunications and banking. Although firms that are at least 50 percent state-owned will still need the go-ahead from a new agency.
The law also gives investors five to 22 years of "stability" on value added tax, corporate income tax, mining royalties and customs duties. That means they will pay tax rates that apply when an investment is made for those periods.
The new investment law protects investors from expropriation, allows profits to be taken out of the country, and reaffirms the right to arbitration, Sereeter Javkhlanbaatar, head of foreign investment regulation and registration in the economic development ministry told Reuters.
While the new investment law marks a step forward, Independent Mongolian Metals & Mining Research analyst Dale Choi said three key issues - the fate of an underground expansion at Rio Tinto's Oyu Tolgoi copper mine, uncertainty over 106 mining licences, and revisions to a rivers and forests law - still need to be resolved to restore foreign investor confidence.
Centerra Gold needs revisions to the rivers and forests law in order to go ahead with its Gatsuurt project, which has been on hold since 2010.
Kincora Copper is among an estimated 11 foreign companies and 67 Mongolia groups affected by uncertainty over the status of mining licences.
Mongolia passes new investment law to attract foreign investment – Xinhua, October 3
Mongolia Eases Restrictions, Makes Investors Like Chalco Happy – Metal Miner, October 4, 2013 (Mogi: Chalco? Foreign SOE-s still need approvals)
MIBG: New Investment Law Passed – Mongolia is Open For Business
October 4 (Emerging Frontiers) Mongolia has finally answered the call of its suffocating capital markets. On Thursday October 3rd the Mongolian Parliament passed a new Investment Law that has effectively leveled the playing field for foreign and domestic investors. This is the first in a series of new laws that are aimed at attracting foreign investment back into the country.
Following the biggest cycle of economic growth in the nation's history, Mongolia quickly fell out of favor at the halfway point of 2011. This was initiated by an emergence of nationalist sentiment in the run up to the 2012 Parliamentary elections and was compounded by damaging reports that seemed to escape the country on a bi-weekly basis. The result was an unpredictable legislative environment, increased political risk and an extremely challenging business environment for both Mongolians and foreigners alike. The months that followed saw the Mongolian Government block a take-over bid by a Chinese SOE, the passing of a highly controversial foreign investment law and the introduction of a draft minerals law that was steeped in national protections.
Investors responded with resounding discontent. In the first half of 2013 the economy experienced a 42% drop in foreign direct investment, a 23% depreciation of the Mongolian Tugrik against the US dollar and a short fall of 1.5 trillion Tugriks against the planned budget for the year. Often characterized as the darling of frontier markets the past two years have proven difficult for a nation in transition. With panic setting in, the country's lawmakers have finally taken note and have started making the necessary legislative changes to reverse the situation.
This most recent development, the passing of the new Investment Law is by far the most significant step forward for foreign investment into Mongolia in nearly five years. It represents a change in both practice and principal as the Government of Mongolia shifts its tone towards foreign capital. The most senior politicians from varying parties can now be seen breathing life into the nations newest motto: "Mongolia is open for business."
Obviously, legislation on its own will not be enough to entice foreign investment back into the country. However, the inclusion of tax stabilization measures and provisions to prevent changes to the new legislation should provide the extra security that investors need to start exploring their options. Further reforms across the capital markets and the mining sector will only continue to strengthen the nations legislative environment. Needless to say, with the long-term fundamentals remaining extremely positive Mongolia could be preparing for an economic boom that is reminiscent of 2009.
Chris MacDougall is a Managing Director at Mongolian Investment Banking Group LLC. Follow his updates on Mongolia on Twitter.
Mongolia at Investment 'Turning Point,' Cabinet Secretary Says
By Michael Kohn
October 6 (Bloomberg) Mongolia aims to show its relationship with foreign investors has reached a "turning point" by progressing on development of two of the country's largest mines, Cabinet Secretary Saikhanbileg Chimed said.
The nation needs to follow last week's passage of a law ending different treatment of foreign and local companies with "a good chain of events," Saikhanbileg said in an Oct. 3 interview in Ulaanbaatar. Progress on funding the second phase of the Oyu Tolgoi mine being developed with Rio Tinto Group Plc (RIO) and preparations to list the state-owned Erdenes Tavan Tolgoi mine are among steps that would bolster confidence, he said.
"When we make a final decision, there should not be any political interference," said Saikhanbileg, 44, a graduate of George Washington University's School of Law. "When we make the initial talks of course maybe the politics comes up but the final approach in terms of policy should be a normal business practice. A practical decision should be followed."
Following record economic growth of 17.5 percent in 2011, Mongolia's mineral resource boom has slowed during a year-long election cycle that raised the level of resource nationalism, taking a toll on investor confidence. Worries over the economy peaked in August when failure to agree on terms of a $5.1 billion expansion of Oyu Tolgoi led to 1,700 worker layoffs.
By September, Mongolia's currency, the tugrik, lost one-fifth of its value and foreign investment plunged 47 percent year-on-year.
Number One Priority
Saikhanbileg, who by the age of 29 was already Mongolia's Science and Education Minister, said resolving the Oyu Tolgoi financing package is his government's "number one priority," adding that he's hopeful a solution will be made by the company's directors, rather than politicians.
The Oyu Tolgoi dispute centers on approval of a $4 billion financing package that will allow the company to develop the underground portion, where 80 percent of the mine's wealth lies. The Mongolian government and Rio are still negotiating over 15 points of dispute that include an audit on cost overruns during the first phase.
"Oyu Tolgoi needs to be resolved purely on business decisions, not political ones," said Saikhanbileg, speaking in his office where photographs of him and other world leaders and business people cover one wall. Germany's Chancellor Angela Merkel, whom he called an 'Iron Lady', was one of the world leaders he was most honored to meet.
Saikhanbileg said it was "high time" to resolve other delayed mining projects, including the expansion of the Erdenes Tavan Tolgoi coal mine.
Increasing Value
Part of his 'good chain of events' is preparation for an initial public offering of state-owned Erdenes TT, which requires substantial infrastructure, including a power plant, coal-washing facilities and a railway to China.
"We need to increase the value of the company," said Saikhanbileg, whose life outside politics includes watching Denver Broncos football and heading Mongolia's power-lifting federation. Once the company is better placed to turn a profit, an IPO could ensue "within two or three years," he said.
Another goal of his cabinet is to improve the clarity of the government's message, Saikhanbileg said, indicating an awareness of the bad press Mongolia has been subjected to over the past year and a half.
"We have a missing link in expressing the government position to the rest of the world," said Saikhanbileg, adding that the government plans a promotional team that can travel outside the country to explain its actions.
"We are going to set up this kind of channel, so everyone can get info about Mongolia," he said. "The new agency called Invest Mongolia will do this."
Details of the new Investment Law
October 3 (news.mn) Parliament passed the Investment law during Thursday`s session meeting with 83 percent approval.
The newly approved law has made various amendments and changes to a groups of laws. These include the cancelation of the Foreign Investment Law, the Law on the Regulation of Foreign Investment in business entities operating in sectors of strategic importance. Further amendment were made to the State Registration of Legal Entities, the General Law of Taxation, the Entity and Organization Income Tax Law, Value-added Tax Law, the Law on Customs Tariffs and Taxes, the Mineral Law, the Special Permission for Legal Entities, the Petroleum Law, the Law on Concessions and draft laws relating to compliance regulations with the Investment Law.
According to the Investment Law, if the investment proposal is made above 15 billion MNT, four types of project tax impositions will be stabilized.
However the investment amount and period will depend on regional factors.
For instance, a 300-500 billion MNT investment proposal to build a factory in Ulaanbaatar or nearby region will mean the investor will receive an up to 10 years tax stabilization certificate.
If this amount of investment is made in the western region, a 13 year tax stabilization certificate will be given.
The regions will be divided into Ulaanbaatar, Central, Khangai and eastern and western regions in the Investment Law regional charter.
Investment amount (MNT billion) | Stabilization period (years) | Investment period (years) | ||||
UIaanbaatar region | Central region (Dornogovi, Dundgovi, Umnugovi, Selenge,Tuv, Darkhan-Uul, Govi-Sumber) | Khangai region (Arkhangai, Bayankhongor, Bulgan, Uvurkhangai, Khuvsgul, Orkhon) | Eastern region (Dornod, Sukhbaatar, Khentii) | Western region (Bayan-Ulgii, Govi-Altaim Zavkhan, Uvs, Khovd) | | |
10-30 | 5-15 | 4-12 | 3-10 | 2-8 | 5 | 2 |
30-100 | 15-50 | 12-40 | 10-30 | 8-25 | 8 | 3 |
100-200 | 50-100 | 40-80 | 30-60 | 25-50 | 10 | 4 |
200< | 100 < | 80 < | 60 < | 50< | 15 | 5 |
Mongolia passes mining-friendly law, but 106 licences remain in limbo
October 7 (MINING.com) Mongolia on Monday passed a new law aimed at attracting fresh capital to the mining sector.
The Asian nation which is dependent on the mining sector to fuel growth is desperate to turn around the slump in its economy and the steep fall-off in foreign investment.
Foreign direct investment in the country dropped by 47% during 2013, the value of the currency, the tugrik, is down 20% this year and the Mongolian central bank is burning through foreign reserves as foreign debts balloon to 55% of GDP.
Changes to the 2012 Strategic Entities Foreign Investment Law (SEFIL) approved by the country's cabinet over the weekend should go some way to improve the situation.
The new law which provides more certainty surrounding mining taxes and royalties and scraps the distinction between private foreign and domestic investors, but keeps certain restriction on state-owned companies wanting to invest in the country, was called a "turning point" by Mongolia's cabinet secretary.
But skepticism of better relations between the government of Mongolia and foreign investors, particularly in the mining sector which accounts for more than 20% of GDP today, but has the potential to contribute a much greater proportion, remain.
The number one issue that needs to be resolved according to all players in the sector is the stalled underground development of Oyu Tolgoi. The copper-gold mine which could have final bill of as much as $14 billion is 34% owned by the Mongolian government with Rio Tinto-controlled Turquoise Hill (TSE:TRQ) owning the rest.
Talks over Oyu Tolgoi, which have dragged on for most of the year, are centred on costs with Rio's management fees proving a particular sticking point.
The mine, which shipped its first copper in July, is set to contribute as much as a third of the nation's economy if the second phase underground expansion where 80% of the project's value lies were to go ahead.
A positive outcome on Oyu Tolgoi, where some 2,000 workers have been let go due to the delays, would do much to restore the confidence of investors, many of whom have burned fingers in the country before.
Mongolia in February suspended Entrée Gold's (TSX:ETG) mining permits in an area adjacent to the Oyu Tolgoi. Talks continue between the Vancouver-based explorer and the government of Mongolia which could be handed stake in Entrée in exchange for a lifting the suspension.
Last year China's state-owned Aluminum Corp's bid for coal producer SouthGobi Resources (TSX:SGQ)(HKSE:1878) was blocked by Mongolian authorities sending shares of the Turquoise Hill-owned company into a tailspin it has not yet recovered from.
Mongolia is nevertheless relaunching talks with international miners on developing the other blockbuster mining asset of the nation of fewer than three million people.
State-owned Erdenes Tavan Tolgoi coal-mining company controls the main block of 6.4 billion tonne Tavan Tolgoi deposit, the world's largest deposit of high-quality coking coal, but the western Tsankhi section which is being offered to foreigners on its own holds some 1.2 billion tonnes.
Mongolia struck a deal with US giant Peabody Energy, China's Shenhua and a Russian-Mongolian consortium in July 2011, only to cancel the whole process two months later. The much-vaunted multi-billion dollar IPO of Tavan Tolgoi which was first mooted more than five years ago also remains on ice.
Outside these multi-billion dollar mega-projects, foreign miners keen to operate in the country are facing even more daunting tasks.
A moratorium on new exploration licences have been in place since April 2010, but more worrisome is the fact that since January this year 106 existing license holders have had no legal recourse or rights to undertake exploration on their existing licenses due to a criminal court case involving corruption relating to former senior government employees in the Mineral Resource Authority of Mongolia (MRAM).
For only 31 of the 106 impacted licenses about $19m had already been been spent and a further $36m planned. The 106 licenses cover a landmass approximately six times larger in surface area than active mining licenses in Mongolia according to a new report by Independent Mongolian Metals & Mining Research.
The Ulaanbaatar-based research company headed by Dale Choi outlines how the 106 licences holders have essentially become collateral damage in the matter:
"The criminal court case is acting in an administrative court matter, outside of its jurisdiction, and it is proposed that existing licenses holders are to have no preferential right nor compensation mechanism for previous acquisition, legal, exploration and other associated costs despite the standing of these licenses being annually confirmed by MRAM via the acceptance of license fees, approving and re-issuance of licenses.
"During the review and trial of the criminal case related to the above persons, the 106 license holders were not determined as a victim and civil claimant. We are not aware of any specific case-by‐case investigation into the 106 mineral licenses. License holders have not been interrogated and had no legal rights or course of recourse to date. There has been no accusation at any stage that the license holders have undertaken any wrongdoing."
Another company that fell foul of Mongolia's bureaucracy and politics, uranium explorer Khan Resources, is currently seeking $200 million of damages from the government of Mongolia due to the illegal expropriation of its permits with a trial by the International Arbitration Tribunal scheduled to start November 11.
Centerra Gold's Gatsuurt project has also been awaiting approval for years as Mongolia reworks its environmental regulations regarding rivers and streams. The Canadian company completed a 55 kilometre railway connecting Gatsuurt, boasting reserves of 1.5 million gold ounces, to its producing Boroo mine as long ago as 2010, but the project is now essentially on care and maintenance.
Back in the saddle: Mongolia gives a little in investment tug-of-war
October 7 (Business Standard) Resource-rich countries can get away with bad behaviour, but only in small doses. Mongolia is finding the balance. The nomad state came close to tarnishing its reputation with its choppy treatment of miner Rio Tinto. A new law that offers equal treatment for foreign and local companies is a shift back in the right direction.
Rio cried foul after its 2009 agreement to develop Oyu Tolgoi, Mongolia's prize copper mine, became a political plaything. Newly elected officials criticised the project's fees and cost overruns, and have tried to hold up a $4 billion financing package. The resulting stalemate has been an economic drag.
Foreign investment in Mongolia, to which Rio is a major contributor, fell to $1.8 billion from January to August, half the amount in the same period a year earlier, according to Moody's. The new law suggests Mongolia's nationalist tendencies are easing. Foreign companies will be able to invest in formerly protected sectors without government approval. Most importantly, investors can seek "stabilisation" certificates that lock in their tax rates for a number of years. Though state-owned companies will still need approval to invest, Mongolia comes out looking more open than its neighbour China.
That doesn't benefit Rio directly, but may pave the way for a graceful compromise. One sticking point has been that Rio's fee, struck with the old government, is calculated as a percentage of investment, which hurts Mongolia when project costs go up. Switching to a share of revenues in return for steady future taxes and a promise by politicians to stop meddling could appeal to both sides. Mongolia would avoid looking too generous, while Rio would get access to high-quality copper without seeming a pushover.
Most importantly, Mongolia has probably not done any lasting damage. Yields on its US dollar bonds have increased by over two percentage points since they were issued last November, but have kept pace with comparable issuers like Slovenia, Zambia and Rwanda. When countries offer growth and scarce assets, and investors crave super-normal returns, it takes a lot to ruin a reputation.
De Facto: Policy deficit
By Jargalsaikhan Dambadarjaa
October 3 (UB Post) When it comes to economy, Mongolians act as if we are driving a car by looking at the speedometer only. It appears that speed is the only aspect that matters, rather than cost or the direction the car is going.
Our country is experiencing a deficit in efficient economic policy. The core of any policy is the principles that it is based upon. However, there is no such core in Mongolia's economic policy, which explains the lack of implementation of numerous laws that have been passed. Furthermore, repealing or amending a law within less than a year since its enactment, is regarded as normal now.
Our economic policy is based on government formation rather than specific principles. It can be seen from the fact that every newly formed government in Mongolia has inheritance issues, and replaces the entire staff with people from their own political parties. This situation favors those in the government only and doesn't benefit the private sector or citizens.
Therefore, the greed of politicians taking over governing power, reallocating capital created by others and stealing from public property is not to be unexpected.
Efficient economic infrastructure that can provide qualified public service is essential to nurturing economic growth as well as improving economic competitiveness. Government involvement is only needed when public services such as transportation, electric power, heat, safety, drinking water and sewage cannot be delivered by the private sector through market competition. Having the private sector provide public services is the most efficient option for the long term. In any case, the customer's interests must be the top priority when any government regulation is made.
Messy government regulations
The previous government established the National Innovation and Development Committee by claiming that a single organization that regulates the operations of every ministry, similar to what the former Planning Committee did, was needed for further development. However, in spite of ministry opposition to establishing such a committee, the reformist government expanded the National Innovation and Development Committee and turned it into the Ministry of Economic Development. The newly established ministry set out the following as their mission on their website: "To improve the living standards of people in a sustainable manner by devising and implementing efficient short-, mid-, and long-term economic policies".
Nevertheless, within a period of one year, government involvement in the economy has increased considerably and free market competition has been reduced. Currently, the government is attempting to set apartment prices by acquiring foreign loans. It begs the question: Is their policy as efficient as they claim?
The government does not carry out duties that private sector is incapable of accomplishing. Each time the Mongolian government gets involved, our economy suffers from various negative consequences such as debt pressure and corruption. On top of that, government involvement reduces labor productivity. A very clear example is the current affairs surrounding the Tavan Tolgoi coal deposit. Energy Resources LLC, a private company, erected apartment blocks, schools and kindergartens in Tsogttsetsii soum. They also completed major construction works, including paved road to the Chinese border, a coal washing plant and a power plant. On the contrary, looking at what the state-owned company that also operates in Tavan Tolgoi has accomplished, will demonstrate that it has caused a complete disaster. The government had its own company caught in debt, replaced their CEO, and is now having the former CEO investigated for corruption.
Our government hindered a private company from building a railroad to the southern border at its own expense and is now building the railroad themselves funded by a loan they acquired by increasing public debt. Only in the last few days has the Mongolian People's Party, which has been in political power throughout the years, seemed to have realized that the government should not be meddling with the mining sector.
Another place where there is an apparent deficit of efficient policy from the government, is our communications sector. The government is adding Telecom Mongolia, a state-owned company, to the pool of four private companies that provide mobile network services, and is allowing the state-owned company to have an advantage over the others. The whole meaning of market competition is lost when the government changes its role from a referee to a player. The government has recently signed a Memorandum of Cooperation with South Korea's KT Company, which owns 40 percent of Telecom Mongolia's shares, to grant them the right to introduce modern 4G LTE wireless communication technology to Mongolia.
Basically, our government has stifled the countrywide networks built by existing mobile network operators (namely G-Mobile, Skytel, Unitel and Mobicom) just to have their own state-owned company do the job. Is this really an efficient policy? Furthermore, the government has sent a "friendly reminder" to Mobicom to discard their right to cooperate with Rostelecom. It could be interpreted as a case of political racketeering.
Decisions replacing investment in the private sector with invest in the government devalues long-term investments and creates barriers for private companies to pay off their debt. In other words, the government is discriminating against the private sector rather than showing it support. They are repeatedly putting deficit-ridden, state-owned companies on life support and injecting equipment and technology to them at expensive rates. Though the government is fully aware of the fact that what they are doing is not right, they choose to turn a blind eye.
Principles of regulation
The parliament has been discussing domestic and foreign investment laws and the "long-named" law these days. There has been a proposal to establish policy to be pursued in these areas before discussing the relevant laws. Mind you, this is actually the right step. When devising policy for government regulation, the first thing to be done is set core examples that will not be changed in any future scenarios. This way, there won't be any need to make constant amendments to the principle policy.
If the government is to be involved in economy, the most important thing is to focus on improving the competitiveness of the private sector and prioritizing the interests of customers. The time is here for us to remove existent and potential conflicts of interest through the immediate privatization of state-owned companies. Waiting forever to increase the value of state-owned companies for privatization will end up leaving private companies with nothing.
Let us have an independent, professional legal entity carry out government regulations and introduce a principle where its reports are regularly produced and made available to the public. Economic regulations must have an apparent goal to be achieved by taking specific steps. Also, the effectiveness of regulations has to be measured by their outcome rather than what has been done. Such regulations should have predictable results and long-term investors ought to be able to receive benefits from them.
If our economic policy had been based upon specific principles rather than government formation, Mongolia's economy would have already developed. However, it is good to see that our political parties are starting to look into it. As they say, it's better late than never.
The Weak Power of Factional Politics
October 6 (The Mongolist) There is growing speculation that it is only a matter of time before the Democratic Party (DP) calls for Prime Minister Altankhuyag's ouster. It is a reasonable prediction given the many missteps of the current government over the last year and the dire economic consequences its policies have produced, but I am not completely convinced it is the most probable outcome for the PM. The current government is a factious coalition that would have to be replaced with another factious coalition, and the million dollar question is whether another faction leader within the DP has the ability to cobble a ruling coalition together without the support of the PM's own faction the "Altangadas." Moreover, any rival for the Prime Minister-ship would have to contend with the fact that even if he could get all the DP members on board with his leadership, he still would fall short of the 39 seat threshold to form a government. It would be more than just a challenge of getting party votes. It would also be a challenge of inter-party coalition building.
Most of us are happy to maintain a basic view of Mongolian party politics. It's enough to know that there is a party called the "Democrats," a party that used to be the "old Communists", and a smattering of independents and small party politicians. The thing about the parties, though, is that they are becoming annoyingly resistant to simple generalizations. This is especially true under the current government. Beyond the fact that it is a coalition government between the majority DP and a minority coalition comprising the MPRP, which is a splinter group from the "old Communists" (now MPP), and several independent and small party parliamentarians, the DP itself is a highly factious party.
The reason one is inclined to take the generalized view of the parties is that it feels like that should offer a quick and dirty way to understand the ebb and flow of politics in the country. One party is pro-business. The other is pro-environment. Yet another is big on national welfare programs. However, these sorts of generalized views along party dimensions are becoming less meaningful with each passing day given that there seems to be very little party discipline among the DP and even among the opposition MPP in their respective ideological and policy domains.
As a comparative example, something similar is occurring with the current US government shutdown. In the US we see a highly factious Republican Party forced to use politically disastrous tactics in pursuit of an arguably unwinnable strategy. There are many reasons being thrown around by pundits to explain what is going on, but at a fundamental level the situation shows an extreme faction within the party, namely the Tea Party, taking advantage of a decline in party discipline.1 Instead of the party representing a compromise of varying but close ideological and policy preferences that provides its members the benefit of being stronger than the sum of their individual parts, the mismatch of party loyalty with weak party discipline is hamstringing moderates and providing a power advantage to more extreme elements within the party. Hypothetically, in a system without a notion of party loyalty, the more moderate wing of the Republican Party would be able to align with the moderates in the Democratic party to form a pretty strong majority, but the taboo of crossing party lines prevents a moderate majority from forming, giving the extreme elements an advantage in an environment of weak party discipline.
There are elements of this in the current political situation in Mongolia. The PM has proven himself so far competent at maintaining a coalition of factions that one could argue has kept rivals weak as much as it has provided him political strength. In fact, I am inclined to favor the former over the latter, that the PM has proven himself adept at keeping rivals weak rather than building a strong ruling coalition. The proof of this is in looking at his cabinet which is made up of MPs and politicians with a hodge-podge of ideological positions that often times are at cross-purposes. If it sometimes feels like the government is negotiating against itself when it comes to policy positions on highly controversial issues such as Oyu Tolgoi or Tavan Tolgoi, that feeling is not unfounded. The government IS negotiating against itself with more extreme elements holding sway much like the Tea-party in the US.
During the height of MPP (then MPRP) domination of Mongolian politics in the early 2000s under N. Enkhbayar's leadership, one of the advantages the party had over the DP was its strong party discipline. The MPP succumbed to factional infighting during the last parliament, and the disputes were so severe that one faction even broke off and formed the new MPRP, which is a member of the current government. The increasing factional quality of the DP and MPP means that today we see political leaders trying to achieve the delicate balance of maintaining the illusion of party discipline while navigating the real dangers and challenges of weak factional power. The results of those attempts have so far been hardly encouraging from a governance and policy perspective.
As the economic situation in Mongolia continues to worsen, the growing speculation about the PM's prospects of holding on to power are reasonable, but it still remains to be seen if there is a rival in DP that can either impose strong party discipline or form a rival coalition of factions that adds up to at least 39 seats. There are many reasons to argue that the PM's government should be on the way out, and yet it really comes down to whether the PM and his allies can maintain his marginal advantage in wielding the weak power of factional politics.
Footnotes
1. See example of John Sides, "The 5 species of House Republicans," The Washington Post, http://www.washingtonpost.com/blogs/monkey-cage/wp/2013/10/04/the-5-species-of-house-republicans/, 2013-10-04.
Speaker Leaves for Inter-Parliamentary Union Assembly in Geneva
Ulaanbaatar, October 7 /MONTSAME/ A delegation headed by the Speaker of parliament Z.Enkhbold Sunday left for Switzerland to participate in the 129th assembly of the Inter-Parliamentary Union (IPU) to run on October 7-9 in Geneva.
The visiting group has comprised A.Bakei MP, head of the Standing committee on state structure; M.Batchimeg and D.Battsogt MPs. In addition, the secretary-general of the Parliamentary Office B.Boldbaatar will take part in the IPU meeting of parliamentary office secretaries.
Following the IPU session, the Mongolian parliamentary delegation will pay an official visit to the Republic of Turkey on October 9-13.
Cabinet Meeting in Brief
Ulaanbaatar, October 7 /MONTSAME/ At its regular meeting held last Saturday, the cabinet discussed a Mongolia-Turkey intergovernmental agreement on mutual travelling of citizens, and then decided to consult it with related Standing committee of parliament.
On April 11 of this year, the countries signed an intergovernmental memorandum on exempting ordinary passport holders of the both countries from the visa requirements after agreeing the matter during the visit of the Turkish Prime Minister Recep Tayyip Erdogan to Mongolia.
In accordance with the agreement, people of the countries can travel each other's countries without visa for up to 30 days.
- The same day, the cabinet approved a Mongolia-China intergovernmental agreement on the military-technical cooperation which was signed on September 18, 2013 in Beijing during the official visit of the Mongolian Defense Minister to China.
This agreement reflects an issue of developing the bilateral defense collaboration in sharing experience in technical facilities and technologies, buying some products and preparing engineering trained staffers.
Uvurkhangai residents file claim to Constitutional Court to recall MPs
October 3 (news.mn) Several residents from Uvurkhangai province have filed a claim to the Institutional Court stating that MP G.Batkhuu and D.Zorigt have violated the law.
The claim says that a candidate who wins the majority of votes in Uvurkhangai community failed to be elected parliament which is illegal according to Mongolian laws and regulations.
The residents` claim also said that "decisions made by the Election General Commission violated Article 3 of the Constitution of Mongolia "State power shall be vested in the people of Mongolia. The people shall exercise state power through their direct participation in State affairs as well as through the representative bodies of State power elected by them."
The final results of voting in Uvurkhangai in the June Parliamentary election in 2012 indicated that MPP candidate S.Chinzorig collected 23,493 votes, MPP candidate N.Tumurkhuu 21,267 votes, DP candidate G.Batkhuu 19,939 votes and DP candidate D.Zorigt 16,795 votes.
But the Election General Commission made an illegal decision to let DP candidate G.Batkhuu and DP candidate D.Zorigt into Parliament against Uvurkhangai voters will. Therefore we demand to recall those illegal MPs."
The Appeal Court affirmed that MPP candidates S.Chinzorig and N.Tumurkhuu distributed gifts and bribe money to voters during their campaign. The MPP candidates made a claim to the Constitutional Court but the Court rejected their claim.
TDBM signs dual tranche loan
October 4 (Trade Finance) The Trade and Development Bank of Mongolia has signed a dual tranche loan to refinance its short-term liabilities.
Mongolia's Trade and Development Bank (TDB) has signed a dual tranche loan in a deal run by bookrunners and mandated lead arrangers (MLAs) ING, the Dutch Development Bank FMO and TDB Capital.
Originally valued at $100 million, the loan was revised and signed off at $82 million after one development bank backed away from the deal.
TDB has split the loan between a $35 million five-year term loan 'A' and a $47 million two-year term loan 'B'. The smaller tranche was covered by FMO and the International Investment Bank, while the second tranche was syndicated by ING and seven other banks.
AKA Export Finance Bank of Tokyo-Mitsubishi UFJ and VTB Bank acted as MLAs. Commerzbank was lead arranger and Atlantic Forfaitierungs, MG Leasing and Chailease Finance were arrangers.
The original transaction comprised of two $50 million tranches. One tranche was to be solely provided by FMO, while the second was a syndicated loan further split into two, three and five-year options.
TDB AWARDED "BEST BANK IN FRONTIER MARKETS" BY FINANCE ASIA
October 2 (TDB) Asian leading magazine, Finance Asia which publishes Asian news and analysis across the world, selected bests of the bank and finance sector and TDB has won the "Best Bank in Frontier Markets" award.
Banks from frontier markets such as Albania, Bangladesh, Sri Lanka, Philippines, Indonesia and Vietnam competed for the award. Countries with frontier markets are open for investment, have high possibility for faster development and attract investors with their small markets. This award gives more attention to the banks' potential than the asset size.
Finance Asia has been organizing the Country Awards for more than 10 years. The winners are determined by the assessment on the banks' key financial performances as well as the reputation, financial capabilities and international standings and base on the actual performances.
TDB has received four international prestigious awards since the commencement of the year 2013.
Mongolia's Erdenet Mining mulls copper cathode plant
October 4 (Metal Bulletin) Mongolia's Erdenet Mining Corp (EMC) is carrying out a feasibility study for the construction of a 100,000-tpy copper smelter, according to commercial department head N Enkhbaatar.
"We have no problem with energy in Mongolia – there are a lot of coal companies and also we get out power from the state-owned company in Ulanbataar," Enkhbaatar told Metal Bulletin on the sidelines of MB's copper concentrate conference in London on Friday October 4.
He could not give timelines and details of the copper cathode plant.
The company has an annual capacity of 530,000 tpy of copper concentrate.
"We sell all our concentrate to Chinese smelters through agreements with traders," Enkhbaatar said.
The company would like to sell directly to the Chinese copper smelters, he said.
EMC has, in the past, signed two-year supply contracts with major trading houses, he added.
The government of Mongolia has a 51% stake in EMC while the Russian government holds 49%.
Erdenet located in northern Mongolia lies about 241km north-west of capital city Ulanbataar.
Daewoong inks contract with Asia-Pharma to distribute URSA, Eposis and Tobra opthalmic solution in Mongolian market
October 1 (PHARMABIZ.com) Daewoong Pharmaceutical, a Korea-based drug manufacturing and distribution company, has signed a contract with Mongolia's pharmaceutical company, Asia-Pharma to export 'URSA (capsule 250mg)','Eposis prefilled syringe Inj (EPO), and 'Tobra Opthalmic Solution'' during the Bio Korea Pharm Fair held in KINTEX, Ilsan, recently.
Under the terms of the agreement, Asia-Pharma has granted the right to supply and distribute URSA, Eposis (EPO), and Tobra Opthalmic Solution to Mongolia's local markets.
Daewoong Pharmaceutical plans to finalize the licensing procedures by 2014 for the three products and start local sales and anticipates raking in more than $7.5 million in sales from the local market for the first five years after the products are rolled out.
Eposis (EPO), a haematopoietic agent produced by genetic recombinant technology, is effective in treating the anemia of patients with chronic renal failure and has been exported to Turkey, Vietnam, Thailand, Indonesia, Sri Lanka, Pakistan, Syria, etc. URSA is currently exported to about 10 countries including China, Vietnam, and Philippines.
Asia-Pharma, founded in 2002, is the second largest local pharmaceutical company carving out 18 per cent share in Mongolia's pharmaceutical market and has built a close network of approximately 700 pharmacies in Mongolia.
Jeon Seong-ho, general manager, global marketing team, Daewoong Pharmaceutical, said, "Mongolia has witnessed a surge in the demand for pharmaceutical products, fuelled by recent economic growth, and is an attractive market for overseas pharmaceutical companies as it has heavy reliance on foreign medicines, importing 70 to 80 per cent of its drugs. This export contract will be vital for making foray into Mongolian market and make bridgehead into central Asia."
The 25 Most Powerful Women in Global TV: Nomin Chinbat
Nomin Chinbat, CEO, HD TV Network, Mongolia
October 4 (The Hollywood Reporter) As CEO of Mongolia's leading independent HD TV Network, Chinbat is hoping to bring legally acquired TV formats to Mongolia's 2.8 million people. She is based in the capital city of Ulaanbaatar, but her programming also is popular with the nomads in their ger tents on the grasslands.
Says Chinbat: "When I returned to Mongolia after spending eight years studying in the U.K., I realized the broadcasting system in my country was underdeveloped, still influenced by government politics and needing someone to bring it up to Western standards."
Media: A business in shambles
By Jargalsaikhan Dambadarjaa
October 7 (UB Post) The internet started to be viewed as media technology rather than communication technology from the 1990s. The same thing happened to mobile phones in the 2000s. As a result, the media sector is growing bigger and bigger in economy.
According to a 2011 report released by the Press Institute of Mongolia, there were 126 different newspapers published in our country. Sixteen of them were daily newspapers while 30 were published weekly. In addition, 52 weekly magazines are published in Mongolia and there are another 40 magazines that are produced quarterly. Also, 14 percent of Ulaanbaatar population that are over 12 years old read newspapers every day and most of the readers are over 30 years old, employed and have higher education.
There are a total of 187 Mongolian television channels and 61 of them are located in the capital city. An enormous information flow catalyzed by hundreds of websites as well as thousands of mobile phones is going on in Mongolia. The number of mobile phones in our country has already exceeded the number of people we have. A total of approximately 6,500 people are employed in our media sector, which has about 400 media companies. If we count the people who are working for the entertainment industry, which we often put under the arts and culture sector, the total number will reach 15,000.
The oddity
The mass media, which is supposed to be demanding for greater social transparency, has become the most obscure sector in Mongolia. There is no possibility of finding any information about the real owners of media companies and measuring their economic performance. Professional organizations and associations never produce such reports, thus, it is impossible to ascertain how many people are working for the media sector, what their average salary is or how they are doing in terms of labor productivity. However, thanks to relatively fiercer competition, the television industry has been developing quickly than the others in the media sector. Also, internationally accepted audience measurement is now done in Mongolia to assess television viewership by every television channel as well as each of television programs. It allows us to discuss the television industry a little more thoroughly.
Without the make-up
A survey says that half of Mongolia's population resides in Ulaanbaatar and 75 percent of adults spend their free time watching television. So, it is safe to say that television has a great influence on our society. Maxima Survey Center now sets up a special electronic device in households in order to carry out 24 hours monitoring on every television channel in UB and each of their television programs. This monitoring allows the time and frequency of television programs as well as advertisements to be recorded. Furthermore, they can estimate with higher accuracy who watches what television programs and advertisements. Maxima have done this survey in cooperation with Kantar Media Company, an England-based company expert in consumer behavior and audience research. Some interesting observations can be made from this survey carried out in Mongolia.
The results that have been collected so far suggest that the Mongolian television channel that has the biggest audience reached a TV rating of only five percent. Moreover, 60 percent of television channels broadcasted in Ulaanbaatar has a rating of less than five percent. In other words, they have an audience that does not even exceed 5,000 people.
It turns out that, when their audience is combined together, all Mongolian television channels attract only 30 percent of the total viewership. Furthermore, 15 of the 30 percent is comprised by the top 10 channels alone, which include MNB, TV5, Mongol TV, Edutainment TV, UBS, MN25, TV9 and SBN. Televisions channels such as Shine Delkhii, Ekh Oron, NTV, Movie Box and Dream Box are currently in an intense competition with the established top channels.
Half of the total advertisements aired on television channels is sent from 20 large companies while the other half is delivered by 1,170 companies as well as other organizations. Those 20 companies that led the chart by the amount of money they spent on television advertisements are MSC Holding, Unitel, Nomin Holding, Monos, Naran Group, Mobicom, Skytel, Tavan Bogd Group, APU, BSB, Vitafit, Summit, Bodi Group, Xacbank, Next, Max, Genco Group, Khanbank, MSM, Tushig, Gem International and G-Mobile.
The total cost of television advertising in 2013 is estimated to be around 94 billion MNT, which is about 10 percent more than what it was last year. This calculation takes into account the announced ad rates of every television channel in UB and the duration of broadcasted advertisements on those channels. Another set of numbers that catch attention is that a total of 4,535 goods and services were advertised by 2,500 companies in 2010 while 2,546 goods and services were advertised by 1,193 companies in 2012. This decrease in advertised products as well as owner companies is likely to take place again this year.
Why does the broadcasting of advertisements tend to increase despite the less number of companies advertising less number of goods? It is because of the new television channels that are being introduced to the industry every year. Those channels must receive some part of their income from broadcasting ads, thus, they seek to attract advertisements. One way to achieve that goal is to broadcast advertisements from big companies free of charge. When paying for a television channel for ads, one should be buying some audience for them rather than some period of broadcasting time. However, they are now more focused on the airing time with no guaranteed audience.
Indistinguishable television channels with poor content
With the exception of occasional Oyu Tolgoi discussions, a Zuun Erkhem episode interviewing the President Elbegdorj, the 2013 Presidential Debate and a television series called 'Huvi Tavilangiin Eedree', Mongolian television programs have always had an audience that is 3-10 times less than that of Korean drama series broadcasted on our channels.
Mongolian television channels need to undergo a revolutionary change in what they broadcast and be able to differ from each other by their content so that a television channel acquires its own audience in the total viewership. Also, it will greatly aid the companies that are advertising their products on television channels to improve their sales. Our television channels are currently competing to decrease their rates, which makes the difference of product marketing insignificant. For example, it costs almost the same to advertise a cheap product from China and a world brand product. This is the reason why many big companies have lately been refusing to use television advertisements. Internationally, TV channel management aims at aligning its TV program policy with its business policy and increasing their viewership. Our television channels, on the contrary, have a marketing department that has completely different objectives.
As of August 2013, a total of 261,000 Ulaanbaatar residents watched Mongolian television channels in the prime time while foreign channels had an audience of 91,000 people in the same period of time. It was regularly observed ever since the survey started, which means that Mongolian channels have lost 30-40 percent of their market to foreign competitors. If Korean television dramas have the biggest viewership, is there any Mongolian television program that can actually attract audience?
Reflection
The small size as well as insufficient growth of our media sector can be explained by lack of fair competition with in the sector and in economy as a whole.
Companies only engage in a competition to lower prices if the sector has little competitiveness and reduced opportunities. Ultimately, everyone ends up losing and faces a deficit. Our advertising market needs only a six television channels that are internationally competitive rather than 60 deficit-ridden channels. How is this still going on?
The fact that it is still going on suggests that there is a strong presence of the interests to use social media as a brainwashing device to mislead the public opinion. It has lately been discussed that Mongolia's media sector now has a type of 'non-disclosure agreement' where one party pays a media company a huge amount of money to ensure that the company never discloses any information they are uncomfortable with. Some pieces of news disappear suddenly from big websites within an hour.
Information about media companies, their real owners and political affiliations, need to be publicly announced. Also, as social media serves the public, their financial performance should be available for people to see.
Financial reports of media advertisements by the government need to be disclosed. Furthermore, television programs that are paid by taxpayers' money to promote public servants, especially ministers and members of parliaments, should be restricted.
If we manage to foster free competition in the media sector, many new players such as advertising agents will come into the market and create new businesses. It will also help companies to reach out to their target audience.
However, this industry is in shambles today. Free market competition can only be achieved after all the players are in their respective places as a result of appropriate government regulations as well as natural market mechanisms. Also, fair competition rather than an increase in the number of media companies can create capable workforce, enhance labor productivity and improve salary in terms of quality.
Our media sector must not serve to influence the society, but should be the mirror that reflects it clearly.
Security of tenure among key issues for Mongolian mining industry
October 2 (Metal Bulletin) Security of mining tenure in Mongolia, a transparent legal system and legislative reforms are among the key cornerstones which will promote investment sentiment and confidence in the country, Dale Choi at Independent Mongolian Metals & Mining Research said.
"While well overdue legislative change is a potential positive development, without flagship transactions and resolution of security of tenure uncertainties, we do not believe the foundation for a return towards private sector growth will be provided," Choi said in a note to clients.
As of August 2013, foreign direct investment in Mongolia has collapsed 47% year-on-year, foreign reserves have depleted at $175 million per month burn rate with exchange rate depreciating 18% year-on-year and foreign debt at 55% of Gross Domestic Product, he said.
A number of key issues, including law on investment, were discussed at the emergency parliament session in September but nothing was approved.
The next session starts on October 3.
In such an environment, certain catalysts including a successful decision on the investment agreement and funding of the Oyu Tolgoi copper-gold underground mine could help with investor sentiment.
Resolutions related to mineral exploration licenses and revision of certain laws related to mining and investment will also boost investor sentiment.
The delay of a proposed $4.2-billion project financing package has stalled the underground mine development at Oyu Tolgoi, with around 2,000 jobs lost and almost a similar number still at risk, Choi said.
If Oyu Tolgoi and Rio Tinto are having such problems, then the smaller groups will also be "at the mercy of bureaucracy and at risk to similar reinterpretations and negotiation of legal agreements".
"We believe Oyu Tolgoi needs to be successful to support positive investor sentiment toward Mongolia and further significant FDI," Choi said.
He also said that since January, about 106 exploration licence holders have had no legal recourse or rights to undertake exploration due to a criminal court case.
"It is estimated 11 foreign and 67 local groups are the owners of the 106 licences. At present 24 companies holding 31 licences of the above suspended 106 licences are actively seeking direct dialogues and discussions with appropriate government authorities," he said.
These 31 licences were issued before the ban on the issuance of new mineral licences in April 2010.
The 106 licences cover a landmass about six times larger in surface area than active mining licences in Mongolia.
"Acts of the government, like the granting of the licensees; their subsequent renewal and acknowledgment of good standing cannot be subject to sudden and arbitrary revocation (without possibility of appeal) without severely affecting investor confidence in the Mongolian legal system and the suitability of Mongolia as an investment destination," Choi said.
Another law "the Long Name Law" which was approved in 2009 restricts mining activities near certain rivers, forest and protected areas.
The negative effect of this law has been the emergence of illegal informal mining activities including ninja miners and the depletion of Mongol Bank's gold reserves to 2 tonnes from 25 tonnes in 2005, Choi said.
These issues have led to proposals to establish transparent gold trading but the illegal activities have hurt the environment and the tourism industry, Choi said.
"According to the ministry of mining, the impact of the Long Name Law and subsequent concerns regarding security of mineral tenure is estimated to be 6.6% of the 33% decline in foreign direct mining direct investment in the first half of 2013," he added.
Research Report: Lesser Dependence on the Chinese Cement Market?
October 7 (National Securities) --
Price Spike
Since July 2013, the Chinese Ministry of Industry and Information Technology has instructed over 1,400 companies in a variety of sectors of the economy which are "overly investor-friendly" to cut production by the end of this year, in order to alleviate over-production of numerous materials including construction related materials. As a result, as of last week, 58 construction material manufacturers including steel and cement producers, had reduced production to off-set declining client demand.
This Chinese government inspired action had a short-term price impact on the black market for cement in Mongolia. On September 17, 18 and 19, Chinese imported cement was being priced at 200,000 MNT per ton (U$120). During this time however, according to the GoM, not a single ton of Chinese cement was sold and prices have abated subsequently to more normal 140-150,000 MNT per ton levels. Given that 70% of construction materials are imported from China this could have had a potentially negative longer-term impact if the market had accepted these inflated figures. Thankfully the market has rejected these levels.
As a guide, please refer to the following table for average cement prices during the high construction season i.e. June - August of each year. We have benchmarked prices for Khutul Cement and Lime that is known for its good quality, and tend to be amongst the highest quality of the domestic producers.
Construction Material | Measurement Unit | Last 6 Years (July-August) | Domestic Khutul Cement, Average Price (MNT) | Imported Cement, Average Price (MNT) |
Cement | 1 Ton (ОРС 20%, 4.25) | 2008 | 120,000 | 121,600 |
2009 | 84,000 | 100,000 | ||
2010 | 120,000 | 125,000 | ||
2011 | 153,000 | 174,000 | ||
2012 | 187,000 | 175,000 | ||
2013 | 187,000 | 148,000 |
3-Key Market Developments
National Securities believes that this rejection by the market of these inflated prices and the following 3 key market developments augers well, looking forward to the 2014 construction season. In our estimation it suggests a cement market that is likely to be less reliant on China and more price insensitive as a result to externally driven pricing pressures.
Successful Implementation of the State Support Programs
The former Government of Mongolia (GoM) began a "Master plan to support construction material production", targeting the years 2007-2015. It is a soft loan grant scheme with some tax exemptions for producers. This policy has been retained by the new GoM which sees the need for a slowing down in the price increase of construction materials in tandem with an increased supply of real estate to cool down prices. As of September 2013, the GoM, in cooperation with the Central Bank has granted local manufacturers soft loan in the amount of 136 billion MNT (U$80m), of which 129.4 billion MNT (95%) went to cement and steel framework producers.
Increasing Supply of Domestic Producers
Despite a decline in the worldwide production of cement during the recession years of 2009 and 2010, Mongolian cement production increased annually for 35% during this same time-frame. This was greatly driven by high demand from several sectors such as construction and mining, as well as from ambitious infrastructural plans from the state. During the last couple of years, under the "New Development" programme, several large cement expansion projects of companies such as "MAK", "Yalguun International", "MIZU" and "Monpolimet" in addition to Remicon and Khutul; are now reaching their final stages now or into CY2014.
The Risk of Imported Materials
Most imported materials including cement are not subject to regular or stringent quality controls, which can to some extent, explain their low price in comparison with the Mongolian product. Additionally, the delay of transportation from China can cause time pressure for construction companies, as Mongolia is known for its short warm construction season. What was once a 15-day turn around in transportation time can reach more than 45 days due to the insufficient rail links of the country. Therefore buying cement from domestic suppliers has the twin appeal of saving time and money.
Mongolia struggles with complexities of resource development
Various forms of graft are already a major element in doing business in Mongolia
By Jonathan Manthorpe
September 30 (Business in Vancouver) In an emergency session of parliament, Mongolia's political leaders are scrambling to reverse the disastrous results of their attempt last year to prevent the threatened domination of their economy by state-owned Chinese companies.
Foreign investment in Mongolia fell by 42% in the first half of this year with World Bank predictions that economic growth will be only 13% in 2013, compared with around 17% in recent years.
Mongolia's dramatic reversal from being the darling of international risk-takers to an almost pariah status stems from a law passed in May last year. This required government or parliamentary approval of investments by foreign state-controlled companies in Mongolia's "strategic" economic sectors, defined as minerals, financial institutions and communications. But many elements in the law remained ill-defined, such as what constituted a "foreign state-owned entity." The result was a lot of uncertainty among foreign investors, especially the injection of political discretion in the approval process, which increased the likelihood of corruption. Various forms of graft are already a major element in doing business in Mongolia, which, as in many developing countries, has yet to embed the rule of law as a cultural and administrative concept.
Soon after his re-election in June, President Tsakia Elbegdorj, whose Democratic Party also controls parliament, held a crisis meeting with former presidents, prime ministers and political party chairmen to try to get a consensus on a new foreign investment law.
The resulting draft law now before parliament, the Great Khural, removes many of the uncertainties and ambiguities under last year's effort.
The draft simplifies the process of registering private foreign investment projects.
It removes the classification of strategic economic sectors for foreign investment. It defines a foreign state-owned entity as one where the government directly or indirectly holds more than 50% of the equity.
The Ministry of Economic Development is designated as the only authority to give approval for all investments by foreign state-owned companies.
The draft law has been welcomed by foreign investors and analysts, who see it as providing a predictable and fair playing field for business in Mongolia.
Last year's restrictive law was in large part a knee-jerk reaction to strongly voiced public objection during last year's parliamentary election campaign to the takeover of a privately owned Canadian coal mine, Ovoot Tolgoi, flagship enterprise of Toronto-listed SouthGobi Resources Ltd., by Chalco, the Aluminum Corporation of China. Chalco is the leading importer of Mongolian coal and has problems with the Ulaanbaatar government over another coal mine, state-owned Tavan Tolgoi, with deposits reckoned to be around 7.5 billion tonnes.
Production at Tavan Tolgoi, which could deliver 50 million tonnes of coal a year, was halted by the Mongolian government at the beginning of the year in a dispute with Chalco over price.
The Mongolian government is, however, trying to dilute the influence of China over the Tavan Tolgoi project by encouraging American, Japanese and South Korean companies to become involved in other phases of the development.
Mongolia's fewer than three million people have a long history of suspicion of their two overbearing neighbours, Russia and China. Mongolia was part of the Chinese empire for 200 years until the collapse of the Qing Dynasty in 1911. But 10 years later Mongolia was swallowed by the Soviet Union and remained a pawn of Moscow until independence in 1991.
The two decades since have been a tempestuous time as Mongolians try to adjust to unfamiliar and sometimes alien economic, political and legal concepts. Particularly difficult to absorb has been the realization that Mongolia's economic future rests on its vast untapped mineral resources, especially of copper and coal. This requires a difficult cultural and social shift for a people whose history rests on semi-nomadic herding across the country's endless grasslands and deserts. •
More important for Mongolia's immediate economic future than the new foreign investment law is the outcome of a debate raging over a draft mining law.
This draft, widely criticized by potential foreign investors as overly restrictive and resounding with resource nationalism, is heavily influenced by Ulaanbaatar's experience with the massive Oyu Tolgoi, which was brought to the market by Vancouver's Ivanhoe Mines (TSX:IVN).
If approved, the new law would put environmentally sensitive parts of the country, such as forests and watersheds, out of bounds to prospectors, and require Mongolian representatives on the boards of mining companies to ensure "accountability and transparency."
Oyu Tolgoi, in Mongolia's southern Gobi Desert, is one of the world's largest untapped copper reserves and conveniently close to the border with China, where the manufacturing industry yearns for reliable supplies of the metal.
The Oyu Tolgoi saga is a torrid tale of machinations in corporate boardrooms and the corridors of power.
The potential place in the Mongolian economy of Oyu Tolgoi is so large it has inevitably exerted huge influence over the entire debate about mining law, the role of the state and the birthright of the country's people. The first open- pit phase of Oyu Tolgoi can deliver 300,000 tonnes of copper concentrate this year. This would produce revenue of $1 billion, a large slice of Mongolia's gross domestic product, which last year was $10.2 billion.
The estimates are that by 2020 Oyu Tolgoi could be producing earnings of $7 billion a year.
But successive governments in Ulaanbaatar have struggled with nationalist leanings among the public, especially in the capital, and their own inclinations about how large a stake the state should have in the project and how much it should invest.
POSCO: Bringing the Saemaul Movement to Have-Not Countries in Africa and Asia
- Agricultural leadership training in Mongolia / Saemaul agricultural training centers in operation in Mozambique
October 7(POSCO) POSCO spreads Saemaul Movement to deliver growth engines and hope to underdeveloped countries throughout the world.
Actively unfolding global Saemaul Movement, the new village movement, in poor areas of Africa and Asia, POSCO has been carrying out infrastructure construction projects, which are conducive to economic development ,including developing rural villages, improving housing environment and building agricultural training centers, where farming techniques are passed down and agricultural leaders are made, thereby helping them grow and become independent.
As part of this global Saemaul Movement, POSCO has been carrying out the `Mongolia Agricultural Leadership Training Program` in Mongolia in partnership with Global Civic Sharing, an international development NGO.
POSCO established a Local Development Training Center in Jargalant Mongolia in 2002, and has been conducting training every year for 120 of the agricultural leader candidates selected throughout Mongolia since 2010.
The agricultural leadership training project is to provide skills to Mongolia which will substantially contribute to enhancing incomes for local rural villages. Such skills include the practice of greenhouse agricultural and the building of cattle sheds. The project is also designed to promote communal spirit for the empowerment of leadership qualities and abilities.
So far, POSCO has conducted 14 different agricultural leadership trainings along with5 lots of the leadership camp, and 667 trainees have completed the training course. Among them, POSCO selects some 10 outstanding trainees each year and provides them with a study tour to S. Korea which includes a field trip to `Eco-Farm`, an eco-friendly agriculture support center operated by POSCO in the city of Pohang.
11 outstanding trainees have been selected this year. They arrived in S. Korea on September 29, and were given with advanced agricultural techniques of the country.
For four days from September 30, the Mongolian trainees received practical training necessary for improving agricultural techniques, including pasturage plants cultivation, potato cultivation, agricultural machinery and eco-friendly material manufacturing, as well as residential leadership training on how to convince residents, local issue solving techniques, economic development strategy, and more.
While paying a visit to the memorial hall in the birthplace of Saemaul Movement, Pohang steel mill and POSCO center, they also had a time to appreciate and experience S. Korea and POSCO, which have accomplished a great deal in developing the economy based on the Saemaul Movement.
After visiting Pohang steel mill and the forestation memorial forest in Goryeong-gun on October 4, the trainees will move to Seoul where they have time to explore and experience the culture of S. Korea, before returning to their country on October 6.
While spreading the Saemaul development model to African and Asian countries, POSCO has demonstrated a variety of accomplishments. In Mozambique and Zimbabwe of Africa, POSCO built Saemaul agricultural training centers, teaching specialized knowledge and techniques about agriculture and stockbreeding, while increasing agricultural production and contributing to solve Africa`s famine problem. In Ethiopia, meanwhile, the Saemaul Development Project is under way, with overseas volunteers including the retirees of POSCO along with their family members stepping up their efforts to improve village environments as well as enhance the income of their neighborhoods.
When it comes to Asia, POSCO is promoting Dream Village project to develop a village for non-homeowners in Vietnam, and carrying out the global Saemaul Movement in Indonesia, Nepal and Mongolia.
Korea District Heat Corp. delivers happy energy to Mongolia
October 2 (The Dong-A Ilbo) People at a village in Ulaanbaatar, Mongolia were in an excited mood on September 4. A ceremony was being held to commemorate the opening of a children`s library built by Korea District Heat Corporation. Ten Mongolian children performed a Korean children`s song by waving Korean and Mongolian national flags.
A village resident visiting the ceremony said, "I`m so pleased that a library is built for my grandsons and granddaughters," adding, "Our children had no place to spend time in winter and it`s good to have a place for them to read books and play."
Korea District Heat Corporation began building a children`s library in Mongolia early this year. In 2011, as a part of original development aid of Korea International Cooperation Association, the corporation carried out a regional heat facility modernization project, and had decided to build a children`s library by using a spare space in a machinery room after facilities changes were finished.
In June this year, the heating corporation signed with Ulaanbaatar and Good Neighbors` Mongolian office and revamped the machinery room`s exterior wall while installing tables and benches on the gravel-covered front yard. To ensure children`s safety, it installed a paving block on the street outside the library and also a sidewalk. A voluntary group composed of heating corporation employees also visited the place to join mural painting drawing.
Faced with lack of kindergartens and schools, Ulaanbaatar vigorously welcomed the heating corporation`s library building. Inside the library are 1,500 books and educational videos in Mongolian, Korean and English language. A computer study room was also made with PC donations from the corporation.
The establishment of children`s library in Mongolia is the Korea Heat District Corporation`s first overseas social corporate citizenship activity. It plans to expand such activities further in Mongolia. Temperature in winter times is below 40 degrees in Mongolia, and heating costs are a big problem since many households still live in a traditional Mongolian tent-like house, despite rapid modernization of the country. The corporation visited these tent villages and heating equipment manufacturing companies, and is examining the feasibility of heating facility improvement business.
Power Plant 3 extension to become operational this year
October 4 (news.mn) The capacity of Power Plant 3 is to be extended by 50 MW, increasing electricity by 50MW and power by 100 Gkal in an extension project to be launched this year.
Currently almost 90 percent of the extension construction for Power Plant 3 has been completed. The first phase of construction has come out of the factory and is now ready to be installed.
When the Power Plant 3 extension becomes operational, the capacity of power for the central region of Mongolia will be increased by 50 MW, the City power will increase 75 Gkal/h.
The newly constructed apartment and office buildings in Bayanrzurkh and Khan-Uul Districts will be connected and provided with power.
Calls made to relocate markets to outskirts of Ulaanbaatar
October 4, /www.news.mn/ A joint task force appointed by the Ulaanbaatar City Mayor E.Bat-Uul has conducted inspections of 58 grocery markets and shopping centers in the City.
The inspection revealed that several markets and shopping centers failed to meet standards for sanitation and safety, emergency exits and fire extinguishers and some of them had even built extensions without permission.
The task force reported on the results of the inspection to the dozens of markets and shopping centers in Ulaanbaatar City and suggested to remove the markets appliance section of Narantuul market, Minii dalai eej market, Bars -1 and 2 markets, Asait market, Dunjingarav market, Odkon market, Jobi building material market out of the City in order to reduce traffic and reduce waste materials around the markets in the City.
The Ulaanbaatar City Mayor will decide whether or not to relocate the markets from the City by reviewing the results of inspection on the markets by the task force.
During the inspection 11.9 million MNT of fines were imposed to 53 entities and companies and individuals that failed to meet standards for the inspection.
Former city authorities suspected in abuse of power and illegal land privatization
October 3 (news.mn) The Economic Crime Combat Division of the Criminal Police Department has initiated a criminal investigation into the former City authorities over abuse of power, illegal land bargaining, corruption and fraud. The former City authorities, the senior officials of land allocation departments in the City and Districts are suspected of illegal land bargaining, corruption fraud and abuse of power in conspiracy.
A number of senior officials are being questioned as suspects in the case including the former Ulaanbaatar City Mayor G,Munkhbayar, former head of the Ulaanbaatar City Citizens Representatives Khural, T.Bilegt, former deputy head of the Land Affairs Service of Ulaanbaatar city, E.Ariungerel and former head of division of revenue planning and development, D.Dashdeleg.
The investigation may involve 300 former senior officials of the Land Affairs Service of Ulaanbaatar city and Land Departments in Districts to give explanations and answer questions.
News.mn reported on and revealed facts about the power behind the "throne" of land illegally allocated in the city center with the series of interviews titled "Who is the owner of unknown lands" in 2012. Since the interview Ulaanbaatar City Mayor E.Bat-Uul publicly announced a list of 145 areas of land that were allocated illegally and cancelled their rights for land ownership and possession.
Now the Economic Crime Combat Division of the Criminal Police Department is investigating these 145 cases of illegal land ownership. The Criminal Police department actually started the investigation in early 2013 but was delayed until the conclusion of the Presidential Election.
Ulaanbaatar International Film Festival begins
October 7 (news.mn) The opening ceremony for the first film festival named after Ulaanbaatar City began with "Light Bay Colt" by young Mongolian director, Ch.Khoroldorj on Sunday. For the week of the Ulaanbaatar Film Festival numerous best films will be available for free to Mongolian movie fans at Tengis movie theatre between 4th and 9th October in an effort to boost cooperation between international movie makers and for enjoyment.
Today on the second day of the Ulaanbaatar Film Festival, Tengis Movie theatre will screen "Lifelong" by Asli Цzge, (Turkey), "In Bloom" by Nana Ekvtimishvili and Simon Gross (Georgia) on October 7th.
A meeting is scheduled to meet Defne Halman, the starring role of the film "Lifelong" by Asli Цzge after the film is screened at 19.45 today October 7th.
On Wednesday, the film "Lunchbox" by Ritesh Batra (India), "Will you still love me tomorrow?" by Arvin Chen (Taiwan), "Eat, sleep, die" by Gabriela Pichler (Sweden) will be featured and meetings with the movie makers and actors is scheduled on October 8th.
On Thursday, "Blue ruin" by Jeremy Saulnier (USA), "Salvo" by Antonio Piazza and Fabio Grassadonia (France) will be screened and again a meeting with actors and movie makers is scheduled on October 9th.
As part of the Ulaanbaatar Film Festival, the Mongolian movie program is scheduled to show Mongolian movies "Red bar" by director B.Ganbold, "Thief of the mind" by J.Sengedorj, "Lardima" by J.Sengedorj, "I am Mongolian " a documentary by B.Bayar and "Tell my name" a documentary by E.khurelkhuu.
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Diplomacy
Mongolia intensifies bid to become 22nd APEC member
BALI, Indonesia, Oct. 6 (Xinhua) -- Mongolia is intensifying its bid to become the 22nd member of APEC, officials said here on Sunday.
Making a detailed presentation to international media, Mongolian Foreign Minister Bold Luvsanvandan outlined the reasons why his country should become the next member of Asia Pacific Economic Cooperation (APEC).
"Mongolia made its first official application to join APEC in 1993 and this has remained an enduring aspiration. We now meet the requirements that were set out by APEC in its 1997 Ministerial Statement on Membership," he said.
Mongolia, along with India, Pakistan, Bangladesh, Sri Lanka, Macau, Laos, Cambodia, Costa Rica, Colombia, and Ecuador, are among a dozen countries seeking APEC membership.
If Mongolia's bid to join APEC is successful, it will become the first land-locked country to join the bloc of 21 Pacific-rim economies.
Mineral-rich Mongolia has a relatively small economy. With about 22.4 percent of its population living on less than 1.25 U.S. dollars a day, and its per capita income in 2011 at 3,100 U.S. dollars, Mongolia is ranked as a lower to middle income economy by the World Bank.
But the International Monetary Fund (IMF) predicts that it would be one of the world's fastest-growing country in 2013 with 14 percent growth on top of 17.5 percent in 2011, thanks to a booming mining sector, particularly copper and coal, which accounts for about 21.8 percent of its GDP.
Mongolia has impressive reserves of minerals including 18.4 billion tons of coal, 2.4 tons of gold, 1 million tons of iron ore and 2.4 billion barrels of untapped oil. In fact Mongolia's coking coal exports will hit 50 million tons by 2017 and is among the largest in the world.
"APEC economies also count for 89.5 percent Mongolia's trade and 50.6 percent of foreign direct inflows. China, Canada and Russia alone make up 96.4 percent of Mongolia's exports," Bold added.
Adding more sugar to the deal is a government decision announced on Friday adopting new investor friendly laws that aims to push foreign inflows. Mongolia also has trade agreements with 44 countries and aims to increase ties with other APEC countries.
"At a time when Asia-Pacific countries become more and more intertwined Mongolia cannot afford to stay outside. I can assure you that with its growing economy and friendly political relations with every single APEC country Mongolia would bring added value to APEC."
APEC host Indonesia clearly agrees with this view point. Indonesian Foreign Minister Marty Natalegawa, after meeting with his Mongolian counterpart on the sidelines of the ongoing meeting told media on Friday that Mongolia met the criteria to become an APEC member.
"Mongolia is an economy that can make a big contribution to APEC. The thing is, there is no consensus yet," Marty was quoted as saying by local media.
Related:
Indonesia renews support for Mongolia's APEC bid – The Jakarta Post, October 5
Fast-Developing Mongolia Seeks to Join APEC Club – Jakarta Globe, October 7
Mongolian PM meets Chinese ambassador on China visit
ULAN BATOR, Oct. 1 (Xinhua) -- Mongolian Prime Minister Altankhuyag Norov met here on Tuesday with Chinese Ambassador to Mongolia Wang Xiaolong ahead of his upcoming visit to China in October.
During the meeting, the prime minister and the ambassador exchanged opinions about issues planned to be discussed during Norov's official visit to China.
Wang said the Chinese side is preparing for this trip and is confident that discussions and talks would boost the strategic partnership between the two countries and uplift their economic cooperation.
The Mongolian prime minister said they are also working to prepare for the visit. Mongolian minister of defense and minister of road and transportation have visited China before. Batbayar Nyamjav, Mongolian minister of economic development, will also visit China soon.
Mongolia's Third Neighbor
October 4 (Carnegie Moscow Center) Mongolia seldom features in the news. A vast country with a puny population sandwiched between China and Russia, it has managed since 1990 to build a parliamentary system of government which results in periodic alternation in power of the two main parties. Occasionally, political tensions can rise and streets of Ulan Bator, the capital, become filled with people pressing their demands. However, the political system has been able so far to absorb such shocks and move on.
During most of the 20th century, Mongolia, due to its close links to Moscow, was said to be a country in Eastern Europe, not East Asia, where it is geographically positioned. Today, its leaders and elites leave no doubt that they are looking east, toward the Pacific basin, which they see as the center of the global economy and 21st century politics. The former Soviet republics of Central Asia, such as Kyrgyzstan, are now learning from Mongolia's parliamentary system.
Besides making parliament work in the birthplace of Genghis Khan, the Mongols have given the world a foreign policy concept of a "third neighbor." Next to maintaining a strict balance between two former overlords, Beijing and Moscow, Ulan Bator seeks to balance its both physical neighbors with a third—virtual—one. This third neighbor is never identified by name but is described as "advanced democratic countries," which stands, in the first place, for the United States, Japan, and South Korea.
Mongolia's achievements and aspirations were recognized by a U.S. presidential visit. Finally, a few years ago, Moscow, after a 20-year-long break, started paying attention, including at the top level. The Mongols, however, became concerned last month as Xi Jinping, China's new leader, toured Central Asia. With Beijing reviving the Great Silk Road, Ulan Bator saw itself as being sidelined. So much more reason, the Mongols have decided, to work with the Chinese, the Japanese, the Koreans, and the Russians toward closer economic integration in the Far East.
Mongolia keeps to its own code of political conduct. The main reason it is staying away from the Shanghai Cooperation Organization is that it does not want even to hint at a political affiliation, not to speak of a security alignment. Given its strategic position, it needs not only to be friends with its both giant neighbors, but also have powerful friends in a third place to avoid domination by China or Russia. Yet, Ulan Bator is not shunning anyone. It offers itself, for example, as a venue for contacts related to North Korea. Mongolian officials are frequent visitors to Pyongyang, and the head of the North Korean state security service has traveled to Ulan Bator. To retain their friendships with third parties, the Mongols want to make themselves useful.
Transcript of a video posted in an earlier issue
Locked Between Two Large Neighbors, Mongolia Seeks to Connect With the World
October 4 (The Global Observatory) Mongolia's peaceful revolution in 1990 ushered in 23 years of democracy, and President Tsakhiagiin Elbegdorj believes his country can both be a model country and learn from others as he seeks good relationships and partnerships with the rest of the world. "After twenty years of doing democracy, I see one truth," he said in this interview with the Global Observatory. "Democracy is not a destination. Democracy is a way."
Landlocked between two of the world's biggest powers, China and Russia, he said Mongolia also prizes its "third neighbor," which is what he calls other—even farflung—nations.
"We have two big neighbors, and, of course, we are really striving to maintain neighborly good relations with our two neighbors. As well, we want to have good relations with other nations. All those other nations we call our third neighbor. This is the concept after 1990."
"We are really committed to rule of law, human rights, and market economy. And those are attracting more investments, more people to Mongolia, and we would like to see more investments from our third neighbor."
Mongolia recently joined the Organization for Security and Cooperation in Europe (OSCE), and served as chair of the Community of Democracies. "If we become more relevant, and I think also independent, and the security of Mongolia is guaranteed. That's my philosophy, and we are working for that."
"I really believe that civil society is the soul of any nation," he said. "Civil society is equal to democracy. If your people have that right, I think your nation benefits from that. People usually manage their life better than government manages people's lives." The Mongolian president recently joined US President Barack Obama in launching a civil society initiative in New York.
The son of a herdsman, the president expressed great joy at serving as the country's freely elected president. "Working for your people, serving your nation by their free choice? That's the greatest joy you can have."
The interview was conducted by Warren Hoge, Senior Adviser for External Relations at the International Peace Institute:
Transcript (edited for clarity)
Warren Hoge: We are pleased to have a very distinguished guest in the Global Observatory today, Tsakhiagiin Elbegdorj, the president of Mongolia. President Elbegdorj was sworn into office on July 10 for his second term as president of Mongolia. He was prime minister of the country twice, and he led the peaceful democratic revolution in 1990 that ended seven decades of communist rule in Mongolia.
Mr. President, you have helped transform Mongolia from a dictatorship to a democracy in a single generation. That's quite an accomplishment. How did you do it?
President Tsakhiagiin Elbegdorj: You know, after twenty years of doing democracy, I see one truth. Democracy is not a destination. Democracy is a way. It can end after some time. I think still we have challenges. Even in some advanced countries have challenges related with democracy, with freedom. And we have challenges in Mongolia.
I usually say that freedom is like a child; it never grows up, and you have to change the diapers every morning. And that's what we are doing in Mongolia.
But in terms of the democracy, in terms of freedom, one thing is good—you can advance. I usually say that freedom, democracy, is a learning process. When you learn more, you can advance. You can make a little bit better decision. And with that, we can share our experiences. Of course, why we achieve that kind of result, I think, is thanks to our people's support. And I really believe in the people's power. And that power is, I think, the most amazing power that we have.
WH: Mr. President, Mongolia is a landlocked country with two very big and very powerful neighbors, Russia and China. How does this affect your trade and foreign policy? And can you tell us a bit about your third neighbor policy?
TE: Yes, we have two big neighbors, and, of course, we are really striving to maintain neighborly good relations with our two neighbors. As well, we want to have good relations with other nations. All those other nations we call our third neighbor. This is the concept after 1990.
And I think we are really proud that with many of our third neighbors, we have great values connections. Of course, we don't have land connection with them, but we have values connection. We are really committed to rule of law, human rights, and market economy. And those are attracting more investments, more people to Mongolia, and we would like to see more investments from our third neighbor. It may help us to balance our investments in Mongolia. It may help us to balance those economic interests. I usually say to our two neighbors, "You know when we have more investors from third neighbor, you, our two neighbors, Russia and China, will have more opportunity to invest, to work together. And that is my message usually. And, of course, our two neighbors respect our way of life, and also we have great cooperation with our neighbor countries.
WH: Mongolia has recently joined the Organization for Security and Cooperation in Europe, the OSCE, and chaired the Community of Democracies, for two years, I think. What other steps are you planning to project Mongolia's profile in the international community?
TE: I think we were very happy to join Organization for Security and Cooperation in Europe, and also we were very happy to chair Community of Democracies, and those involvements, that cooperation actually raised our profile internationally. And we would like cooperate with international organizations very closely. Mongolia is open for those international organizations, also regional organizations. Now, we are talking about becoming a member of APEC, for example, Asia-Pacific Economic Cooperation organization, and our neighbors in APEC member countries are actually supporting us. And we need to raise our profile, and one thing is that we need to make Mongolia more connected, more relevant to international issues. If we become more relevant, and I think also independent, the security of Mongolia is guaranteed. That's my philosophy, and we are working for that.
WH: In that same connection, can you describe the Civil Society Initiative, and I think I'm right in thinking that you discussed this with President Obama, Yes?
TE: Before coming to the UN, I received one invitation from the White House, and that invitation was from President Obama. And he asked me to join to supporting this civil society, and I was very happy, and I was the only president sitting together with President Obama launching that initiative in New York.
I really believe that civil society is the soul of any nation. Civil society is equal to democracy. If your people have that right, I think your nation benefits from that. People usually manage their life better than government manages people's lives. And I believe in that. We need to give more access, more opportunities for civil society, and because of that, I joined that initiative, and I think our success in Mongolia also can be shared with others. I'm really happy to launch that initiative.
WH: Mr. President, Mongolia has one of the fastest growing economies in the world. But with so much potential wealth, particularly from extraction industries, and yet a limited population and capacity, what steps are you taking to avoid the so-called resource curse?
TE: First step we are taking is to reform our legal system, judicial system. I usually say that if we got a lot of money, and at the same time, if we have bad governance, both country and nation are in trouble. Because of that, you have to reform your government. You have to make your government ready for that kind of wealth. And because of that, I'm really focused during these years, reforming our judicial system. And I think the rule of law is the best thing democratic countries can offer to its people.
And the other thing, of course, is we are learning from others; how other mineral/resource-rich countries are channeling those money profits from their resources. One example is close to us, Norway. Norway has a wealth fund, pension fund system. And I think we are now studying all other funds around world, and now we are working on a draft of a law and system, and I hope it will come up with good solution to channel, to avoid a resource curse in Mongolia. The world is open to us through the Internet. Through technical means, we can learn from other experiences. How countries are failing, how countries are succeeding. And we would like to be one of the succeeding countries.
WH: At the same time, other countries can learn from you, it seems to me. And I wanted to ask you specifically about Korea, because you are a country with relations with both North and South Korea, and I know you have been to Pyongyang. Do the North Koreans view Mongolia as having some aspects that it might like to follow?
TE: I think we have very good relations with both Koreas, South Korea and North Korea. We have our embassies there, our old connections. For example, with North Korea, their leader Kim Il-sung visited Mongolia twice, and also we have connections through the government. We have a government commission between our two countries every year, once meeting in Pyongyang and Ulan Bator. And we would like to keep that channel open and we would like to give North Koreans more connection with the rest of the world. Also, of course, Mongolia is happy to share our experiences—how to transform our economy, and how people can benefit from that. And I think they are interested in expanding our two countries' relations, and I hope you will hear more good news from this relation.
WH: So, the last question I want to ask you is sort of a personal question. How did it happen that the son of a nomadic herdsman, who was raised really in a Soviet system, Soviet education—you actually went to the USSR 's Army Academy—emerged as a person who not only talks about, but has produced democracy, judicial reform, a free press—all the trappings of open Western society? How did it happen that you became the person who realized that the system you were being raised in was not the system you wanted for yourself or for your country?
TE: When I think about this, I always think about my parents, my father and my mother. And I was born in a herdsman family and I have seven brothers. My family has eight boys, and I am the youngest.
And I think I got that education from my mother: Be good for other people, work for the others, serve others. If you share with others, if you work for others, in turn, you will benefit from that. That kind of teaching I actually heard from my parents. Imagine that: your father, mother, and also your seven brothers and yourself living together. And that was very close association. I think I'm really thankful for my parents.
Also, I'm really thankful for our great Mongolians, great generations who lived before us. I think they had a really good quality, and through genetics, I actually accepted those qualities. If I have something good as a human being, I think those are from my parents, those are from previous generations. And I was really happy learn that.
And one thing, also good—I think being herdsman boy, and now today as a president, freely elected by the people—this is really joy. Working for your people, serving your nation by their free choice? That's the greatest joy you can have. And thanks to the freedom, thanks to the democracy which we started in Mongolia, I am today president.
If we didn't have today's democracy, freedom in Mongolia, I would be a very different person in my country—if we kept that closed society, if we kept that communist society in Mongolia. And I'm really thankful for my nation, for my people. And they support me and they share my idea, and I have to serve for the interest of people. If you think good things about other people, I think, your fortune will be also good. I believe in that.
WH: President Elbegdorj, thank you very much for talking to us in the Global Observatory.
TE: Thank you very much.
4th Annual Mongolia, Russia, China Science Forum Begins
October 4 (news.mn) The 4th Forum of Scientists of Mongolia, Russia and China under the theme of "Green Development – Key trend of three party cooperation of 21st century" begins today on October 4th under the patronage of the Prime Minister of Mongolia. The International Studies Institute of the Mongolian Academy of Sciences, School of International Relations of the Mongolian National University are jointly organizing the 4th Forum at Government House.
The first Forum of the Scientists of Mongolia, Russia and Chine was organized under the theme of "Mongolia, Russia and China: Together for development in the 21st century" with the encouragement of the Prime Minister of Mongolia in 2008.
As the parties agreed to hold the Forum respectively, the 2nd Forum of Scientists was held under the theme of "China, Mongolia, Russia: Peace, Development and Cooperation" in Beijing in 2009.
The 3rd Forum was held in Moscow in 2012 under the theme of "Russia, China, Mongolia: together forward against modern challenges".
During this forum the scientists aim to discuss green development challenges and how to adopt it in cooperation.
Key remarks will be made by the Minister of Environment and Green Development, S.Oyun, the President of the Mongolian Academy of Sciences, B.Enkhtuvshin and Ambassadors of China and Russia to Mongolia.
Prime Minister of Mongolia N.Altankhuyag will meet the scientists to show his support.
EU-Mongolia relations: the PCA and beyond
In Cooperation with the Embassy of Mongolia in Brussels
Programme
13:30-14:00 | Registration |
14:00-14:15 | Introduction by the Chair: Mr Glyn Ford, Board Member, European Institute for Asian Studies |
14:15-14:45 | Keynote Address by |
| H.E. Mr Khishigdelger Davaadorj, Ambassador of Mongolia to the EU H.E. Mr Viorel Isticioaia Budura, Managing Director for Asia, EEAS |
14:45-15:15 | Presentations by Mr Herbert Dorfmann, Delegation for relations with Tajikistan, Turkmenistan and Mongolia, European Parliament Mr Jeroen Plag, Head of International Corporate Clients, ING Bank |
15:15-16:25 | Discussion and Q&A |
16:25-16:30 | Closing Remarks |
EU-Mongolia Relations: The PCA and Beyond
The signature of the EU-Mongolia Partnership and Co-operation Agreement (PCA) in April 2013 marked a historic moment in EU-Mongolia relations, as the PCA will act as a framework for the consolidation of political, economic and cultural ties between the EU and Mongolia. Mongolia has risen to international prominence, thanks to its flourishing third neighbour policy. This year Mongolia successfully chaired the Community of Democracies and was the global host of UN World Environment Day 2013. The country's global visibility is also likely to increase exponentially in the next ten years, as Mongolia's mining sector is set to become one of the largest in the world.
This briefing seminar will discuss the newly signed PCA agreement, Mongolia's position in Asia as well as highlight the present challenges that Mongolia faces. Through this seminar, EIAS seeks to reflect on the progress of the EU-Mongolia relationship and address the prospects for a future Mongolia, that is prosperous and a firmly entrenched member of the international community.
When
15 October 2013 14:00 through 16:30
Location
European Institute for Asian Studies
Rue de la loi 67
Brussels, B-1040
Belgium
Cabinet Discusses Appointing and Recalling of Some Heads of Diplomatic Missions
Ulaanbaatar, October 6 /MONTSAME/ The regular cabinet meeting ran Saturday discussed appointing and recalling of heads of some diplomatic missions abroad.
By its decision, the cabinet has recalled Sh.Altangerel, the Ambassador Extraordinary and Plenipotentiary of Mongolia to the Republic of France; B.Davaadorj--to Federal Republic of Germany; T.Zalaa-Uul--to Canada; and L.Orgil--to Switzerland.
Then, the cabinet decided to submit to the State Head proposals on appointing M.Batsaikhan as the Ambassador to France, Ts.Bolor--to Germany, R.Altangerel--to Canada and V.Purevdorj--to Switzerland.
Middle Banner 7 (600 pixels wide) |
Social, Environmental and Other
Waste to turn into power
October 4 (UB Post) Mongolians produce an average 1.2 to 1.3 million tons of waste per year. Members of the Mongolian National Association of Waste Recycling Industries (MNAWRI) collect, classify and recycle 30 percent of the waste and export it, while the remaining 70 percent is disposed of in landfills. But now, the buried waste could be turn into a source of power. MNAWRI has made quite an effort to introduce this advanced technology, popular in developed countries, to Mongolia and worked with Germany's PSE Engineering to cooperate on the matter, signing a memorandum of cooperation on October 2.
Germany is famous for its recycling industry in Europe and PSE Engineering will formulate consolidated research on the waste of 21 provinces and Ulaanbaatar, and will choose specific technology to use for recycling, as well as what plans and projects to implement in Mongolia.
PSE Engineering produces power, heat, and gas by burning waste at a very high temperature, and sells its energy to local power suppliers. Small recycling plants can recycle over 45,000 tons of waste, while PSE Engineering recycles over 100,000 tons of waste per year.
Mongolia wants Danish energy solutions
October 3 (Copenhagen Capacity) Large parts of Mongolia's energy sector are out-dated and cannot supply sufficient heat or electricity to the population. The Mongolian government is now looking at Danish energy solutions to help the country.
Mongolia's Deputy Energy Minister, Dorjpurev Dulamsuren, recently visited Denmark together with a delegation from the country's Department of Energy to look at Danish energy solutions that can be implemented in the out-dated energy sector.
Mongolia is already cooperating with several Danish district heating companies which during the past 20 years have helped the Mongols repair and build their district heating system. And the Deputy Minister refers to Danish energy technology as 'some of the most efficient'.
Large mutual interest
The Danish district heating sector welcomes the Mongolian governmental interest and reports a high level of mutual interest. At ABB, which provides district heating package solutions worldwide, Sales Director Martin Petersen states that the firm, in cooperation with Danish subcontractors, takes part in two projects in Mongolia with a total value of over DKK 150 million.
And even though the construction work will take place in Mongolia, the district heating projects will impact the Danish economy positively.
"Much of what is being produced for the district heating industry, for example pumps, is actually produced in Denmark," says Martin Petersen, who believes that it will create growth and new jobs in Denmark if the agreements with Mongolia fall into place.
This is an excerpt. Read the full article (IN DANISH) here.
Short Film: NCDFREE MONGOLIA
Inspiring NCDFREE change-maker, Byambaa, takes you on a journey through Mongolia and offers you an insight, an opportunity to join her in her vision for a Mongolia free from preventable NCDs.
Mongolia to have central walking tour routes
October 1 (UB Post) The Ministry of Culture, Sport and Tourism (MCST) is working to officially establish walking tour routes nationwide. In the first stage of the project, MCST held a training session on "Determining Routes of Walking Routes and Developing Sites Along Them" for officials in charge of tourism in the Culture and Sport Divisions of all 21 provinces on September 24.
The organizers believe that it will be a useful foundation for the officials to determine and establish walking tour routes that compliment the Mongolian climate, existing land formations and points of interests, as well as plan for development along the routes.
The number of foreign tourists interested in walking tours has been rising in recent years, and the new routes will help meet demand and diversify activities available to visitors. Handbooks, brochures, and other essential materials for tourists will also be published, which will be a new chapter for Mongolian tourism.
The Mongolian National Tourism Center has already established five routes and developed sites along the routes at Bogd Khaan mountain. In detail, there is an 8.5 kilometer route between Turkhurakh and Tsetsee Gun, an 8.4 km route from Manzushir Monastery to Tsetee Gun, a 4.5 kilometer route between Zaisan Hill and Baruun Shireet via Dugui Tsagaan, a 6.4 kilometer route between Zaisan Hill and Tenger Khad (Sky Rock), and a 3.1 kilometer route between Bayanzurkh Checkpoint and Temeen Khad (Camel Rock).
Apart from the plan to establish new routes, Minister of Health N.Udval showed her support for walking tours and sought to popularize them by holding nationwide morning jogging with the "Proper lifestyles starts simply" campaign on September 25. The campaign was initiated by a Sukhbaatar Province resident who said, "The most active time of the day for most Mongolians, especially our youth, now starts in the evening and they have almost forgotten the joy of being active and seeing the early morning sun." He proposed the campaign to Minister N.Udval as a way to prevent public illness by establishing healthy habits and exercise.
Minister N.Udval approved the proposal and held a 3 kilometer walking tour between 7 a.m. and 9 a.m., scheduled nationwide at different locations in all the provinces for the first time in Mongolia. She jogged along with Tuv Province residents.
The largest contributing factors to the mortality rate in Mongolia are cardiovascular disease, diabetes, obesity and high blood pressure. Expensive medications are not all that's needed for preserving good health. The key to good health lies in prevention. Daily exercises prevent cardiovascular disease by up to 90 percent, and diabetes by up to 80 percent. Health sector officials are encouraging the public to rise early, have breakfast regularly and exercise, jog and run in the morning sun.
The 51st Season of Opera and Ballet opens with the Chinggis Khaan opera
October 4 (news.mn) The Mongolian State Academic Theatre of Opera and Ballet is to open the 51st Season for 2013-2014 with an Opening Night performance of the Chinggis Khaan opera on Saturday and Sunday, October 5th and 6th.
Choosing Chinggis Khaan opera for the big night was not only chance. The theatre decided to stage the Chinggis Khaan opera whose history and life has been told for centuries in order to promote and support the National opera and ballet.
The two chapters and six scenes of the Chinggis Khaan opera by the State prized composer B.Sharav was performed first in 2005 by Cultural Merit Figure L.Erdenebulgan.
This year the State prized composer B.Sharav has prepared some improvement to the music for the opera. Soloist of the Mongolian State Academic Theatre of Opera and Ballet, E.Amartuvshin will for the first time feature as Temuujin in the Chinggis Khaan opera where the whole crew of the theatre will perform.
The performance will feature a crew of over 100 singers, ballet dancers and musicians in Khentii, Dornod and Sukhbaatar provinces as a part of Classic art-II National program in order to improve children"s musical education and to promote the value of classic music between October 9th and 15th. The theatre have prepared to performance the "Three Dramatic Characters" opera by D.Damdinsuren and B.Smirnov, a gala concert for youths.
The theatre also plans a surprise for classic music fans, a performance by Russian classic musicians on October 11th to 20th.
Skyline of tents, towers shows Mongolia inequality
October 3 (AFP) Sat in a tent on the outskirts of Mongolia's capital, Norihil Gendenpil lives on the physical -- and economic -- margins of a booming city filling up with skyscrapers.
The 88-year-old grandmother still worries daily about the rising cost of food for herself and 20 children, grandchildren and other family members.
"Every morning the price goes up," she says, sitting in her yurt, a traditional felt tent used by Mongolian nomads for generations.
"But I don't want to ask anything of my daughters, since they themselves are struggling to make ends meet."
Just a few minutes' drive down a dusty road, glitzy skyscrapers, malls, a five-star golf and ski resort and -- perhaps the greatest luxury in her eyes -- apartment blocks with central heating offer a stark contrast to Gendenpil's way of life.
The nouveau riche in Ulan Bator, home to half of the country's three million people, can now go shopping for Armani outfits, Louis Vuitton bags and Vertu mobile phones encrusted with precious stones.
Driving Lexus SUVs and Hummers, they clamber over poorly paved roads and idle in chaotic traffic in a city full of dilapidated infrastructure from the era when the country was a satellite of the Soviet Union.
The rapid transformation -- in one of the poorest countries in the world -- has come from the exploitation of vast coal, copper and gold reserves.
Mongolia's economy grew 12.3 percent in 2012 after expanding 17.5 percent the year before.
But rising inequality in the cities along with environmental damage in rural areas have stirred popular discontent.
Mining wealth yet to flow to the fringes
The government of President Tsakhia Elbegdorj, re-elected in July, faces mounting pressure to balance the demands of powerful multinationals and its own people.
It is also dealing with uncertainty prompted by drops in commodity prices and falling demand in the key market of neighbouring China.
Growth has slowed in the first half of the year and foreign investment has plummeted by 43 percent -- prompting parliament to hold special sessions in recent weeks.
The mining wealth has yet to flow to the fringes, where Gendenpil lives on a monthly pension of 180,000 tugriks ($110, 80 euros).
She relies on government food-stamps -- of $5.90 a month for adults and half that for children -- to buy the Mongolian staples of meat and dairy.
Vegetables can be hard to come by in a country where temperatures drop to minus 40 degrees Celsius (minus 40 Fahrenheit) in winter, while imports from China are expensive.
Some of Gendenpil's younger relatives have already given up on sharing in their country's boom.
Enkhnyamaa Purevsuren, 28, had been earning $310 a month in a leather-goods factory before joining her sister in Malaysia, where she worked as a nanny.
But two years later, at the end of 2012, Gendenpil called her and other family members back to Mongolia, unnerved by rumours involving the Mayan calendar that the world was about to end.
Dutiful relatives returned home, gathering around a shamanistic altar at the back of their yurt to await the apocalypse.
Since then Purevsuren has been hoping to make her way back to Malaysia.
"I haven't managed to save any money," she says.
"I don't have a place to live and salaries are very low."
Hakuho wins his 27th Emperors Cup at Autumn Grand Sumo Tournament
October 1 (news.mn) The Autumn Grand Sumo Tournament of Japanese Professional Sumo (Aki Basho) took place for 15 days in Tokyo seeing Mongolian wrestlers taking the lead.
Mongolian native Hakuho M.Davaajargal won his 27th Emperor"s Cup with 14 wins and only one loss on the 14th day of the tournament on Saturday.
The 69th Grand Champion of Sumo Hakuho moves forward to making a historical record. Now he needs six more Emperor Cups to break the record of Japanese Professional Sumo made by Chiyonofuji (31) and Taiho (32).
Hakuho was beaten by Goeido earlier in the tournament but was successful all the way in the rest of the tournament. Hakuho took the Cup by defeating Kisenosato on the 14th day. On the 15th day he beat easily Yokozuna Harumafuji ensuring his victory and his 27th Emperor"s Cup.
Hakiho commented in an interview after the Emperor"s Cup ceremony:
"I want to congratulate the city of Tokyo, the host of the 2020 Olympic Games. I will be 35 years old when the 2020 Olympic Games comes. I think I will not give up my career in the sumo stage until that day comes. I have promised this. I want to stand along with my father J.Munkhbat, Olympic silver medalist, the Grand Champion of Mongolian National Wrestling at the Opening ceremony of the 2020 Olympic Games."
Yellow Colt: Busan Review
The Bottom Line: A story of a boy and his horse exploits Mongolia's natural beauty but not much else.
Venue: Busan International Film Festival
Director: Khoroldjorj Choijoovanchig
October 6 (The Hollywood Reporter) Khoroldjorj Choijoovanchig's debut feature is a tale of a runaway colt and the young boy that rides him to a racing victory.
The beautifully barren Mongolian plains are the setting for Khoroldjorj Choijoovanchig's debut feature, Yellow Colt, an underwhelming tale of a runaway colt and the young boy that rides him to a racing victory. Not quite a coming of age story and not quite about the pains of loss and identity, the film sits on the fence between overly artistic drivel and painfully mainstream uplift.
Pre-teen Galt (Narankhuu Bayarkhuu) returns to his nomadic family after the uncle that adopted him dies, leaving him no choice but to return to his so-called motherland. After a period of adjustment, he learns to get on with his parents, particularly dad Badam (Tserenbold Tsegmid), and older brother Tomor. At the same time Badam is preparing his herd of horses for a vaguely prestigious Naadam race contested among the surrounding herders.
Galt takes an instant shine to a wild yellow colt that wanders into the pack one day, and asks his brother to help him train the animal for the upcoming race. The horse is considered a good omen, and sure enough Galt wins. Other than a minor rivalry between Badam and another herder that wants the horse, or just doesn't want Badam to have it, that's the extent of the action.
Yellow Colt is kindhearted and well intentioned, and taken together that also equates to dull. The performances are defined by wistful gazing and mournful stares, and plenty of time is devoted to horses running in slow motion against the vast Mongolian grasslands. Tack on a distracting soundtrack fit for an inspirational Lifetime movie and a racing refrain reminiscent of a 1960s television western, and the result is an unassuming story that sadly flirts with camp rather than rousing.
A Window on Asian Cinema
Cast: Narankhuu Bayarkhuu, Damdin Sambuunyam, Tserenbold Tsegmid
Director: Khoroldjorj Choijoovanchig
No rating, 91 minutes
Remote Control: Busan Review
The Bottom Line: A competent debut that effectively showcases the possibilities of Mongolian cinema.
Venue: Busan International Film Festival, New Currents
Cast: Enkhtaivan Bassandorj, Nergui Bayarmaa, Chagnaadorj Ganbaatar
Director: Byamba Sakhya
October 5 (The Hollywood Reporter) Mongolia director Byamba Sakhya's first film revolves around a rural teenager trying to connect with city life and urban dwellers.
With its central premise being a young man's fascination with a woman living in a tower block across the street, Remote Control's premise reads like a retreading of Krzysztof Kieslowski's A Short Film About Love, which tells the tale of a young man's obsession with an older woman. Byamba Sakhya's film offers a teenage epiphany in ways different than the Polish auteur's -- the first-time Mongolian director has offered a rite of passage less fatalistic than Kieslowski's -- and with a modicum of a comment on the changes in his home country as well.
The film revolves around Tsogoo (Enkhtaivan Bassandorj), a young man hailing from a broken rural family -- alcoholic father, cold stepmother, a crooked elder brother who has long bolted to the city -- whose regular milk-selling trips to Ulan Bator has opened his eyes to a life (possibly) less ordinary. After one bust-up too many with his parents, he leaves for the city and camps atop an apartment block where he surveys everything below and begins to dream of leading the lives he sees.
It's more than halfway into the film that the central relationship emerges: Tsogoo spots the lonely Anya (Nergui Bayarmaa), and his attempt to connect with her leads to him nicking a remote control and playing with her gigantic TV. His heart will soon be broken however, as his intervention into her life actually helps mend her relationship problem.
The film does take some time to get into gear, and yields some hammy acting that diverts some unintentional comedy. Still, Sakhya and his team have crafted a competent debut that effectively showcases the possibilities of Mongolian cinema.
Busan International Film Festival, New Currents
Cast: Enkhtaivan Bassandorj, Nergui Bayarmaa, Chagnaadorj Ganbaatar
Director: Byamba Sakhya
90 minutes
Children playground destroyed by Avzaga Buildings
By Batzul Gerelsaikhan, COPENHAGENER TO ULAANBAATARER
October 2 -- It began .. years ago (I really do not remember when it began. To be updated when I confirm it with my family and neighbors), when my playground was taken away from me within a fortnight - I woke up to see the playground, which I grew up playing at, fenced with high wooden fences. I immediately understood that a building was to be built soon. It made me angry. It made my family angry. It made my neighbors angry. Most shockingly, it made me angry, and I seldom get angry! Anger is such a strong feeling that I seldom lay upon anything or anyone.
I've understood that I was actually angry at myself. I couldn't understand how did this happen so fast. Why wasn't I aware of this? How could this happen so fast? How could I let it happen? I asked my family "What's going on??!", and my mother responded with "I do not know". Of course, we knew what was going on, but we couldn't understand how we could let this happen. My mother tried talking to our building mayor, since new buildings legally needed a permission from the neighboring residents that says "Yes, we like the idea. You are welcome to build buildings, take the playground away from our children, block our sunlight, disturb our peaceful sleep with the building noises and make our residential area ugly" - which was highly unlikely to be approved by any of our neighbors.
We live next to the State Department Store, the Nomin Supermarket - the center of the capital city, where people of middle class or above used to live. We never imagined that anyone in their right mind would approve such a hostile playground demolition - it would not be fair to our children and our next generation. However, we were wrong. One of the elderly grandmother resident told our mother that our building representative somehow approved it, she jokingly said that person got a good deal of money for it and already moved out of the building. When my mother told me this, I was angrier.
My anger grew as the construction started taking down our playground toys and equipment - our beautiful tall trees that circled the playground (in an oval shape if you look from above. I really wish I had photos to show its beauty!), our grass, our tables and chairs (where grandparents used to play chess and cards), our seesaw, our merry-go-round, our swing set, our slide, our chin-up bars, our sandbox, our monkey bars, our overhead ladder and many of which (i) helped children develop physical strength and flexibility; (ii) provided enjoyment and fun; (iii) staged a beautiful romantic place for couples and loved ones; and (iv) gave elderly people a lovely garden to relax and enjoy each other's companion and laughter. I cried when they cut off my tree - I used to climb that tree many times when I was a child. It broke my heart, literally. How can they do this to children?
We reached our breaking point, so I and our neighboring children decided to take down the wooden fences. We all agreed on time and date - I was never that excited to take down and destroy something. I could not wait to take that illegal property down and free our playground from them. When the time came, we all ran to the wooden fences. I have no idea how many we were, but the kids' number were just multiplying so fast. I think the kids from other neighboring buildings were joining us. Altogether circling the fences around, the kids started screaming and started kicking the fences down. You may call it a "small revolution" of the neighborhood kids.
How proud we were to seize back what was rightfully ours. We kicked the fences over and over again. As a girl, I kicked it with all my power. Not caring about the girly behavior and dutiful look, I kicked and took the fences down with rest of the boys; and boy, how good I felt! Once we took the fences down (all of it), we were happily jumping on it - hands up, screaming "yeahhhhhhhh", giving hugs and high fives to one another. Even television and media reporters came that night and recorded our victory against the vicious business plan. We screamed at the TV reporter, saying "We won! We won! We won!"
Sadly, the next day, the construction builders came again and built a stronger iron fences instead. This time our parents and grandparents came out and started arguing with the construction builders, telling them this is illegal. The construction people apologized and told us that they were merely taking orders from their bosses, and they had no right to stop the construction - otherwise they would be fired. They said "We are only doing our jobs here. Please, do not make it difficult for us". After heated discussions, they started pushing one another. The kids just stood there and saw that it was out of their hands - it was too big to tackle. Even our parents and grandparents could not do anything about it, but push the construction people around. How could possibly small kids make a difference?
Our victorious fire in our hearts died then - we all understood that money and power ruled the world. I remember lowering my head down, looking at my feet and told myself that I did not want to live here anymore. Many families agreed with me. One by one, our neighbors started moving to Zaisan, once the building was in progress. We hated that building and everyone who was involved in it: from the person behind it, to the people who were building it, to the people who financed it, to the people who got bribed and gave the permission to build this illegal building, to the people who bought apartments and everything to do with it.
After our constant calls and complaints, they promised to build only one building on half side of the playground, and renovate the other half of the playground to a more beautiful playground. Foolishly and innocently we believed them till they started building the second tower on the same ground they promised to build a playground. This happened when I went to Denmark to study. I was very shocked to see another tower built - another really ugly one - when I came back. I truly loathed those two towers.
How ugly they looked. They did not even fit the surroundings. The architecture who designed it had no taste in style, obviously. I mean, take a look at it when you walk past State Department Store now. Should not the architecture take the surroundings into a factor when they build something? I-40,000 area is full of ancient buildings, 4 floored, and all look alike. I'd like something nice as Gandirs, which is built at the other side of the State Department Store, but noooo, take a look at the photos below. In addition, they did not think about parking spaces as well. As soon as the residents went to the building, our area started having traffic jams and lack of parking space (Duh! More people means more vehicles). Worse, the residents started throwing their garbage right outside their building that faced the main street (look at the photos below).
The first Avzaga Building #17:
The second Avzaga Building #(not known) right next to the ugly green one:
Someone asked me "How do you know the garbage is from the new residents? It could be you!" I told him that all of the initial/former residents throws their garbage behind a door of the 1st floor of the main corridors; then our building cleaning lady picks them up and gives them to the garbage collecting car when it comes every morning. Plus, as you can see from the photo, the garbage is full of boxes - yes, boxes. New TV boxes, refrigerator boxes, new whatever boxes and so forth - a clear sign of new residents moving in. It made me wonder and come to a conclusion that the people who moved in to this building do not care about the surroundings and the beauty of their residential environment.
To sum things up, I'd like to ask few questions from the people who supports, finances and buys such horrible properties:
1. To the project master: How can you do this - taking away the playground from children and the relaxing garden from the elderly? How can you sleep at night? How much money did you make? Was it worth it?
2. To the financing investors and buyers: How can you finance such illegal and inhumane project? How can you sleep at night? How can you buy such apartment with no residential gardens, no parking space and no playground for your children? How can you sleep in it?
3. To everyone who let this happen: How did we let this happen?
I am ashamed of myself for letting this happen. I am ashamed of my neighbors who let this happen, even if they fought with me during the revolt. I am ashamed of living next to these people who support and purchase such horrible buildings. I am ashamed of living in such area.
A disappointed resident of State Department Store area,
Batzul
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Munkhdul Badral Bontoi
Founder & CEO
Email: mogi@covermongolia.mn
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