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Tuesday, July 29, 2014
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Headlines in Italic are ones modified by Cover Mongolia from original
Announcement made after Monday close. MEC closed Monday -1.78% to HK$0.221, +34.8% in last 3 months
MEC Appoints China Firm as Contract Miner for Planned Q4 Resumption of Commercial Production
July 28 -- This announcement is made pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong).
The board of Mongolia Energy Corporation Limited (HKEx:276) is pleased to announce that on 28 July 2014, MoEnCo entered into a mining services (coal extraction) agreement with Shin Jian Lu Di Van LLC (新疆綠地王) for appointing it as mining contractor to provide coal extraction services for the Khushuut Coal Mine. According to the agreement, the Contractor is principally required to provide coal mining services including loading and haulage of coal on the mine site.
The Company plans to resume commercial coal production for export by the fourth quarter this year. As the resumption of commercial coal production for export is subject to a variety of factors including but not limited to the smooth running of the dry processing plant at the Khushuut Mine Site and the washing plant in Xinjiang, and the market conditions, shareholders of the Company and potential investors are advised to exercise caution when dealing in the securities of the Company.
The appointment of Mining Contractor (Coal Extraction)
This announcement is made pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong).
The board of Mongolia Energy Corporation Limited (the "Company") is pleased to announce that on 28 July 2014, MoEnCo LLC ("MoEnCo"), an indirect wholly owned subsidiary of the Company, entered into a mining services (coal extraction) agreement (the "Agreement") with Shin Jian Lu Di Van LLC (新疆綠地王) (the "Contractor") for appointing it as mining contractor to provide coal mining services including loading and haulage of coal on the Khushuut Coal Mine. It shall work along with the overburden removal contractor for the provision of mining services.
The Parties
Employer
MoEnCo is an indirect wholly owned subsidiary of the Company and also the license holder of the Khushuut Coal Mine.
Contractor
Shin Jian Lu Di Van LLC (新疆綠地王) is a wholly owned Mongolian subsidiary of its holding company which incorporated in the People's Republic of China in August 2000 and its main business activities include irrigation projects and mining. It has coal extraction experience in Eli, Xinjiang (新疆伊利) in the People's Republic of China.
To the best knowledge of the board of the Company, the Contractor is an independent third party not connected with the Company (as defined in the Listing Rules).
Principal terms of the Agreement
The principal terms of the Agreement, among others, are as follows:
Term
The term of service of the Agreement is for a mobilization period of 35 days and a working period of 36 months.
Principal scope of services
The Contractor is principally required to provide coal extraction, loading and haulage services on the mine site.
Plant and Equipment
The Contractor shall provide manpower and materials, including consumables, trucks, dozers and other machineries, camps, equipment, facilities, and fuel supply; and other ancillary materials and resources for the provision of the coal extraction services.
Service Fee of the Contractor
The service fee of the Contractor is based on the quantity of raw coal extracted by the Contractor. Based on our current estimation, the service fee for the Contractor in the 2014 calendar year will be approximately US$1,700,000. However, the coal extraction quantity and hence the service fee could be varied and adjusted by MoEnCo as provided under the Agreement in response to the market conditions and/or the progress of the other contractors on the site.
Others
The funding of the service fee under the Agreement will be provided by the internal resources of the Company.
The Company plans to resume commercial coal production for export by the fourth quarter this year. As the resumption of commercial coal production for export is subject to a variety of factors including but not limited to the smooth running of the dry processing plant at the Khushuut Mine Site and the washing plant in Xinjiang, and the market conditions, shareholders of the Company and potential investors are advised to exercise caution when dealing in the securities of the Company.
Bestway: Annual Report 2014
July 28, Bestway International Holdings Ltd. (HKEx:718) --
…
Mining Business
Since completion of the acquisitions of the Mongolia subsidiaries in December 2009, the operation of the Mongolian tungsten mines has remained stagnant. Ms. Yang Lee (our former executive director who has extensive experience in the resources industry) continues to act as consultant to reconsider the overall operating strategy for the mining business in Mongolia.
The Directors re-assessed the recoverable amount of the mining rights by using fair value less costs of disposal, which is derived by using discounted cash flow analysis. Details of the mining rights are set out in note 16 to the financial statements
…
Cash at end quarter A$662K. WOF closed flat Monday at A$0.04
Wolf Petroleum Quarterly Activities Report
July 28, Wolf Petroleum Ltd. (ASX:WOF) --
Highlights:
· THE NEW PETROLEUM LAW PASSED
The parliament of Mongolia has passed a new petroleum law aiming to boost foreign investment and make the petroleum sector one of the nation's leading industries.
· NON CORE MINING ASSET DIVESTMENT
Wolf Petroleum sold its interest in SKKGM to its former joint venture partner, Electrum Group for US$200,000.
· RESOURCE ASSESSMENT COMPLETED
Independent resource assessment on SB block estimated LOW 460 million to HIGH 2.2 billion barrels of potentially recoverable oil.
· FARM OUT PROGRESS
A data room has been established and potential strategic partners are in the data room and evaluating the opportunity.
Wolf Petroleum's current focus and major milestone is to farm out SB block.
The New Petroleum Law Passed
The parliament of Mongolia has passed a new petroleum law aiming to boost foreign investment and make the petroleum sector one of the nation's leading industries.
The long awaited New Petroleum Law has been passed by the Parliament of Mongolia and is effective from 1 July 2014. Wolf Petroleum had an opportunity to review and comment on the new law with petroleum related associations and other operating companies.
THE INCENTIVES UNDER THE NEW MONGOLIAN PETROLEUM LAW
OIL OPERATIONS:
The exploration period is eight years and can be extended twice by two years. The production period is 25 years and can be extended twice by five years.
PRODUCTION SHARING CONTRACT (PSC):
Production Sharing Contracts (PSC) can be signed and approved by the Government upon the Companies' request within 180 days. The Company must meet the exploration contract commitments and discuss the production sharing terms.
Wolf Petroleum is ahead of its exploration contract commitments on BU and Jinst blocks and planning to apply for a PSC in 2014.
ROYALTY:
Royalty payments to the Government of Mongolia to be at least 5%.
TAX EXEMPTION:
The Companies are exempt from customs duty, VAT in first five years, and income taxes from oil sales.
COST RECOVERY PROGRAMME:
Exploration, operation, development, and production costs can be recovered 100%. Annual percentage from oil sales to cost recovery programme can be up to 40%.
PIPELINE:
Upon request a Company may be granted a permission to build a pipeline for the purpose of transferring the petroleum that it produces.
The New Petroleum Law simplifies the application for Production Sharing Contract, minimises bureaucracy, and creates a more competitive and investment friendly business environment.
The Company believes the new petroleum law will play a significant role in development of the industry and further open more investment opportunities in Mongolia.
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WOLF PETROLEUM HIGHLIGHTS:
· The leading oil exploration company in Mongolia.
· The largest petroleum acreage holder with over 18 million acres.
· Drill ready prospects with 460 million to 2.2 billion barrels of oil.
· Discussing farm out deals with potential strategic partners.
· Near term huge upside potential with drilling programmes planned.
…
Link to Quarterly Cashflow Report
Cash at end of quarter A$601K
Modun Resources June 2014 Quarterly Report
Highlights:
• Placement to sophisticated investors raising $200,000
• Discussions with local partners to invest in the Nuurst Project are ongoing
• Discussions with Mongolian Government for the off-take agreement are ongoing
• Expansion of company strategy to review new opportunities
July 28 -- The Directors of Modun Resources Ltd (ASX: MOU) (Modun) provide you with an update of activities during the March 2014 quarter.
Placement
On 11 June 2014, Modun completed a placement to a sophisticated investor raising $200,000 via the issue of 100m shares at a placement price of 0.2c. In addition to this placement, at the General Meeting held on 10 June 2014, shareholders approved a placement to family interests associated with a director, Hugh Warner raising $200,000 via the issue of 100m shares at a placement price of 0.2c. At the end of the quarter, Modun has total cash reserves of $601,000.
Nuurst Thermal Coal Project
During the quarter, Modun has continued to focus on sourcing a local partner to help fund the development of the Nuurst Thermal Coal Project. Discussions with a number of potential partners remain ongoing. In addition to this, our Mongolian representatives have continued to hold discussions with the Mongolian Government to progress the completion of the Off-take Agreement, however the timing for the Government to sign the agreement remains uncertain.
Company Strategy
Despite the success we have achieved in generating a 478 million tonne 2004 JORC Compliant Coal Mineral Resource at the Nuurst Thermal Coal Project (326 million tonnes Measured, 104 million tonnes Indicated, 48 million tonnes Inferred), as announced to the ASX on 8 November 2012, we have not been able to convert this asset into growth in the Company's share price nor have we been able to bring the project into production.
As a consequence, the Company has been considering other opportunities available to it to bring value to its Shareholders. The consideration of these opportunities has led the Directors to develop three alternative strategies, to either:
1. continue to explore and focus on the Nuurst Coal Project solely; or
2. keep the Nuurst Coal Project and continue to explore and develop that Project while also looking at and acting on opportunities to acquire additional assets, and develop both of those assets side by side; or
3. sell the Nuurst Coal Project and focus on identifying a new asset that the Directors consider could bring value to Shareholders.
The Company has been investigating the opportunity to diversify into the technology sector via the acquisition of a technology business. The Company has been advised by ASX that, if it does pursue this strategy, then it will most likely need to re-comply with Chapters 1&2 of the Listing Rules. Shareholder approval will be required to sell the Nuurst Coal Project.
Clearly we could maintain our focus on the Nuurst Coal Project and not suffer any compliance burdens, but history has demonstrated that this is not a value creating strategy and so it is not our preferred course of action.
The Directors continue to assess opportunities across the range of the alternative strategies listed above.
Tenement Schedule
At the date of this report, Modun has an interest in one tenement as follows and there have been no changes during the quarter:
Tenement | Project | Location | % Interest |
MV 017349 | Nuurst Thermal Coal | Mongolia | 100 |
Link to Quarterly Cashflow Report
Guildford Coal: Singaporean Party Extends Unsolicited Offer to Acquire Australian Assets to 30 July
July 28 -- The Board of Guildford Coal Limited (ASX:GUF) (Guildford) refers to the announcement made on 17 July 2014, in relation to the unsolicited offer received by the Company, which was due to expire on 23 July 2014.
At this time, Guildford remains in discussions with the Singaporean party interested in the purchase of the Australian assets.
The Board confirms that an extension of time of the offer has been provided by the Singaporean party, and the offer is now due to expire at 5pm (Singapore time) on 30 July 2014.
TRQ closed flat Monday at US$3.51
Will Turquoise Hill's Time Ever Come?
By Gary Bourgeault, July 27 (Seeking Alpha) --
Summary
· Even though mostly negative news continues to weigh on Turquoise Hill, it has found a bottom and range, and continues to move in it.
· No matter what happens, the massive resource at Oyu Tolgoi isn't going away, and that bodes well for the long-term outlook for the miner.
· There is only one thing in the short term that really matters, and that is what needs to be considered if deciding on adding to or initiating a position.
Turquoise Hill Resources (NYSE:TRQ) continues to be the mining company with a lot of potential, even as challenge after challenge has slowed down the progress of the mine, with the primary one being numerous differences with the government of Mongolia over Oyu Tolgoi.
As negotiations stretch out, the question increasingly becomes when it would be a good time to add to a position in Turquoise Hill, or if it's a good entry point.
To make that decision, investors have to consider a couple of things. First, is almost every negative catalyst known concerning the company baked into the price. I believe it is. Even with the recent attempt by the government of Mongolia to surprisingly send a large tax bill to the company wasn't enough to result in a permanent dip.
It dropped significantly on the news, but has already gained about half of that back in a month. That's going to continue to be the way the share price of the company moves until something is announced that gives investors visibility for the future. At that time there is no doubt the share price will soar; which is why those wanting to position themselves to take advantage of that inevitable ascent need to consider if this is a good place and time to invest in Turquoise Hill.
The largest element to consider is the resource at the mine itself, which with a life span of an estimated five decades or longer, has the potential to produce significant revenue for a long time into the future, once negotiations are over and the results analyzed.
In that regard, Turquoise and majority owner Rio Tinto can't be seen as caving in too much, if they do at all, as that would change the overall narrative of the company, and turn it into something it wasn't before negotiations. I find it unlikely to be the outcome. But giving up something to some degree it already has is a possibility. If that happens, it can't be overly material to the performance of the company. I believe these are the types of things investors are mulling over while waiting to see how things play out.
Resource
The reason it's important to check in with Turquoise occasionally is the surety of its future. When consideration is taken as to the massive amount of resource at the mine, there's no question this is going to generate a lot of earnings going forward.
There is approximately 46 billion pounds of copper at the mine and 25 million ounces of gold; all in measured and indicated resources. In inferred resources, it climbs to 55 billion pounds of copper and 37 million ounces of gold. This doesn't include the huge silver deposits and other minerals at the mine.
With a 66% stake in Oyu Tolgoi, you can see why this is a company that must be taken seriously by investors. It's only a matter of when it's going to take off, not if. It will take longer to move into full production because of the company holding off on construction of the second phase of the mine until matters are settled. Consequently, investors will have to be more patient and embrace a long-term outlook.
What needs to be understood is this is a company sitting on this resource and is trading at about $3.50 per share as I write.
How to Consider Turquoise Hill at this Time
Investors can't analyze Turquoise Hill as a normally operating company because of the standstill with the government. For example, in the first quarter there were "rake blade failures in the tailings thickeners, which caused the shutdown of one production line for approximately seven weeks."
While that had an obvious effect on the performance of the company for the first quarter, it was largely irrelevant. Under normal conditions it would have been a temporary issue which would have, for a short time, put some downward pressure on the share price. But with the much larger issues at stake, nobody really paid much attention to it. I sure didn't.
Even generally positive news doesn't have much effect on the performance of the company.
All I and most investors interested in the company want to know are the results of the negotiations between Turquoise Hill and the Mongolian government. That's all that matters in the short term, and in my opinion, should affect the strategy for investing in the company if investors are interested in it.
What Should Determine Investment?
If investors likes commodities and metals, I don't see much better of a company to invest in at this time. Other than shutting down the entire operation or nationalization, there is nothing on the production and resource side that really could fail; as Rio Tinto is managing the project, and has the experience to make it successful.
On shutting down the project, that would be a decision in the hands of Rio Tinto and Turquoise Hill. As I said, I don't see them turning away from the project unless the government of Mongolia makes outrageous demands that would significantly cut into profitability.
On the possibility of nationalization, that is highly unlikely. Mongolia doesn't have the experience to successfully mine the resource, and it's a fact that when natural resources are nationalized, production goes down, and revenue and earnings with it.
Unless the government decides to run it as a socialist wealth distribution organization, it's very unlikely we'll see that the route it takes. To me, the only way that would happen is if Turquoise walked away and took the hit. Those are really the only risks I see. They're possible, but not probable.
Is This a Good Entry Point?
With that in mind, and the large resource it has a 66% stake in, it must be determined if this is a good entry point of not. I believe it is.
As mentioned earlier, there is little more that can hit the company, and even if it does, as it did in the latter part of June 2014 with the tax debacle, the company will take a temporary hit, and bounce back. That has been the way it has responded in the past, and it has again.
The point is, it appears, when weighed against the massive resource in the mine, the share price has found a bottom and a range, and no matter what the company has been hit with, it continues to chug along in that range.
It has fallen close to the $3.00 per share mark, and a few times jumped up past the $4.00 per share mark briefly over the last 12 months. I see the range of the share price being mostly in the $3.30 to $3.80 during relatively quiet times. So at $3.51, this is a very good price to look at for adding to a position or taking one.
My thinking is there is really nothing else that could happen, short of the company walking away or nationalization, that will do much more to the share price, other than bounce it around in the range mentioned, with a news event pushing it a little lower or a little higher, depending on the nature of the event.
Conclusion
Unless investors believe Oyu Tolgoi is going to be taken over by the government or Turquoise Hill is going to walk away from it, I don't see anything that could hold back the share price from soaring once uncertainty is eliminated from the equation.
Earlier I said the company could possibly take a hit if it is perceived to cave in too much to Mongolia in a way that would materially affect its performance. But I only see a small compromise, if any, being in the cards. That's because demands that are too high would in fact result in the company walking away from it if it can't make a profit over the decades the mine is projected to operate.
So at $3.50, I see that as a good entry point. I don't see how an investor could lose at this price, as long as he doesn't panic and get out before negotiations are over and the results known.
Nothing has changed with the amount of metals in the ground, and that's why I believe the share price has found a bottom and a range; both of which are easy to identify and be taken advantage of if it is believed the issues are going to be settled and the project eventually reach full production levels.
MSE Launches MSE ALL Pilot Index Today
July 28 (MSE) "MSE ALL" pilot index is calculated from 1000 points and, as of 28 July 2014; total of 415 shares of 7 JSCs were traded. Consequently, "MSE ALL" pilot index decreased by 0.52 units or 0.05 percent to 999.48 points.
MSE Weekly Review, July 21-25: Top 20 -1.09% to 16,110.35, Turnover ₮70.8 Million
Ulaanbaatar, July 28 (MONTSAME) Five stock trades were held at Mongolia's Stock Exchange July 21-25 of 2014.
In overall, 107 thousand 837 shares were sold of 39 joint-stock companies totalling MNT 70 million 776 thousand and 142.70.
"E-trans logistics" /22 thousand and 567 units/, "Remikon" /20 thousand units/, "Genco tour bureau" /18 thousand and 118 units/, "Hai Bi Oil" /17 thousand and 170 units/ and "Moninjbar" /12 thousand and 794 units/ were the most actively traded in terms of trading volume, in terms of trading value--"APU" (MNT 15 million 312 thousand and 030), "Shivee ovoo" (MNT 11 million 951 thousand and 900), "Hai Bi Oil" /MNT seven million 555 thousand and 680/, "Moninjbar" /MNT three million 458 thousand and 540/ and "Tavantolgoi" (MNT three million 325 and 060).
MSE News for July 28: Top 20 -1.03% to 15,944.39, Turnover ₮1.5 Million
Ulaanbaatar, July 28 (MONTSAME) At the Stock Exchange trades held Monday, a total of 415 shares of seven JSCs were traded costing MNT one million 482 thousand and 235.00.
"Genco tour bureau" /150 units/, "Gobi" /125 units/, "Makh impex" /108 units/, "Mongol shiltgeen" /10 units/ and "APU" /10 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Gobi" (MNT 983 thousand and 035), "Makh impex" (MNT 324 thousand), "Mogoin gol" (MNT 94 thousand and 500), "APU" (MNT 39 thousand and 010) and "Baganuur" (MNT 19 thousand).
The total market capitalization was set at MNT one trillion 602 billion 295 million 764 thousand and 833. The Index of Top-20 JSCs was 15,944.39, decreasing by MNT 165.96 or 1.03% against the previous day.
New MSE Listing Rules Goes in Effect after FRC Approval
July 28 (Cover Mongolia) New rules allow for dual listing and set three-tier listing possibilities.
Tier I is for companies who are well recognized, with large market cap, stable profit/revenue/operations.
Tier II is for mid-size companies with market cap of less than ₮1 billion, with 1 year worth of working capital, and operational history of more than 2 years.
Tier III is for small to midsize companies who are start-ups, high-risk, or mineral exploration/mining companies.
Tier II will be more suited for sophisticated/professional investors.
Link to MSE release (in Mongolian)
MSE Acting CEO Appointed Head of Working Group on Improving Financial Risk Management of Listed SOEs
July 28 (MSE) According to decree No. A/155 of head of SPC, dated 23 July 2014, Angar.D, acting CEO of MSE, has been appointed as a head of working group, which was established for improving financial risk management of some state owned companies in scope of intense capital market development.
The working group consists of delegations of SPC, MSE, SCHCD, and MASD.
MSE Publishes List of 196 JSCs That Haven't Filed Financial Reports, 80.3% of All Stocks
July 28 (MSE) According to No.20.1.6 of Securities law of Mongolia, provision of Article No.13.2 of Accounting law of Mongolia, securities issuer companies shall have to submit second quarter financial statement to MSE within 20th of July. The report submitting timehas extended to 25 July 2014 by Minister of Finance due to the coincidence of the national holiday "Naadam Festival".
As of 25 July 2014, 48 JSCs or 19.7 percent of total 244 MSE listed JSCs submitted statement to MSE.
Rest of 196 JSCs that failed to implement the obligation of providing transparency will be announced to the public by MSE. If this violation will be repeated, MSE will take actions such as to suspend securities trading or delist from MSE.
Click here to view companies that did not submit statement on time.
48 (Out of 244) JSCs That Filed First Half Financial Reports on Time
№ | Company name | Symbol | Description | Publish date | Download | |
1 | BDL | 2014-07-25 |
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2 | SDT | 2014-07-25 |
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3 | BEU | 2014-07-25 |
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4 | SHV | 2014-07-25 |
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5 | BAN | 2014-07-25 |
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6 | NXE | 2014-07-25 |
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7 | BDS | 2014-07-25 |
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8 | BRM | 2014-07-25 |
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9 | NKT | 2014-07-25 |
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10 | HBO | 2014-07-25 |
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11 | SHG | 2014-07-25 |
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12 | MTZ | 2014-07-25 |
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13 | MIB | 2014-07-25 |
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14 | HGN | 2014-07-25 |
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15 | MRX | 2014-07-25 |
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16 | HBJ | 2014-07-25 |
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17 | NRS | 2014-07-25 |
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18 | ETR | 2014-07-25 |
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19 | AMT | 2014-07-25 |
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20 | JTB | 2014-07-24 |
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21 | SUN | 2014-07-24 |
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22 | UDS | 2014-07-24 |
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23 | DZG | 2014-07-24 |
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24 | BSKY | 2014-07-23 |
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25 | MSC | 2014-07-23 |
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26 | HBZ | 2014-07-23 |
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27 | AHH | 2014-07-23 |
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28 | TAH | 2014-07-23 |
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29 | UYN | 2014-07-23 |
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30 | UTS | 2014-07-23 |
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31 | ZOO | 2014-07-22 |
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32 | ULN | 2014-07-22 |
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33 | BUK | 2014-07-22 |
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34 | MNB | 2014-07-22 |
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35 | HAM | 2014-07-22 |
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36 | MDR | 2014-07-22 |
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37 | GTL | 2014-07-22 |
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38 | GOV | 2014-07-22 |
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39 | GFG | 2014-07-22 |
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40 | HRM | 2014-07-22 |
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41 | DSD | 2014-07-22 |
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42 | DKS | 2014-07-22 |
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43 | DGS | 2014-07-22 |
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44 | BAZ | 2014-07-22 |
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45 | DZS | 2014-07-22 |
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46 | BAJ | 2014-07-22 |
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47 | APP | 2014-07-22 |
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48 | ATR | 2014-07-22 |
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BoM MNT Rates: Monday, July 28 Close
| 7/28 | 7/25 | 7/24 | 7/23 | 7/22 |
USD | 1,860.88 | 1,856.92 | 1,853.09 | 1,849.51 | 1,846.65 |
EUR | 2,499.44 | 2,500.62 | 2,496.67 | 2,489.07 | 2,493.90 |
CNY | 300.73 | 299.84 | 299.23 | 298.21 | 297.67 |
GBP | 3,159.31 | 3,152.21 | 3,158.13 | 3,158.22 | 3,151.12 |
RUB | 52.60 | 52.94 | 52.94 | 53.07 | 52.65 |
July MNT vs USD, CNY Chart:
BoM issues ₮66.9 billion 1-week bills, total outstanding -13.2% to ₮463.7 billion
July 25 (Bank of Mongolia) BoM issues 1 week bills worth MNT 66.9 billion at a weighted interest rate of 10.5 percent per annum /For previous auctions click here/
BoM issues ₮50 billion 1-week bills, total outstanding -11% to ₮412.7 billion
July 28 (Bank of Mongolia) BoM issues 1 week bills worth MNT 50.0 billion at a weighted interest rate of 10.5 percent per annum /For previous auctions click here/
Paved Roads to Khuvsgul, Sukhbaatar, Umnugovi Aimags to Be Completed by October
Ulaanbaatar, July 28 (MONTSAME) At this monthly meeting, some specific works done this month were named on Friday.
Starting the meeting, the Premier N.Altankhuyag said that a new 3.4 km auto road was constructed and passenger stations were erected in four spots to enhance a passing capacity of the city-"Tolgoit" train station direction where the bus-trains have been operating. Some roads were repaired into crossroads near "Flower" center and "100 ail", and a furnishing has started at the Gandan Monastery's street within the "Street" project, he went on.
The #3 thermal power station recently accepted an annexe of 50 MWatt, and it became the largest construction in the energy sector in last 25 years, the Premier highlighted.
Some 35 million USD has been exploited from the "Chingis" bonds' revenue to provide 20 thousand families with electricity, said Ch.Saikhanbileg, a head of the Cabinet Secretariat for Government. Here the PM added it is necessary to give a report on a course of financing for the selected projects on import substitution industrialization, at the "Hours of great constructions" weekly meeting.
After this, the Ministry of Road and Transportation reported that paved roads to Khovsgol and Sukhbaatar aimags are expected to be put into use this October, and a road to Omnogobi--this September.
"High level visits are expected this August and September, a proper preparation for them must be made," told the Premier related bodies and also obliged localities' authorities to start a preparation for winter.
Minter Ellison: High Level Overview - Amendments to the Minerals Law (2006)
On 1 July 2014, the Mongolian Parliament passed the much anticipated Law on the Amendments to the Mineral Law, (2014) (the Amendments) amending the Minerals Law, (2006).
Significantly, investors and other interested parties who have been waiting for the moratorium on the granting of new exploration licences and the transfer of existing ones to be lifted will be pleased. (The moratorium was in place since 2010.) Together with the passage of the Amendments, a separate law was passed repealing the statute imposing that moratorium has been repealed effective 1 July 2014.
Furthermore, the Amendments have scrapped pre-mining agreements going forward (whilst allowing for the preservation of existing ones), and extended the maximum term of exploration licences to 12 years with the introduction of a third three year extension. We expect that investors will see these changes as positive. In our view, security of tenure for up to 12 years for exploration licences is in line with global best practice in this regard.
Those who had been expecting the Amendments to introduce a competitive tendering process for the issuance of new exploration licences will be disappointed. The Amendments do not introduce this process, as had been expected in some quarters. In the absence of any changes, our view is that the status quo, direct applications on a first come first serve basis, will continue to apply to the issuance of new exploration licences.
Equally, those who had been hoping that the Amendments would operate to reinstate the 106 Licences that were revoked last year in connection with the former head of the Minerals and Resource Authority being found guilty of bribery, are likely to be disappointed. The Amendments do not stipulate any mechanism for providing redress to the affected licence holders, rather, on 4 July 2014, the Mongolian Parliament passed specific regulations regarding the retendering of those licences. (Mogi: no, it was the cabinet that passed the required regulations for retendering)
The Amendments do not impose restrictions on pledges or transfers of exploration licences as had been contemplated in earlier drafts, which will assist in fund raising and will stimulate a secondary market. Also contrary to earlier drafts (and international practice), the Amendments do not require relinquishment of the exploration licence area. That said, it is unclear whether the reduction of the maximum exploration licence area from 400,000 hectares to 150,000 hectares will require existing licence holders to relinquish area that is currently held.
Set out below is a high level overview of the material/noteworthy changes to the Minerals Law ushered in by the Amendments.
Exploration licences
· The moratorium on the issuance of new exploration licences has been repealed. However, no competitive tender process has been introduced for granting new exploration licences. Previous iterations of the Amendments had proposed that a tender process would be introduced wherever there had been state funded exploration work over a grant area. However, the final adopted version of the Amendments have not introduced such a tender process.
· The maximum period for an exploration licence has been extended from 9 years to 12 years with the introduction of an option to extend the licence term for third, and final, term of 3 years. At the same time the ability to enter into pre-mining agreements (which historically could be used to delay the requirement to commence mining for up to 3 years) has been done away with.
· Annual fees for the 10th to 12th years of an exploration licence are US$5 per hectare and the minimum expenditure is US$10 per hectare.
· Maximum size of an exploration licence has been reduced to 150,000 hectares from 400,000 hectares.
· Whereas previous iterations of the Amendments had proposed:
o a three year restriction on the transfer or pledge of newly issued exploration licences; and
o the return of 10% of the area of an exploration licence after 3 years and 20% after 6 years,
the final adopted version of the Amendments have dropped these proposals. As such, newly issued exploration licences will be immediately transferable, opening the door to a reactivated secondary market and, importantly for junior exploration companies there is no restriction on the use of these licences as security for capital raising. Contrary to international practice, there is no new requirement to periodically surrender any portion of the grant area, as had been expected.
· The Government, upon the recommendation of the Ministry of Mining, has been given the power to determine the co-ordinates of areas over which exploration licences may be granted. Also, MRAM has been given a duty to determine the co-ordinates of areas over which exploration licences may be granted. At this stage, we presume that a combination of these powers and duties will constitute the mechanism by which the surface area available for exploration and mining will be increased to 20% from the current 8% of Mongolia's territory – in accordance with comments attributed to the Prime Minister regarding the effect of the Amendments.
· No changes were made to the basis for determining the State's ownership of mineral deposits. Previous iterations of the Amendments had proposed that where State-funded exploration had taken place then the State's claim to ownership should be based on the economic valuation and profitability of the mineral deposit and not on the State's historical investment. The final adopted version of the Amendments made no changes to Art. 5.3 of the Minerals Law – so the status quo has been maintained.
Mining licences
· The following additional obligations have been imposed on mining licence holders, they:
o must supply products that have been mined, processed or semi-processed in preference to processing facilities operating in Mongolia at market price; and
o must employ an employee to act as a liaison with MRAM regarding environmental rehabilitation and mine closure.
· The Amendments specifically address the overlapping obligations of licence holders with obligations under the Petroleum Law with regard to coal bed methane. They are obliged to notify the Petroleum Authority of Mongolia if methane is discovered during coal mining and are permitted to produce coal bed methane in accordance with the Petroleum Law.
Preference for Mongolian employees, suppliers and customers
· Mining licence holders must ensure that 90% of their work force and the work force of any sub-contractor working at their mine is comprised of Mongolian nationals. It appears that the existing fine payable by a licence holder for non-compliance with this requirement (Art. 43.2) will now apply equally to any non-compliance by their subcontractor(s).
· Mining licence holders must preferentially:
o procure goods and services and hire subcontractors from business entities which are registered, and paying taxes, in Mongolia; and
o supply products that have been semi-developed, concentrated or mined from the mining licence site to processing facilities operating in Mongolia at prevailing market prices.
· Previous iterations of the Amendments had imposed requirements for these suppliers to be majority Mongolian owned rather than merely registered and paying tax in Mongolia. This was criticised as being contrary to the Investment Law, (2013) that seeks to create an equal playing field for foreign and local investors.
· Previous iterations of the Amendments also contemplated a fine equal to the applicable royalty rate being levied on an licence holder which failed to procure services from registered Mongolian entities which paid tax in Mongolia. However, in the final adopted version of the Amendments this sanction has been dropped. At this stage there does not appear to be a special sanction for this type of breach of the Minerals Law, as had been expected.
Dispute resolution
· The Amendments limit the rights of recourse for license holders who are prevented from exercising their rights as a result of actions or inactions by civil servants or State Administrative Agencies to administrative actions and claims in the administrative courts. We note, however, that the Administrative Law provides a civil right to claim damages for loss suffered as a result of actions of any administrative organisation or administrative officials.
Feasibility studies, work plans and reports
· A feasibility study must now be submitted within 1 year of the date upon which the mining licence is granted and must:
o state clearly how it will transport its mineral products and build requisite infrastructure; and
o demonstrate the availability of capital required for mine rehabilitation;
· The time for work plans and reports to be submitted is amended as follows:
o annual exploration work plans must be provided by 15 April each year;
o an exploration work report must be submitted prior 15 February each year; and
o the mining plan outlining the proposed production parameters for the following year must be submitted by 1 December of each year.
Revocation of licences
· The Amendments have introduced a grace period of 30 days for the late payment of annual licence fees before a licence is revoked. During this period a late penalty of 0.3% of the annual licence fee, per day is payable.
· Where a licence is revoked it must be reissued by tender except where the revocation is because the licence holder has failed to pay licence fees on time (or spend the minimum expenditure).
· If a court annuals a decision to revoke a licence the licence term continues.
· Similarly, if a special purpose area or reserved area expires and the area is returned to a licence holder the term continues.
Government, ministries and departments
· The Amendments give certain additional powers to the Government including:
o establishment of a National Geology Office;
o approving the contacts to be entered into by licence holders with local administrative bodies (i.e. Cooperation Agreements);
o determining co-ordinates of areas available for exploration licences;
o determine boundaries of strategic deposits; and
o granting a new licence over a new licence area as compensation where the Government has taken a licence holders other licence on national security grounds or to undertake a major project.
· The Amendments give certain additional powers to the Ministry of Mining including:
o establishment of a Minerals Professional Council;
o regulate mine and mine processing plant commissioning;
o regulate mine processing plant operations; and
o approve the composition and supervision of an external professional association tasked with advising on and supporting the implementation of the State Mineral Sector Policy (which was adopted on 16 January 2014).
· MRAM functions are to be split between the newly created National Geology Office and the existing mining and cadastre departments. The Amendments give MRAM certain additional duties, including:
o creation and maintenance of a register of licence holders that are listed on a stock exchange;
o determining co-ordinates of areas available for exploration licences; and
o creation of a National Geology Office which has duties including conducting geological, geophysical, geochemical, hydro geological and geo-ecological mapping, research and surveys, setting up a geological database and maintaining a Register of minerals.
Other
· Otherwise the changes introduced by the Amendments are clarificatory in nature:
o common minerals are excluded from the operation of the Minerals Law;
o where a licence wholly overlaps with a Special Purpose Area, the affected licence holder must be reimbursed within 1 year of the decision by the competent agency;
o verification of the exploration work expenditure by the State administrative agency is to be based on the conclusions of exploration specialists and third party audits.
· The deposit reports submitted by exploration licence holders in connection with their application for a mining licence must be from internationally recognised organisations appointed by the Minerals Professional Board.
· Monetary penalties for breach are determined by reference to the minimum wage.
Miner Ellison in Mongolia
In Ulaanbaatar our team offers a first tier commercial capability in corporate, mergers and acquisitions, capital markets, finance, employment, construction and real estate; and in the critical industries of energy and resources, infrastructure and financial services.
We work with a range of international and Mongolian clients, including listed and unlisted mining companies, mining service companies, banks and Mongolian conglomerates.
Elisabeth Ellis, a senior corporate partner with over 20 years' experience in Asia, leads the office as the full time resident partner. Elisabeth is supported by the full resources of the firm, and by a team of lawyers whose technical expertise is underpinned by a strong understanding of local conditions.
Link to review (via BCM)
U.S. Embassy: 2014 MONGOLIA INVESTMENT CLIMATE STATEMENT
7/28/2014 (U.S. EMBASSY ULAANBAATAR, MONGOLIA) --
Table of Contents
EXECUTIVE SUMMARY
Chapter 1: OPENNESS OF GOVERNMENT TO FOREIGN INVESTMENT
Chapter 2: CONVERSION AND TRANSFER POLICIES
Chapter 3: EXPROPRIATION AND COMPENSATION
Chapter 4: DISPUTE SETTLEMENT
Chapter 5: PERFORMANCE REQUIREMENTS AND INCENTIVES
Chapter 6: RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
Chapter 7: PROTECTION OF PROPERTY RIGHTS
Chapter 8: TRANSPARENCY OF THE LEGISLATIVE AND REGULATORY PROCESS
Chapter 9: EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
Chapter 10: COMPETITION FROM STATE-OWNED ENTERPRISES (SOES)
Chapter 11: CORPORATE SOCIAL RESPONSIBILITY (CSR)
Chapter 12: POLITCAL VIOLENCE
Chapter 13: CORRUPTION
Chapter 14: BILATERAL INVESTMENT AGREEMENTS AND TAXATION ISSUES
Chapter 15: OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
Chapter 16 LABOR
Chapter 17: FOREIGN TRADE ZONES/FREE PORTS
Chapter 18: FOREIGN DIRECT INVESTMENT STATISTICS
Chapter 19: CONTACT AT THE U.S. EMBASSY IN ULAANBAATAR
Executive Summary
Mongolia's main economic and political challenges are all linked to ensuring steady growth through the boom and bust cycles likely to visit this resource-dependent economy. Double-digit economic growth over the past few years—2011's sizzling 17.3% GDP growth (Mogi: revised later to 17.5%), for instance—has been based on the investment in, and the production and export of, minerals. Mongolia is a major producer of several minerals including coal, copper, gold, zinc, and fluorspar. With extensive reserves, it has the potential to increase production considerably. For U.S. investors and firms, mining and mining-related services represent one of the most important and potentially most reliable sectors for long-term investment in Mongolia. Other promising sectors, based on Mongolia's economic development needs, include infrastructure, transportation, energy, construction, healthcare, and environmental products and services.
However, Mongolia has suffered ongoing setbacks to its economic advancement. Indeed, growth has steadily slowed from 2011's 17.3% to 2013's 11.7%. Both the International Monetary Fund (IMF) and World Bank estimate 2014 GDP to decline to 9.5%; and 2015, depending on Mongolian policy decisions, may range from a high of 12% to as low as 2%. The IMF cites loose fiscal and monetary policies as likely causes for negative economic adjustment. (For IMF: http://www.imf.org/external/pubs/ft/scr/2014/cr1464.pdf; For WB: http://www.worldbank.org/en/news/feature/2014/07/03/mongolia-economic-update-july-2014.)
As with GDP, Foreign Direct Investment (FDI) has steadily declined, constraining development of the mining and infrastructure sectors. In 2012, FDI invested in Mongolia (mostly in the mining sector) reached USD $3.9 billion, which amounted to approximately 40% of that year's GDP. In 2013, FDI had contracted by nearly 45%. In the first five months of 2014, Mongolia's central bank reported that FDI through May was US $402.3 million compared to US $1.11 billion a year ago—a 64% year-on-year decline.
Two factors have and will continue to affect Mongolia's economic condition. First, more than 90 percent of Mongolia's exports consistently go to China; and so, any slowing of China's growth affects Mongolia. Second, economic policies designed to protect Mongolia's sovereign interests and to respond to the expectations of the Mongolian public have discouraged FDI – despite statements from Mongolia's senior politicians that the government is committed to improving the business environment, reigniting foreign direct investment flows, and fostering Mongolian growth. Recent policy decisions have been influenced by the political realities of a coalition government representing multiple platforms, which has complicated reaching consensus on politically sensitive issues. There are a range of views represented within parliament on what constitutes an appropriate legal and regulatory framework for mining and other activities. Statutes and regulations are thus often crafted in a manner which incorporates multiple approaches and political imperatives. Investors have told us that this approach to legislation and regulation can give the impression that laws are hastily passed and that regulations are slowly created and partially implemented. Some investors are concerned that criticism from some political quarters of current investment agreements and statutory obligations undertaken by past governments portends that commitments may not be fully respected.
Investors and companies may likely encounter bumpy short-run trends as Mongolia continues to come to terms with its mining endowments and how to bring them to the outside world, while satisfying domestic expectations that the mining sector should benefit the public. Investors may perceive, and have to accept that, the current political process creates an unclear policy environment that may increase investment risk, while Mongolian politicians see the process as yielding the necessary level of political comity. However, in the medium to long term, those willing to manage these issues and relationships with local partners with open eyes may find attractive opportunities in the aforementioned industries and sectors.
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XacBank Welcomes New CEO Bold Magvan
July 22 -- In relation with the holding company restructuring Tenger Financial Group's (TFG) Board and The Board of Directors of ХacBank has appointed Mr. Bold Magvan, currently serving as CEO of TFG to the role of Chief Executive Officer of the Bank, effective from July 10, 2014.
Since 2011 Mr Bold Magvan has been serving as a CEO of TenGer Financial Group and member of board of directors. Prior to TFG, he worked at XacBank as President and CEO for over 5 years.
Bold is a senior banking professional with more than 20-year expertise in public and private global financial institutions, including World Bank and International Monetary Fund. From 1996 to 2000, Bold was the Deputy Governor of the Bank of Mongolia (Central Bank).
Bold holds a Master's degree in International Affairs with a major in economic policy management from the Columbia University, New York, USA.
Bold serves as President of the Mongolian Bankers Association.
Bold serves also as the Honorary Consul of the Republic of Iceland in Mongolia.
We are very pleased to welcome Mr Bold Magvan to XacBank, and look forward to him leading the organisation through its next phase of growth.
XacBank Appoints Amartuvshin Hanibal as President
July 25 -- XacBank, the 4th largest lender in Mongolia with an award winning corporate governance and Corporate Social Responsibility program, announces the appointment of Mr. Amartuvshin (Amar) Hanibal to the role of President effective from 10 July 2014.
Amartuvshin joins the Bank from Tenger Financial Group (TFG), where he has been for the past 3 years the Managing Director, overseeing corporate finance and insurance activities. He will continue to serve as the CEO of Tenger Capital LLC, where he played a pivotal role in building the company, establishing relationship with major corporations and successfully closing investment banking deals. He is a member of the TFG's Executive Committee as well as TFG's Lease committee. He is a non-voting member of the Investment Committee of TFG Board of Directors.
Amartuvshin has over 15 years of international experience in the banking industry, specifically in risk management, project finance, financial sponsor and leveraged finance. He has held various positions at ABN AMRO Bank in London, Amsterdam and Chicago. Prior to joining the TFG and XacBank, he has worked as the Managing Director, Head of Risk Management at JSC Kazkommertsbank (KKB), the largest commercial bank in Kazakhstan.
He earned a Bachelor of Business Administration from the European University of Brussels, Belgium and a Master of Business Administration from Harvard Business School, Boston, USA.
"We are delighted to welcome Amartuvshin to the Bank management team," said Bold, CEO of XacBank. "His international and local experience and expertise in the banking and financial services industry will benefit the Bank greatly as we aim to deliver more valuable and diverse financial services to our customers."
XacBank (www.xacbank.mn) is one of Mongolia's largest banks, serving Micro customers, Small and Medium-sized Businesses as well as large corporations with a range of inclusive banking, fair investment and other financial products and services. It operates in all 21 provinces and the capital city serving more than 600 thousand customers through its 107 branches and business service centers nationwide. The Bank aims to create a sustainable value for its customers, shareholders and institutional investors, while promoting a triple-bottom line vision and mission as built around the "Planet, People and Profit."
XacBank is an undisputed leader in Corporate Governance, Transparency and Risk Management, and is best known for its world standard Corporate Social Responsibility implementations.
Mongolia-Russia-China Business Forum & Exhibition in Erlian, August 20-24
July 28 (Mongolian Economy) One of Mongolia's main priorities is to increase and tighten good relations with its neighboring countries of Russia and China. In terms of foreign policy enhancement, Russian and Chinese leaders are paying Mongolia an official visit in the upcoming two months. Before these visits, however, the government office of Erlian city will host a forum and exhibition of Mongolians, Russians, and Chinese. The Mongolian National Chamber of Industry and Trade, in collaboration with the Government of Inner Mongolia, established the event to occur between August 20, 2014 and August 24, 2014. This forum will highlight economic trade and partnership between the three nations.
The theme of the event is "Open Trust, Reform Development, and Partnership." The exhibition will sport national products and imported products. Project and trade ideas will also be introduced during the forum. In Erlian, a store filled with Mongolian national products opened. In addition, participating companies and producers are able to enter Erlian with products without the hassle of undergoing documentation. Custom works will not be necessary for these businesses.
This forum is a good opportunity for many to expand operation outside of Mongolia. Participants will also discuss other topics including local administration, government, mining and infrastructure. 50 Mongolian members registered.
Mongolian National Manufacturers to Organize Trade Exhibition in Beijing
July 28 (infomongolia.com) In the framework of the recent official visit of the Governor of the Capital City and the Mayor of Ulaanbaatar, Mr. Erdene BAT-UUL to Beijing, China which was held in June 2014, Mayor E.Bat-Uul had agreed upon to cooperate with Beijing side for joint implementation of several projects in the near future.
In regard with that joint implementation, the trade exhibition so called "Import Products 2014" will be organized in Beijing between September 28th and October 8th, 2014 to promote various range of the Mongolian national manufacturers' products in China.
Elsewhere, the trade exhibition in China allows our national manufacturers to promote and sell their manufactured goods during the whole 10 days through the booths with up to 1,000 square meters in larger shops and trade centers in Beijing city, China.
CAVEATS FOR THE MONGOLIA-CHINA STRATEGIC PARTNERSHIP
by Mendee Jargalsaikhan, Asia Studies Visiting Fellow at the East-West Center in Washington, explains that "From the Mongolian perspective, the strategic partnership with China is important across a number of areas, but there are caveats, especially concerning the economy, security, and culture."
July 22 (Asia Pacific Bulletin, No. 272, East-West Center) China and Mongolia upgraded their bilateral relationship to a Strategic Partnership in 2011. Last year, both countries agreed to the implementation of a detailed action plan to strengthen their strategic partnership in the five specific areas of politics, security, the economy, culture, and multilateral diplomacy. Some may ask the question why China is looking to further strengthen bilateral relations with a small country like Mongolia. China's relationship with Mongolia dates back for thousands of years and is one reason for the construction of the Great Wall. More recently, Mongolia's independence was recognized by both the Republic of China (Taiwan) in 1945 and the People's Republic of China (China) in 1949. China-Mongolia relations were frozen during the Sino-Soviet split in the 1960s, and not normalized again until the end of the Cold War in 1989. The reasons behind upgrading the bilateral relationship from the "good neighborly, mutually trusted partnership" which was the term used in 2003, to the Strategic Partnership of today, differ for both sides. However, the end goal for both is for a long-term and stable relationship.
Since the end of the Cold War, China has prioritized cooperation over confrontation with its neighbors. It has attempted to institutionalize bilateral relations with major regional powers, including former rivals—Japan, India, and Russia. Beginning in 2005, China began to upgrade, at least in joint statements and declarations, its relations with many of its neighbors—with the exceptions of Bhutan, Nepal, and North Korea—to that of Strategic Partnership. In relative terms, the majority of China's 14 neighbors are small and peripheral given the distinctive demographic, geographic, and economic characteristics of China. However, for China, stability and mutual understanding with peripheral states are just as important as its relationships with other major powers. Over the past decade, this strategic partnership policy has been an evolving key strategy for China with clear political, security, economic, and cultural objectives. China's newly declared strategic partnership with Mongolia reflects these objectives.
Regarding political objectives, China's goal is to reassure leaders of neighboring states that it will not intervene in their domestic politics and will treat them as equal, sovereign entities. China, in return, secures reassurances on its own foreign policy objectives regarding Taiwan, Tibet, and Xinjiang. The strategic partnership with Mongolia, for China, is also designed to achieve these same policy goals. Mongolians regard the Dalai Lama as a religious leader. In addition, Mongolia is ethnically connected to Inner Mongolia and Xinjiang and has growing economic and cultural ties with Taiwan. All are issues of concern for China.
China has a long history of external threats destabilizing the country and there has always been a fear of outside forces entering China from Mongolia, especially as the two countries share a 4,700 km border. Historically, Mongolia and other central Asian states have all been used by Russia to maintain strategic pressure on China. Though Chinese fears about Russia have waned, it is still cautious about the possible use of Mongolia by other potential challengers, namely the United States and India. Thus, Mongolia's commitment to neutrality and non-alignment are important factors for strategic and military planners in Beijing.
China, furthermore, utilizes the strategic partnership with Mongolia, just as it does with other peripheral states, for natural resources, trade routes, Chinese business interests, and, more importantly, to integrate China's own bordering provinces into economic prosperity with these countries. In addition, Mongolia, while not rich in natural gas and oil, does possess significant quantities of coal, copper, and uranium, all of which are of value to China. Moreover, Mongolia is the shortest transit route to Russia and Europe for Chinese products, just like Laos to Southeast Asia and Kyrgyzstan to Eurasia.
Mongolia has long enacted a protectionist policy regarding Chinese investment in key economic sectors including mining, banking, and communications. However, as Mongolia's economic interaction with China continues to grow, there are fears that the country will become too dependent upon China for economic development. Therefore, the strategic partnership with China increases this fear by locking the Mongolian government into long-term investments from China, especially in mining and infrastructure development.
Another goal for China with its strategic partnerships is the promotion of Chinese culture and people-to-people exchanges. In 1990, China enacted a visa-exemption policy and preferential access to medical facilities for Mongolians. More recently, as outlined in the 2013 Strategic Partnership action plan, China will provide 1,000 scholarships annually for the next five years and one-fifth will be for undergraduates. Many of China's smaller neighbors, however, are cautious about Chinese cultural assimilation. All of China's neighboring states are proud of their unique and distinctive cultural identities that are separate from China, and this is reflected in their own understanding of their vital interests. In addition, people who grew up in Southeast and Central Asia in the 1960s and 1970s during the era of state-run anti-Chinese propaganda are still fearful of a rising China. This also applies to Mongolia today, which is striving to maintain its own nomadic, Buddhist, and now democratic identity in a region where Chinese influence and stature is increasing.
From the Mongolian perspective, the strategic partnership with China is important across a number of areas, but there are caveats, especially concerning the economy, security, and culture. For Mongolia's sovereignty, the Chinese endorsement of equal partnership and non-intervention are the most valued. Mongolia needs Chinese endorsement for its foreign policy objectives in order to develop a balanced relationship with its other major neighbor, Russia. Another area of interest to Mongolia is the autonomy to increase its international profile by integrating further with other Central and Northeast Asian neighbors.
Mongolia, as a landlocked country between China and Russia, has limited economic options. Therefore, an economically vibrant China is a natural trading partner which also offers transit infrastructure for economic interaction with other East Asian states, namely Japan and South Korea. China also provides the closest ports for Mongolia's economy and is an important source for select investment, technology, and labor. As such, Mongolia is highly vulnerable to rising Chinese influence, and this fear is natural taking into consideration China's expanding role in the region. Therefore, Mongolia established a Strategic Partnership with Russia in 2008 and with Japan in 2010, a Comprehensive Partnership with the United States in 2011, and in 2013 a Partnership and Cooperation Agreement with the European Union. Significantly for Mongolia, none of these partnerships provide substantive security and economic guarantees, though they do help Mongolia consolidate its political sovereignty and most importantly, its distinct identity as a democratic outpost in Inner Asia.
Overall, the China-Mongolia Strategic Partnership is a road map for neighborly cooperation. China is furthering its policy of institutionalizing relations with smaller neighbors, whereas Mongolia secures political recognition, economic benefits, and security assurances. Specifically for Mongolia, it is following its foreign policy of maintaining balanced relations with its two giant neighbors, China and Russia. Inevitably, Mongolia's options are limited by geography, and therefore it seeks other like-minded democratic states to support its democratic future.
Mendee Jargalsaikhan is a Ph.D. Student in the Department of Political Science at the University of Vancouver and an Asia Studies Visiting Fellow at the East-West Center in Washington. He can be contacted via email at JargalsM@EastWestCenter.org
What is Harper's 'real interest' in Mongolia?
by Campbell Clark
OTTAWA, July 28 (Globe and Mail) John Baird was given a ceremonial welcome in Ulan Bator, and invited to try a bow-and-arrow at a festival in the Jargalant Valley. The Foreign Affairs Minister is on a trip to Asia, visiting big powers China and Japan. But last week, his first stop was in a sparsely populated nation of three million.
Stephen Harper's government is taking a particular interest in, of all places, Mongolia. Why?
Mongolia's Foreign Minister, Luvsanvandan Bold, called Canada an important part of his country's foreign policy. Canada just put Mongolia, a middle-income country, on its list of "countries of focus" for foreign aid.
Yes, there's potential mining trade. But there's also an invitation that the Harper government finds alluring: to help a little democracy maintain its independence from its two authoritarian neighbours, Vladimir Putin's Russia and the People's Republic of China.
"The Prime Minister has taken a real interest in Mongolia," Mr. Baird said in a telephone interview.
Mr. Harper long ago turned from strident China critic to pragmatic trader with a rising economic power, but he still views its global influence darkly. And Mr. Harper has been a vocal critic of Mr. Putin's actions in Ukraine: He's called the Russian President a "throwback" to the Soviet Union.
Mongolia was once under Soviet sway, and it's wary of being pulled back into the orbit of either of its two powerful neighbours. So it's actively trying to show Moscow and Beijing it has a group of other friends in middle powers like South Korea, or Germany – and Canada. They call it a "third neighbour policy."
Mongolia was a Soviet satellite until 1990, and current President, Tsakhiagiin Elbegdorj, was a leader of the pro-democracy movement of that era. But there's still a legacy of deep Russian ties.
The influence of its other powerful neighbour, China, has grown, too. It is Mongolia's largest trading partner. Beijing is interested in Mongolia's resources, and Mongolia wants investment capital. But they also want to guard their independence, and that appeals to the Harper Conservatives in Ottawa.
"We've seen a country about the size of Quebec, in terms of geographic area, but with a smaller population, really make extraordinary progress in terms of democracy and open markets, in a pretty challenging part of the world," Mr. Baird said.
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Australia-Mongolia Friendship Group Established at Parliament of Australia
July 28 (Ministry of Foreign Affairs) Australia-Mongolia parliamentary friendship group has been established within the Parliament of Australia. The group comprises of 22 members and senators, including the Senator Stephen Parry, the President of the Senate, the Hon. Bronwyn Bishop, the Speaker of the House of Representatives, and the Hon. Warren Truss, Deputy Prime Minister and Minister for Infrastructure and Regional Development.
The Hon. Dr. Sharman Stone MP, who is the Chair of the Foreign Affairs and Aid Sub-committee, which focuses on foreign policy and aid affairs, was elected as the Chair of the Australia-Mongolia parliamentary friendship group. The present Australian parliament was established during the parliamentary elections that was held in September of 2013.
Ten members of the governing Liberal national party (LNP), 9 members of the opposition-Australian Labor party as well as 3 members of the Nationals, who built the coalition government with LNP, have joined the Australia-Mongolia parliamentary group. Also, by state representation, there are 6 members from each of the NSW and Queensland, 4 members from Western Australia, 3 from VIC, 2 from Tasmania and one from Southern Australia.
Related:
Australia-Mongolia friendship group established – Montsame, July 28
Australia-Mongolia parliamentary friendship group established – news.mn, July 28
School projects completed thanks to US-Mongolia cooperation
(The U.S Embassy, Chief of Office of Defense Cooperation Maj. Negri delivering remarks at the handover ceremony, Kindergarten 114, Bayangol district, Ulaanbaatar.)
BAYANGOL DISTRICT, Ulaanbaatar, Mongolia, July 24 (US Embassy) – On July 24, the handover ceremony of the renovation project at the Kindergarten 114 took place. During the Khaan Quest 2014 international peace keeping exercise, a multinational team of engineers and construction specialists worked together to complete renovations at School 42, Kindergarten 114, and to construct a new water distribution point in the Songinokhairkhan district.
U.S. Army and Marine Engineers teamed up with the Mongolian Armed Force's 017 Construction Regiment to renovate Kindergarten 114, kicking off the project, both sides began site preparation and preliminary work on May 18th, with the bulk of the work being completed during the Khaan Quest exercise which took place between June 18th and July 1st.
The head of the Mongolian Armed Forces, and Brigadier-General Badambazar J. said in his opening remarks at the ceremony, "We've finished the renovation project at the Kindergarten 114 successfully. We would like to thank the U.S. Embassy in Ulaanbaatar, U.S. Pacific Command, Bayangol District Governor's Office, and Citizens Representatives Council, Kindergarten 114 workers in the name of the Armed Force."
The Chief of the Office of Defense Cooperation at the U.S. Defense Attaché Office Major Adam Negri said, "During [Khaan Quest] the engineers worked tirelessly to accomplish the work you're seeing today."
Maj. Negri added, "The purpose of this exercise is twofold, first is to improve the capacity of the U.S. and Mongolian Engineers, and secondly is to improve the infrastructure in the communities between Mongolia."
At the ceremony congratulations were given by the Deputy Governor of the Bayangol district Ms. Tsetsegmaa, district's Department of Education Chief Mr. Jargal A., the Mongolian Armed Forces Chief of Operations, Brigadier-General Badambazar J., Chief of Peace Support Operations, Col. Molorbold J., Bayangol District Governor Office Chief of Staff Col. Ganbaatar L., and the U.S Embassy, Chief of Office of Defense Cooperation Maj. Negri. Armed Force's 017 Construction Regiment Engineer, Kindergarten 114 staff, and representatives of the community were present to receive congratulations.
Khaan Quest 2014 was the latest in a continuing series of multilateral exercises designed to promote regional peace and security. This year marked the 12th iteration of this training event. The exercise consists of four main components, a combined battalion-level command post exercise, a platoon-level field training exercise, engineering civic action program projects and cooperative health engagement events, which comprise more than 1,200 peacekeepers from 24 countries.
North Korean embroider opening independent exhibition on August 1
Ulaanbaatar, July 28 (MONTSAME) A North Korean embroiderer Choe Jong Sung will open her independent exhibition in the "Blue Moon" art gallery on August 1.
She intends to show some 20 embroidery works featuring Mongolian lifestyle, history, landscape and animals.
Embroidery center of N.Korea has some 1,000 members. Their creations, which look like real photos, have already gained a popularity around the world, including Mongolia.
The exhibition will continue until August 5.
Social, Environmental and Other
Oyu Tolgoi: Manlai soum anniversary celebrated in pictures
- 90th anniversary commemorated with release of photo book –
Manlai soum, Mongolia, July 25 (Oyu Tolgoi) - The 90th anniversary of one of Umnogovi aimag's soums is being celebrated in a brand new book of photos. Oyu Tolgoi has launched the publication in cooperation with the soum Governor's office and local residents.
The book documents rare and precious heritage and landmarks preserved from ancient times as well as those from the present day. It also shows the beauty of the region's natural landscape, mountains, rivers, fauna and flora, and documents people's livelihoods, traditional household items and local customs.
The photos also document modern progress and development, the faces of local residents, young and old and will form an important historical record for the public.
Oyu Tolgoi is committed to respecting cultural heritage, especially the traditional culture of the Gobi. The Manlai book is part of the company's ongoing programme to preserve intangible and tangible cultural heritage in the region.
Sh.Baigalmaa, Oyu Tolgoi's General Manager, Social Performance said: "I am confident that this photo album will play an important role in introducing Manlai soum's history to future generations. On behalf of everyone at Oyu Tolgoi, I am delighted to congratulate the people of Manlai soum on this historic 90th anniversary and mark this moment by presenting this photo book."
The ins and outs of visiting a Mongolian ger
Antonia Bolingbroke-Kent spent years educating smelly Mongol Rallyers on Mongolian etiquette. Here she reveals how to visit a Mongolian ger (yurt) without offending your hosts
July 12 (Wanderlust Travel Magazine) If you're lucky enough to be packing your bags for Mongolia this summer, the likelihood is you'll be spending a night or three in a ger, the traditional felt tents of the nation's nomads. Ah, the magic of sleeping in one of these fabulous constructions, the bittersweet taste of Airag (fermented mare's milk), the sight of a million glittering stars peering through the ger roof.
But beware! While Mongolians are legendarily hospitable, they are also extremely superstitious, and life in the ger is bound in a complex web of beliefs and traditions. So you don't offend your hosts or the Gods, here are few pointers as to how to successfully navigate your first ger experience.
· When you first approach the ger, call out "Nokhoi khor" which literally means, "Hold the dog". This is the Mongolian equivalent of knocking on the door, and will save you being savaged by the resident guard dog.
· Go to the left hand side of a ger when you enter; the right hand side is the domain of the family.
· Be respectful – don't take photos without asking, don't touch things in the ger and don't have long conversations in a language your hosts can't understand.
· The first thing that will happen is you'll be offered food and drink, most likely dairy products (dried curds), salty tea or airag. As gastronomically unfamiliar as this may be to you, never refuse. Even if you touch the tea to your lips and take a tiny bite of the curds, do try something as flatly refusing will cause your hosts offence.
· If you are male, you may well be offered the snuff box by your host. If you want some, empty a little bit onto your hand and inhale. Even if you don't want the snuff, just say yes and go through the actions of taking and inhaling some. Occasionally, the snuffbox may be empty. In this case, pretend there is some and again, go through the motions of taking some and look appreciative. Snuff boxes are carried by almost all Mongolian males in the countryside.
· Every ger will have an altar at the back. Don't sit with your back or feet towards it.
· If you have sleeves, keep them rolled down so as not to expose your wrists, particularly when shaking hands or taking food or drink. If you have short sleeves, pretend to pull them down as a symbol of respect.
· Always accept food or drink with your right hand (or with both if the dish or cup is heavy), with the left hand supporting the right elbow.
· Take off your gloves when shaking hands.
· Sit cross-legged with your feet underneath you.
· Leave a small gift, other than money, for your hosts.
· If you accidentally kick a Mongolian's feet, immediately shake their hand. This is not refined to gers – you should do this even if you are walking down the street in Ulaanbaatar.
· When offered some vodka, dip the ring finger of your right hand into the glass, and lightly flick a drop (not too much – vodka is also sacred) once towards the sky (for Tengri, the god of the sky), once in the air (to the wind), and once to the ground, for Gadzer, god of the earth. If you don't want any vodka, go through the customs anyway, put the same finger to your forehead, say thanks, and return the glass to the table.
· Don't lean against a support column or wall of the ger as they represent stability. You might also confuse a column for the stove pipe, which will burn you terribly if you lean on it.
· Don't whistle inside a ger.
· Don't stand on or lean over the ger threshold.
· Fire is sacred to Mongolians so don't throw rubbish or water on it.
· It's disrespectful to walk in front of an older person, so try and avoid doing this.
· Neither touch other people's hats nor leave your hat on the floor.
· Every family will have an urga, a long wooden lasso pole. It's very bad luck to walk over one of these when they are lying on the ground.
· Milk is also sacred to the Mongols, so endeavour not to spill any.
· Don't touch people (including children) on the head or hold their shoulder, it's believed to take away that person's good luck.
· However, if you do spill milk, walk over an urga and pat the children on the head, your hosts will understand you're foreign and won't throw you out in disgust. But a little perceived effort to respect the nomad's customs will get you a long way and make for an even more fabulous stay on the steppe.
Ants splits her time between travel writing, TV producing and adventure wrangling. She spent many months in Mongolia running The Adventurists' Mongol Derby, the world's longest, toughest horse race. Follow her adventures at www.theitinerant.co.uk.
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