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Friday, April 10, 2015
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Headlines in Italic are ones modified by Cover Mongolia from original
Coal Mongolia 2015
Coal Mongolia 2015 focuses on improving competitiveness by cutting transportation costs
By B.KHASH-ERDENE
April 9 (UB Post) Mongolia's biggest coal sector event, the Coal Mongolia conference, took place at SS Convention Center on Thursday and Friday for its fifth consecutive year.
Speakers of the conference included key government officials such as Mining Minister R.Jigjid and State Minister M.Enkhsaikhan, and domestic and foreign coal sector delegates such as Energy Resources LLC CEO G.Battsengel and Vice President of Ferwei Energy Consulting Co., Ltd of China Wenlin Xue.
This year's main issue raised by speakers was the reduction of transportation costs for coal to help increase the competitiveness of Mongolia coal on the Chinese market, a theme carried over from all previous years of Coal Mongolia.
"A new strategy is needed, and the new strategy is to reduce costs and expenses. If we want to make the same revenue as before, we have to increase extraction, transportation, and sales," said Minister of State M.Enkhsaikhan during his speech at the conference.
"In the end, the biggest issue of the Mongolian coal sector is railway. Coal and railway are inseparable… If Mongolia is to profit, we have to reduce costs," M.Enkhsaikhan added.
Visitors to the conference were critical of a lack of progress made by the government in furthering railway construction to China for coal transportation. Last year, the government decided to build a narrow-gauge railway to China from Mongolia's biggest coal mine, Tavan Tolgoi, which was met with much criticism from the public, as all of Mongolia's existing railway is built with the Soviet standard wide-gauge.
Eighty-five percent of Coal Mongolia 2015's nearly 600 attendees were government officials.
Conference speakers also highlighted that coal sector investment has fallen dramatically in recent years. Mongolia's FDI fell more than 70 percent in the last two years, according to the National Statistical Office of Mongolia.
Executive Director of the Mongolian Coal Association, Alagaa said, "There are opportunities. If Oyu Tolgoi's second phase issue is resolved, if Tavan Tolgoi's next phase is resolved, four or more billion USD is ready. The current has been stopped, it needs to be opened. There are many ready coal projects. They only need support from the Mongolian side," he added.
Sumitomo rep talks on coal market and marketing of Mongolian coal
By S. Odbayar
April 9 (gogo.mn) We are delivering our second interview with Fujiwara Hiroto, General Manager of Sumitomo Corporation, Ulaanbaatar Office.
He talks on coal market and marketing of Mongolian coal.
For full interview please see the video below.
MMC closed +10.34% Thursday to HK$0.32
MORE: Tavan Tolgoi Deal in Parliament for Review: Enkhsaikhan
By Michael Kohn
April 9 (Bloomberg) -- Mongolia's parliament will review terms of the Tavan Tolgoi coal project and take a final decision on its status, Minister of Mongolia Enkhsaikhan Mendsaikhan says at Coal Mongolia conference in Ulaanbaatar.
* Hope parliament will clear $4B project and encourage investment in Mongolia: Enkhsaikhan
* Parliament may reach a conclusion within two weeks: Enkhsaikhan
* Tavan Tolgoi consortium to be responsible for $150m debt owed to Chalco by Erdenes Tavan Tolgoi JSC: Enkhsaikhan
* The debt will be repaid with coal within one year: Enkhsaikhan
* If debt repayment is not complete in one year, the consortium can raise additional money by selling coal to a 3rd party: Enkhsaikhan
* Ariunaa Baldandorj, a spokeswoman for Energy Resources, which is leading the consortium, didn't respond to a phone call or e-mails requesting comment on Chalco debt
* Talks with consortium not finalized but "principle agreements" have been reached: Enkhsaikhan
* Consortium needs to reach sea to ship coal: Enkhsaikhan
* Tavan Tolgoi asset to remain under 100% state ownership: Enkhsaikhan
* NOTE: The consortium developing Tavan Tolgoi comprises Energy Resources LLC, China Shenhua Energy Co. and Sumitomo Corp.
* NOTE: Mongolia's PM said Sunday that talks with the companies would be finalized soon
* NOTE: Fitch: A Mongolia-Rio Tinto Deal Would Be Credit Positive
(BFW)
Mongolia sees new rail link to China as key to coal sales
By Terrence Edwards
ULAN BATOR, April 9 (Reuters) - A $4-billion deal to revive Mongolia's giant Tavan Tolgoi coal mine will include building an extended cross-border rail link, a minister said on Thursday, a move that could stoke fears about the country's growing dependence on its giant neighbour China.
Mongolia's mining boom has slowed, partly as a result of the country's reluctance to hand over control of mineral assets to China. More than 90 percent of the Mongolia's exports already go to China.
China's Shenhua Energy will be crucial to Mongolia's strategy for selling coking coal from the huge Tavan Tolgoi mine to buyers in China and beyond, Minister Mendsaikhan Enkhsaikhan told a coal conference.
His comments marked a sharp turnaround from the past few years, when Mongolia's actions to block deals after China tried to take control of Mongolian mines led to a slide in foreign investment, including a 74 percent slump last year.
The country's wariness stems from hundreds of years of political dominance by China.
Shenhua and its consortium partners plan to build a 265 km (164 mile) railway from Tavan Tolgoi, Mongolia's largest coking coal mine, to the Chinese border as part of an investment agreement needing legislators' approval, Enkhsaikhan said.
Mongolia has asked for $4 billion from the investors to finance development of the mine. Mongolia would receive a $200 million advance payment to the miner while retaining full ownership, Enkhsaikhan said.
Enkhsaikhan is leading talks with Shenhua, Japan's Sumitomo Corp and Energy Resources, a wholly owned subsidiary of Hong Kong-listed Mongolian Mining Corp, to take over management of the state-owned firm Erdenes Tavan Tolgoi to run the mine.
Shenhua's influence over the heavily trafficked railways could help Mongolia's coal reach buyers in China, he said.
"Shenhua having its own railway network will provide the most favourable conditions," said Enkhsaikhan, whose chief role is to negotiate agreements for the country's largest development projects.
He also said that Sumitomo's marketing and sales expertise would play a critical role.
Another target for Mongolia is port access to reach new markets such as South Korea and Japan.
"The Chinese seaport and beyond are considered the most optimal options," said Enkhsaikhan.
The consortium would also be responsible for fulfilling commitments to Aluminum Corp of China (Chalco). In 2011, Erdenes TT agreed to repay $350 million it borrowed in coal deliveries. About $150 million worth of coal deliveries remain, Enkhsaikhan said.
Former Deputy Cabinet Secretary Ch.Sainbileg Appointed CEO of Erdenes TT, Successor Appointed Chairman
April 9 (infomongolia.com) These days, an issue to develop the Tavan Tolgoi (TT) deposit in order to put into economic circulation is attracting a lot of attention as local and as foreign investors and being discussed today at all-levels of Mongolian authorities.
In conjunction, the post of Executive Director of the Erdenes Tavan Tolgoi JSC was vacant to date, because the former CEO Ya.Batsuuri is under investigation by Independent Authority Against Corruption and the latter court hearing extended the term of imprisonment.
In accordance with situation, the Board Members of the state-owned company called its meeting on April 08, 2015 and unanimously agreed to appoint Mr. Ch.Sainbileg as the new CEO of Erdenes Tavan Tolgoi JSC.
Newly appointed Chuluunbat SAINBILEG used to chair the company's Board and been as the Vice-Chairman of Cabinet Secretariat.
Pursuant to post changes, the Chairman of Erdenes Tavan Tolgoi Board of Directors is succeeded by Mr. Galsan GANBOLD, who concurrently is appointed as new Vice-Chairman of Cabinet Secretariat of the Government of Mongolia.
Related:
Erdenes TT has new leader – Montsame, April 9
Ch.Sainbileg appointed as CEO of Erdenes Tavan Tolgoi – gogo.mn, April 9
TRQ closed+3.61% to US$3.73, +4.22% to C$4.68
Fitch: A Mongolia-Rio Tinto Deal Would Be Credit Positive
Fitch Ratings-Hong Kong/Singapore-09 April 2015: An agreement between the Mongolian government and Rio Tinto to proceed with the phase 2 expansion of the Oyu Tolgoi gold and copper mine would help stabilise the sovereign credit profile from the current Negative Outlook, says Fitch Ratings.
A deal could have potentially transformative effects for the country's external accounts and macroeconomic position, catalysing billions of dollars in new foreign capital inflows, accelerating economic activity, and providing relief to many of the country's key credit constraints.
In turn, this would reinforce Mongolia's favourable development prospects. The potential for rapid growth in per capita incomes is substantial considering the country's mineral and other resource wealth. However, this is dependent on Mongolia being able to successfully attract investment to harness its natural resources.
Fitch maintains Mongolia's sovereign Issuer Default Rating on Negative Outlook, and has specifically highlighted weak external liquidity as one of its principal credit sensitivities. Mongolia's access to external liquidity is heavily dependent on a swap facility with the People's Bank of China (PBOC), and Fitch estimates that - under current trends - the country only has sufficient external liquidity to meet projected requirements for the next two years. Failure to reach an agreement on Oyu Tolgoi risks further undermining the country's economic fundamentals, potentially triggering more serious pressure on external liquidity.
Expansionary fiscal and monetary policy has pushed public debt to an estimated 59% of GDP as of end-2014, exceeding its 'B' rated peers. In turn, a growing reliance on external capital markets in conjunction with a sharp decline in FDI has significantly raised refinancing risks for the sovereign. Sovereign and sovereign-guaranteed entities face a combined USD1.1bn in US dollar bond maturities in FY17 and FY18.
Mongolia's prime minister announced on 5 April that his government had reached an agreement in principle with Rio Tinto to proceed to the second phase of the Oyu Tolgoi, although a formal agreement has yet to be officially confirmed by both sides. The roughly USD5bn phase 2 expansion has been stalled for more than two years owing to disagreements over financing, cost overruns and taxes for the project.
Similar:
Rio Tinto share price: Fitch comments raise likelihood of mine dispute resolution in Mongolia – iNVEZZ, April 9
Sam Walsh: Mongolia waits as government decides on Rio's "best and final offer"
By Terrence Edwards
April 9 (Mongolian Economy) Sam Walsh has been chief executive officer of Rio Tinto since January 2013. He stepped into the head role after Rio had planned for USD 14 billion in write-offs under the lead of Tom Albanese. He arrived in Mongolia on March 28 to commemorate Oyu Tolgoi's one millionth tonne of concentrate shipped.
-What is the current status of relations between Rio Tinto and the government of Mongolia, especially since the entrance of a new prime minister, Chimed Saikhanbileg?
-Relationships are good, and the Oyu Tolgoi project is an important project for the government, people of Mongolia, and Rio Tinto and shareholders. We have a lot in common as we move to improve the wellbeing of the Mongolian people. We have a project that provides returns to shareholders. I think we've redressed discussions over the last 18 months, and we tabled a memorandum of understanding in November that summarised the status of negotiations to date and provided a solution in relation to outstanding issues. There are currently a few outstanding issues remaining. Let me stress that Rio Tinto's position is no different than the position any major project developer would take. We're not asking for anything extraordinary or special. It's an approach that you need to take with a really large capital project to take the project forward. There are issues we're working through with the government, and I'm hopeful we'll bring to resolution. Rio Tinto is committed to Mongolia. We think it's a good place for us to be building projects and running mines. My visit here is to show that commitment, to show our interest, and show our good will in regards to the progress in negotiations.
-Are lenders still on board for the USD 4 billion project financing that Rio would use to fund construction of an underground mining complex?
There've been a number of lenders who rolled over their offers. Once we've resolved all of the negotiations, we need to go back to lenders to confirm the availability of the funding. The world is a pretty volatile and tough place. We're certainly seeing that in relation to commodity prices, including copper. There're still areas of the world still struggling to get over the global financial crisis, and conflict in areas around the world. It's something that we'd need to go back and verify that the financing is still available.
-What's the soonest you believe Oyu Tolgoi could see production from the underground mine that will be built in phase two?
-There are a number of things we'd need to work through. Obviously we'd need to finalise negotiations with the government. We'd then need to refresh the study numbers because they're now out of date. We'd then need to remobilise the workforce and so on. There are a lot of moving parts there that would need to be taken into account before you can specify when it [phase two] would start.
-Is the memorandum submitted to the prime minister last November Rio's final offer for a resolution for disputes, such as the USD 30 million in taxes the government claims Oyu Tolgoi owes and borrowing USD 4 billion to finance phase two?
-This is the best and final offer. We believe this a very reasonable approach to resolving the outstanding issues. Clearly, in terms of reaching a final conclusion there's a lot of detail that needs to be resolved, so negotiations were continuing last week. Of course, the entire process is a negotiation - but let me also say there's no project of this size and scale outside of Oyu Tolgoi inside Mongolia. It does need to be considered in terms of magnitude and importance to the economy. Let me reemphasise we're not looking for any special treatment. We're looking for certainty; we're looking for clarity in relation to what actually will apply to the project. It's more seeking clarity than anything particularly special.
-Cabinet Secretariat Minister S.Bayartsogt has said the MoU you've put forward is against Mongolian law. The country can't provide special tax regulations for just one country, he said, even for Oyu Tolgoi. What do you think about that criticism?
We believe that we've put a fair and reasonable offer. The project's 53 percent of value in returns for the government. That does meet international standards. It's highly competitive compared to other projects around the world. We need to be sure when we look at this project over its life that it generates an adequate return to cover the risks, to cover the life of the mine. Remember that mining projects do have a greater risk than building factories at the outskirts of Ulaanbaatar. You're relying on interpretation of resources, you're relying on the accuracy of your drilling program, you're relying on the ability to be able to concentrate the ore satisfactorily and so on. Mining projects are different to generally most other projects in the world. In looking at returns of a project, you need to take that into account.
-Turquoise Hill has said it would be willing to go to arbitration over the government's tax claim? Is Rio prepared to go that far?
-It's generally an issue for accountants and auditors. We run with a fairly - totally - automatic process. To answer the question, you need to provide me with exchange rates, commodity prices, oil prices and so on because all of these factors will have an impact. But all these factors being equal, I'm not expecting an impairment. Rio Tinto pays a fair amount of tax all around the world. We released our fifth taxes paid report, which indicates that the taxes paid all around the world. If you're interested we paid USD 7.2 billion globally for 2014. Every tax, we pay - at a national or federal level, state or province level, or local community taxes. We do pay our fair amount of tax. We're debating USD 30 million, we're in discussions with government. If necessary we will go to international arbitration.
-Do you think Oyu Tolgoi risks impairment in the next set of results if the project continues to be delayed?
-I don't think it'll have an impact on current production or the project. These are day to day issues that you deal with and work through. But from a government view point and a Rio Tinto view point, we're equals in all this.
-Given the availability of mining contractors and suppliers in the depressed market, how much do you think you could save on construction costs for phase two now?
-We need to retest the figures. We need to refresh the numbers. You're certainly right that there's been a reduction in capital project activity. There's also been a reduction in all of the major commodities - steel, copper, aluminum and so on. So i would expect there would be improvement in the numbers, but we'd need to play that all out.
-The main reason for the government's objections is it wants more immediate benefits from Oyu Tolgoi. The government is not happy to wait many years for investors to recuperate their investments before it starts receiving dividends? Is there a solution to this?
-The project will be paying taxes and benefits to the government, but basically as it commences - which we've seen in relation to the open cut operation at OT - we have to date seen USD 250 million [in taxes and fees].
-Still, this is a sticking point for many people in Mongolia, as well as concerns about income disparity and the environment. How can Rio convince the people of Mongolia that mining is good for the country?
-First of all there're the taxes. There're also the thousands of jobs that we provide. Rio Tinto is the second largest mining company in the world. We build projects using world's best practices. We have a very strong focus on safety, health, environment, and we rigidly follow world best practices in these areas. Of course we meet legislation wherever we operate. Mining is important to the 21st century. There's almost nothing you can do in developing a country in terms of urbanisation and industrialisation without mining materials. You can't build buildings. You can't even run your mobile phone without the commodities that we supply. We are a critical part of the developing world. It's important that, yes, we operate the world's best practices, but it's also important that we do physically bring projects forward. And copper will be important to the world. We don't want to see that world run out of copper.
-How does Mongolia compare as a sovereign partner to the other governments it has worked with?
-As I mentioned earlier, the tax rate here is competitive against tax rates elsewhere in the world. We believe we are and will be paying a fair amount of tax. We operate in over 40 countries, and each country has its own special way of doing business and requirements for mining companies. We see that as an important part of our social license to operate; that we meet the expectations of the community wherever we operate around the world. And I think we do a pretty good job of it.
Why I'll Wait And See With Turquoise Hill And Oyu Tolgoi
By Gary Bourgeault, long only, research analyst, portfolio strategy, media
Summary
· Mongolia's Prime Minister announces a deal has been agreed upon concerning Oyu Tolgoi.
· Questions arise on why Rio CEO Sam Walsh hasn't confirmed deal is done.
· Risks are inherent if a deal isn't made, as share price of Turquoise Hill would plummet and remain in limbo for some time.
April 9 (Seeking Alpha) Financial news outlets were blaring out headlines and lead stories about an alleged agreement between the government of Mongolia and Rio Tinto (NYSE:RIO) and Turquoise Hill (NYSE:TRQ) concerning Oyu Tolgoi, the rich mineral resource in the country.
While it would be welcome news to investors if this is in fact the case, I will wait until I hear very clearly from Rio CEO Sam Walsh on his take in the deal.
Just recently Walsh stated very clearly that the final offer was on the table, and it's a check to me that he has been very quiet after the supposed blockbuster announcement from Mongolia's Prime Minister Saikhanbileg, that past hindrances to the project have been resolved and the project is cleared to move ahead.
If that was really the case, it's very puzzling that there are no confirmations of this outside of a small story and line from Sky News in Australia, which asserted Walsh confirmed the story.
To me, this is too big of a story and impetus for it to be ignored by Rio and Turquoise Hill, if indeed a deal has been made.
This is especially true after Walsh said just a little over a week ago that negotiations had reached the critical stage, with the major issues left to be faced. It's puzzling to believe it took that long to fix a number of smaller issues, and in a short week the major issues have quickly been resolved. It's possible, but highly unlikely.
I'm not saying pressure on the Mongolian government won't result in a deal being made, but with no strong response from Walsh, I find it suspect and probably premature concerning Saikhanbileg's announcement of the way being cleared for Oyu Tolgoi to go forward.
There have been too many vagaries in the past when things looked like they were being resolved, to trust this as a surety. I do believe a deal may be close to being made, but with the recent surge in share price of Turquoise Hill, I will wait to add to my position in the company, as the price movement has been solely tied to an announcement by only one side in the deal. That in itself is unusual, as partners almost always make joint announcements when reaching a deal, and with 'no comment' being the response of Walsh and Turquoise Hill, that suggests there is still work to be done.
Breaker issues
As Walsh noted about a week ago, the progress made in the negotiations were related to smaller issues. While that's a good tactic, as it allows both sides to make progress without a significant amount of resistance; which would lead to a more positive environment for the real issues of the deal.
That said, if the major issues were resolved at this time, Walsh, Rio Tinto and Turquoise Hill's marketing department would be all over it. That's why I believe the announcement was premature, and why I will wait until Walsh confirms a deal is in place, and what the exact terms of the deal are.
As for the major issues to be resolved, they're primarily cost overruns and taxes. On the tax side, it's not the approximate $30 million that is allegedly owed at this time that is the major issue, but that there needs to be absolute clarity on how Mongolia is going to decide on what is owed. Over time, that could become a huge challenge for Rio and Turquoise Hill if it's not brought to a decisive conclusion.
Turquoise doesn't want to find itself in a compromising situation with billions owed and spent, only to discover the earnings are far less than expected because of uncertain bookkeeping on the part of Mongolia.
If the tax issue isn't resolved, Walsh has said he will seek "international arbitration."
Cost overruns are a sticking point for Mongolia because per its current agreement - which Turquoise and Rio aren't willing to adjust - it won't be paid its portion until money borrowed for the project is paid back.
Mongolia asked for higher royalties in exchange for Turquoise getting a bigger piece of Oyu Tolgoi (66 percent at this time), but that was rejected by the company in February.
Cost issues for Rio
Another issue on the side of Rio Tinto, which owns a controlling interest in Turquoise Hill, is it is concerned over margin and prices with other commodities - especially iron ore - and in response has slashed operating expenses by close to $5 billion since 2012, according to Financial Times.
That means it isn't interested in changing the original terms of the agreement made with the Mongolian government, so if and when confirmation of a deal is made, we should see it being favorable to Turquoise Hill's and Rio Tinto's interests.
Financing is in place for the second phase of development for Oyu Tolgoi, and once a deal is finalized, it's likely that should result in the project going forward in the latter part of 2015.
That will give the share price another boost, but again, there have been too many variables in the negotiation process for me to take the word of Mongolia that a deal has been struck; especially when it has yet to be confirmed by its Oyu Tolgoi partners.
Risk to investors
Even at the recent inflated share price of Turquoise Hill, this is still a low entry point for an investor looking to hold the company for many years, such as I am.
But for those that may be looking to get in for a shorter period of time, this current surge in the share price is a concern, mostly because if it is found out a deal isn't in place, the stock will plummet probably at least as much as it jumped. The degree of the fall in price will be determined by the accompanying details of what needs to be done to get the deal completed, along with the time-frame it will take to make it happen.
I wouldn't get into Turquoise Hill at this time if you are looking for a short-term upward surge, as I think it's already totally priced into the share price.
On the other hand, if you're looking to get into it long term, if a deal is in fact made, we may never see the share price of Turquoise Hill at these levels again.
The amount of resource in Oyu Tolgoi is so vast, that it still may be understated and not adequately measured.
Conclusion
As of September 2014, an updated feasibility study revealed there was 24.9 billion pounds of recoverable copper, 11.9 billion ounces of recoverable gold, and 78 million ounces of recoverable silver. That brings the overall known value of the mine to $92 billion.
In a separate study, when including deposits beyond the second phase of the project, it is asserted there is as much as 56.5 billion pounds of recoverable copper, 27.9 million ounces of gold and 195.2 million ounces of silver. Under that study that would point to a mine life of 94 years and a value of about $200 billion.
While it's not unusual for the share price of a company to move on a headline, my major concern here is the headline was the result of an assertion from only one party in the deal. That is unusual, although not so much if you've been following the narrative of this strange saga as it has unfolded. So with what appears to be progress concerning the project, even the announcement was done in an inexperienced way, and with no one willing to confirm it, appears to be something that was done spontaneously without notifying Turquoise Hill or Rio Tinto beforehand.
Before adding to my position in Turquoise Hill, I will wait until I know for sure that a deal has been completely finalized. I would rather forego a better entry point than pay this price for the company, only to find out a deal hasn't been made, and endure a paper loss for a couple of years.
The other side of the issue for the investor is Turquoise Hill hasn't been able to be analyzed in the usual manner of any company, because these ongoing uncertainties have kept it from being able to build out the resource, which means it's only operating at limited capacity with limited investment.
Once a deal has been made, over the next couple of years afterwards we'll get a much better picture of operations and potential earnings, and a time-frame that can be counted on to achieve predictable results.
No one would lose, in my opinion, if they took a position in Turquoise Hill at this much higher price than it recently stood at. The only risk for the long-term investor, or short-term investor as well, would be if the talks totally fell apart, and the project was put on hold for an unknown amount of time, or Mongolia attempted to nationalize it. The latter is increasingly unlikely because it would find it difficult at this time to secure financing to build Oyu Tolgoi out.
Once a deal is finalized, assuming that is the outcome, I see Turquoise taking another jump in share price. I would rather have things more secure before putting more money into the company, and that will be measured by a conformation from Walsh or Turquoise Hill that a deal, not only in principle, but in reality, has been completed.
I don't mind losing some on the entry point in order to be more sure on the long-term viability and predictability of the project.
KOT closed Wednesday C$0.10. Last traded at C$0.01 on Jan 30
KHOT Infrastructure to Expand Mongolian Operations
ULAANBAATAR, MONGOLIA--(Marketwired - April 8, 2015) - KHOT INFRASTRUCTURE HOLDINGS, LTD. ("KHOT" or the "Company")(CSE:KOT) is pleased to provide shareholders with an update on its Mongolian Infrastructure operations.
As previously announced on December 29, 2014, the Company completed its first Mongolian highway repair contract in November 2014. This initial six kilometer project, although modest in size, was an important step for the Company and its Mongolian operating subsidiary, AMZ, clearly demonstrated management's ability to successfully conclude all aspects of a Mongolian road construction contract.
Management has determined that timing is now optimum for the Company to rapidly expand its operational capacity to take advantage of the full range of infrastructure opportunities currently approved or with approval pending. This includes 5,400 kilometers of new paved road construction scheduled for completion by the end of 2016. Mongolian government plans include tenders for construction of both contract and concession roads.
The Company would benefit from a significant joint venture partner to bolster the financial credibility and major construction experience required to successfully win tenders in both the contract and concession categories.
Management is pleased to report that KHOT has entered into a binding Memorandum of Understanding (MOU) with a major foreign state owned entity to form a special purpose consortium which provides for joint participation in the bidding for all tender calls.
This combination will enable the consortium to participate in the full range of construction opportunities for approximately 500 kilometers of concession road projects.
"We are excited to co-venture with a corporate partner of this stature and experience. The combined companies will create a formidable team with the resources necessary to successfully exploit this enormous opportunity," said James Passin, Chairman of KHOT.
For more information, please visit www.khot-infrastructure.com.
Prophecy Engages Investor Relations Firm and Grants Options
VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 8, 2015) - Prophecy Development Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to announce that it has engaged Cor Capital Inc. ("Cor Capital") to provide investor relations and shareholder communications services for the Company effective April 1, 2015.
In addition to responding to all investor and shareholder inquiries, Cor Capital will focus on introducing Prophecy to institutional investors, large asset money managers, investment advisors and high-net worth individuals including arranging conference calls, road shows and other investor presentations. Other duties will include arranging follow-up meetings and maintaining an on-going dialogue with its client base on behalf of the Company. Cor Capital will also provide Prophecy with advice with respect to capital structure, financing, mergers and capital raising opportunities. In connection with their engagement, Cor Capital has been awarded a consulting contract paying $7,500 per month for a term of twelve months and 1,500,000 incentive stock options (the "Cor Options").
The Company also announces that pursuant to the terms of the Company's Share-Based Compensation Plan which was approved by shareholders at the Company's last annual general meeting of shareholders held on June 19, 2014 it has granted in aggregate (including the Cor Options), 10,000,000 incentive stock options (the "Options") to various directors, officers, employees and consultants of the Company. The Options are exercisable at a price of $0.05 per common share for a term of five years expiring on April 7, 2020 and vest at 12.5% per quarter for the first two years following the date of grant. As part of its continuous review, the Company cancelled over the past year, a total of 2,230,000 stock options with various exercise prices.
1878 closed +1.55% Thursday to HK$5.25, SGQ last traded C$0.84 on Tuesday
SouthGobi Resources Announces Annual General Meeting on June 15
April 9, SouthGobi Resources (TSX:SGQ, HKEx:1878) --
…
Pursuant to a request from the above-mentioned reporting issuer, we wish to advise you of the following information in connection with its Annual and Special Meeting of Shareholders:
Date of meeting: June 15, 2015
Record date for notice: April 17, 2015
Record date for voting: April 17, 2015
Beneficial ownership determination date: April 17, 2015
…
Shell Will Buy BG Group for $70 Billion in Cash, Shares
April 8 (Bloomberg) Royal Dutch Shell Plc agreed to buy BG Group Plc for about 47 billion pounds ($70 billion), making Europe's largest oil company the pre-eminent player in global natural gas and adding fields in Brazil.
The deal, the industry's biggest in at least a decade, will push Shell further into producing, shipping and selling gas as the company bets China and other emerging economies switch from coal and oil to cut pollution.
Investors were skeptical of the stock and cash acquisition, which isn't expected to boost earnings per share until 2017. The price of the class of share being used to buy BG fell the most since 2008 on concern the company is overpaying.
"To assume that Shell can pay a 50 percent premium for BG, and extract significant synergies, deliver value for shareholders and maintain a dividend on an expanded shareholder base would require a more-than-healthy degree of optimism," said Michael Hulme, commodities fund manager at Carmignac Gestion SA.
The merged company, led by Shell Chief Executive Officer Ben van Beurden, 56, will boast a market value twice the size of BP Plc and surpass Chevron Corp. Shell, struggling to rebound from its worst production performance in 17 years, will swell its oil and natural gas reserves by 28 percent with the combination and inherit a management team that carved out a unique niche in liquefied natural gas, or LNG.
LNG Pioneer
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Link to WSJ Comparison: Shell and BG Group
MSE News for April 9: Top 20 -1.55% to 13,321.52, Turnover ₮12.7 Million
Ulaanbaatar, April 9 (MONTSAME) At the Stock Exchange trades on Thursday, a total of 6,088 units of 16 JSCs were traded costing MNT 12 million 701 thousand and 644.00.
"Genco tour bureau" /1,767 units/, "State Department Store" /1,597 units/, "APU" /1,272 units/, "Makh impex" /310 units/ and "Remikon" /261 units/ were the most actively traded in terms of trading volume, in terms of trading value were "APU" (MNT four million 468 thousand and 050), "Gobi" (MNT one million 449 thousand and 940), "Material impex" (MNT one million and 290 thousand), "Darkhan nekhii" (MNT one million 072 thousand and 500), "Material impex" (MNT 976 thousand and 510).
The total market capitalization was set at MNT one trillion 326 billion 736 million 732 thousand and 865. The Index of Top-20 JSCs was 13,321.52, decreasing 1.55% and the all index of MSE was 968.00, decreasing 0.98% against the previous day.
MSE Offers ₮16.8 Billion 28-Week, ₮10 Billion 3-Year Mongolia Notes, Closing 4/14
April 8 (MSE) --
1. The issuer's name: Mongolian Ministry of Finance
2. The purpose of the issuance of bond: Fund management of State treasure
3. Offering scope of securities: Offering to the public
4. Type of securities: Government securities
5. Face value: MNT 100,000
6. Discounted price: 92,179.00
7. Total amounts issued: 168,487 Units
8. Short-term securities performance:
Government Securities name | Amount /units/ | Value /billion MNT/ | Maturity /week/ | Form of Interest payment | Interest rate (percent) | Starting date of the order | Closing date of the trading |
ЗГЭБ-Б-28-298 | 168,487 | 16.8 | 28 | Discounted | 15.80% | 2015.04.08 | 2015.04.14 |
9. Long-Term securities performance:
Government Securities name | Amount /units/ | Value /billion MNT/ | Maturity /year/ | Form of Interest payment | Interest rate (percent) | Starting date of the order | Closing date of the trading |
ЗГЭБ-Б- | 100,000 | 10.0 | 3 | Semi-annually | % | 2015.04.08 | 2015.04.14 |
10. Coupon payment of long-term government retail bonds will be paid on every 15th of January and 15th of August or 15th of May and 15h of November.
11. Rate of interest: interest rate of the Government Securities, which will be issued weekly, will be based on auction results of Central Bank basis State Government Securities weighted average interest rate. If the Central Bank's weekly trading cancelled, the interest rate will be set based on the previous trading of Government Securities weighted average interest rate.
12. Order deadline: The Mongolian Stock Exchange will take orders 6 days and the trading will close on the 6th day at 14.00 PM and information on total orders will be delivered to the securities issuer.
13. Trading period: Total registered orders distribution of MSE trading system will be determined based on the Ministry of Finance votes.
MSE Glass Account Report, First Quarter 2015: Revenue ₮361.6 Million, Expense ₮261.2 Million
April 8 (MSE) In first quarter of 2015, Mongolian Stock Exchange traded total of 14 million securities worth MNT111.7 billion through 61 trading sessions. Daily average trading value reached to MNT1.8 billion, which indicated 20.97 times more than same period of previous year. In addition, trading transaction of foreign investors reached to MNT1.3 billion, which indicated 57 percent more than previous year.
In first quarter of 2015, "Mongolian Stock Exchange" JSC had revenue of MNT361,615,230.12 and expense of 261,200,062.89. Salary and related other expenses were MNT171,913,344.11 and maintenance and other expenses were MNT89,286,718.78. Overall, total profit of first quarter was MNT100,415,167.23
Bank rates at time of sending: TDB (Buy ₮1,978 Sell ₮1,988), Khan (Buy ₮1,980 Sell ₮1,988), Golomt (Buy ₮1,980 Sell ₮1,988), XacBank (Buy ₮1,978 Sell ₮1,987.5), State Bank (Buy ₮1,980 Sell ₮1,988)
BoM MNT Rates: Wednesday, April 8 Close
| | 4/9 | 4/8 | 4/7 | 4/6 | 4/3 | 4/2 | 4/1 | 3/31 | 3/30 | 3/27 | 3/26 | 3/25 | 3/24 | 3/23 | 3/20 | 3/19 |
| USD | 1,985.95 | 1,986.16 | 1,986.45 | 1,986.04 | 1,985.85 | 1,985.40 | 1,983.05 | 1,984.69 | 1,982.09 | 1,985.14 | 1,989.51 | 1,993.92 | 1,992.63 | 1,986.55 | 1,989.71 | 1,989.92 |
| EUR | 2,140.95 | 2,154.09 | 2,170.00 | 2,178.29 | 2,160.01 | 2,145.82 | 2,135.05 | 2,139.79 | 2,153.54 | 2,145.74 | 2,191.15 | 2,183.84 | 2,182.83 | 2,143.88 | 2,123.02 | 2,129.61 |
| CNY | 320.11 | 320.05 | 320.78 | 320.67 | 320.54 | 320.34 | 319.99 | 320.09 | 319.42 | 319.51 | 320.21 | 320.84 | 321.06 | 319.87 | 321.05 | 321.15 |
| GBP | 2,952.91 | 2,952.72 | 2,958.82 | 2,962.97 | 2,944.22 | 2,948.12 | 2,944.23 | 2,932.97 | 2,935.67 | 2,940.39 | 2,970.04 | 2,970.14 | 2,978.18 | 2,955.59 | 2,932.04 | 2,951.45 |
| RUB | 37.41 | 36.33 | 35.79 | 35.13 | 35.26 | 34.71 | 34.11 | 34.27 | 33.99 | 34.36 | 35.26 | 34.86 | 33.89 | 33.43 | 33.11 | 33.08 |
MNT vs USD (blue), CNY (red) in last 1 year:
BoM FX auction: CNY bids declined, accepts US$4m MNT, $30.5m USD swap offers
April 9 (Bank of Mongolia) On the Foreign Exchange Auction held on April 9th, 2015 the BOM has received bid offers of CNY 20.0 million in a rate of MNT 320.30-320.40 from local commercial banks and BOM has not accepted the offer.
On April 9th, 2015, The BOM has received MNT Swap agreement bid offer in equivalent to USD 4.0 and USD Swap agreement bid offer of USD 30.5 million from local commercial banks and accepted the offer.
See also:
BoM issues ₮39.4 billion 1-week bills at 13%, total outstanding -11.4% to ₮233.5 billion
April 8 (Bank of Mongolia) BoM issues 1 week bills worth MNT 39.4 billion at a weighted interest rate of 13.0 percent per annum /For previous auctions click here/
Mogi: Let's see how MSE can handle this.
Mongolia Bond Auction Fails for Sixth Time Amid Economic Slump
By Michael Kohn
April 9 (Bloomberg) -- Mongolia's 10b tugrik ($5m) three-year government bond sale Wednesday failed to attract any competitive or non-competitive bids, according to a central bank statement.
* NOTE: A total of six failed bond auctions have occurred for a total of 45b tugrik sought; includes three three-yr sales and three five yr sales
* NOTE: Failure of govt bond auctions is "normal" as govt and market had different expectations for pricing, Zoljargal Naidansuren, Governor of the Bank of Mongolia, said on April 2, after previous failure
* NOTE: Mongolian tugrik fell to record low of 1993.92 against the dollar on March 25. Currency has fallen 40.9% in past two years against the dollar.
(BFW)
GoM Treasury Auction: ₮14 Billion 28-Week Bills Sold at Discount, Average Yield 15.8%
April 8 (Bank of Mongolia) Auction for 28 weeks maturity Government Treasury bill was announced at face value of 20.0 billion MNT. Face value of 14.0 billion /out of 44.0 billion bid/ Government Treasury bill was sold at discounted price and with weighted average yield of 15.800%.
Around 2,200 pounds is 1 metric ton
Copper Sees Improved Sentiment on Supply Issues, Gaining 11.74% Since January Low
April 7 (Copper Investing News) The copper price is still under $3 per pound, but the red metal continues to slowly creep upward as supply issues pop up.
On Tuesday, the metal gained just over 1 percent to reach $2.76 per pound. Copper has been around that level since March 20, and has gained 11.74 percent since hitting a multi-year low in January.
To be sure, copper still has its fair share of troubles — slow demand from China is keeping some cautious. Still, there have already been a number of disruptions caused by floods, mechanical failures and other issues that have some market watchers thinking twice about their bearish predictions for copper this year.
For instance, BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT) cut its production forecast for Olympic Dam following an electrical failure at its Svedala mill in February, while a road block near Freeport-McMoRan's (NYSE:FCX) Grasberg mine caused the miner to temporarily halt production in late March.
Most recently, devastating floods in Chile caused several miners to put a hold on production. Some of the mines affected included Lundin Mining's (TSX:LUN) Candelaria mine, Barrick Gold's (TSX:ABX) Zaldivar and Codelco's Salvador.
Furthermore, according to Reuters, the country's state copper commission, Cochilco, lowered its production forecast from 6 million tonnes to 5.94 million tonnes this week. The change was due to problems caused by an ongoing drought in the region in addition to the recent floods. "There is an effect, albeit of low significance, from operations temporarily halted (mostly Codelco's Salvador and JX Nippon's Caserones) due to the heavy rains," said Cochilco in a statement.
According to The Wall Street Journal, those problems are causing some investors to turn bullish on copper. Daniel Belchers, a commodities fund manager at London's Columbia Threadneedle, told the Journal that his fund previously invested less than suggested in copper, but has become bullish in recent weeks. "With all of these mines now coming off or having a lot less production than we were expecting, we will be in a deficit market this year," he said.
Similarly, Cormark Securities has said that it's staying bullish on copper in the long term, while Macquarie previously upgraded the base metals sector from "neutral" to "overweight," citing copper supply and demand fundamentals as a key driver behind that decision.
Of course, not all predictions are positive. Jeremy Baker of the Vontobel Belvista Commodity Fund in Zurich told the Journal that "there is a risk that copper could drift lower again" on worries over China's economic outlook. Still, base metals investors will no doubt be encouraged by some of the positive sentiment surrounding the metal, and will be watching for further updates on the outlook for global copper supply and demand.
Company news
Over the weekend, Mongolian Prime Minister Saikhanbileg Chimed announced that the government has come to an "agreement, in principle" with Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) regarding an expansion at the company's Oyu Tolgoi mine in Mongolia. The share price of Turqoise Hill Resources (TSX:TRQ), which is majority owned by Rio, has risen approximately 10 percent since the announcement, while Entrée Gold (TSX:ETG), which also has a stake in the project, has seen its share price gain about 50 percent.
On Tuesday, Lundin Mining announced maiden reserve estimates for two new orebodies recently discovered at its Candelaria mine in Chile. The new Susana and Damiana deposits consist of 14.9 million tonnes of proven and probable reserves at average grades of more than 1 percent copper, and it is anticipated that these reserves will be accessed from existing and new portals from the open-pit mine at the project.
Lower coking coal contract price shows downward pressure: Russell
By Clyde Russell
April 8 (Reuters) (Reuters) - - Coking coal prices are yet to show signs of bottoming with bearish signals from both contract talks between Australian producers and Japanese buyers as well as Chinese demand.
Hard coking coal for second quarter delivery was settled at $109.50 a tonne free-on-board between producer BHP Billiton and buyer Nippon Steel, Morgan Stanley said in a research noted on April 6.
This was down 6 percent from the previous quarter's contract and represented a 7 percent premium to the spot price at the time the deal was concluded.
The premium to the spot price is in line with prior settlements, with Japanese buyers willing to pay above spot in order to guarantee supplies.
Coking coal, also known as metallurgical coal, is used in steel-making and is traditionally a higher value product than thermal coal used in power generation because it has a higher energy value and fewer impurities.
However, coking coal prices are now down two-thirds from their peak around $300 a tonne in 2011, while benchmark thermal coal prices at Australia's Newcastle Port have dropped about 55 percent over the same period.
Similar to thermal coal, coking coal has suffered from oversupply as global miners responded to the view that Chinese demand would accelerate for years to come.
This view has been challenged by recent events, with China's imports of both coking and thermal coal slowing significantly.
Coking coal imports totalled 62.3 million tonnes in 2014, down 17.3 percent over 2013, according to Chinese customs data. In the first two months of 2015, imports were at 7.98 million tonnes, down 13.6 percent over the same period last year.
If the pace of imports in the first two months is sustained for the rest of 2015, it implies a total of about 48 million tonnes, which would be a drop of 23 percent on 2014.
MONGOLIA RISING
The slump in coking coal prices has effectively knocked higher cost producers out of the Chinese market, notably from the United States, with no imports from the country reported in the first two months of 2015 and a drop of 66 percent in 2014.
But worrying for producers in top exporter Australia is signs that Mongolia is ramping up its shipments to its southern neighbor.
Imports from Mongolia stood at 2.22 million tonnes for the first two months of 2015, a gain of 70 percent over the same period last year, while those from Australia dropped 25.4 percent to 3.8 million tonnes.
This is a major reversal from 2014, when imports from Australia rose 3.5 percent to 31.2 million tonnes, while those from Mongolia dropped 4.2 percent to 14.79 million tonnes.
Chinese customs data also shows that for February this year, the cost of coking coal from Mongolia was $40.45 a tonne, compared to $110.04 for Australian cargoes.
While Mongolian coal does present more challenges in transport, given that it has to use a combination of trucks and rail, this sort of price differential makes it very appealing to steel mills, most of whom are battling low profitability.
Mongolian Prime Minister Chimed Saikhanbileg has also been touting new deals worth up to $8 billion to expand the country's copper and coal mines.
While Mongolia has told this story before, and the reality has often been less optimistic, the risk is that the landlocked nation actually does invest more and thereby increases its export capacity.
This would allow it to chase a greater share of what may be a shrinking market for coking coal in China, given the weak outlook for steel production.
Representatives of China's vast steel sector, which accounts for about half of global output, have said the country already has reached "peak steel", and that demand and production are unlikely to rise much in coming years.
If this is the case, the coking coal demand has an automatic cap.
The idling of older, less-efficient blast furnaces and the increasing use of higher-grade imported iron ore may also serve to lower coking coal demand, even if total steel output remains more or less constant in China.
Overall, it's hard to build a bullish case for coking coal prices in the absence of supplier production cuts, particularly in Australia.
Democratic Party without democracy
April 9 (UB Post) There are no parties without scuffles, says the Democratic Party. They spent their 25th anniversary "protecting democracy" by kicking out the party's youngsters and ripping up their protest signs.
MP M.Batchimeg declared that the Democratic Party (DP) has a structure within the party similar to that of the pre 1990s Mongolian People's Revolutionary Party Political Bureau. Because of her statement, she has been criticized to the point of her removal from the party. Nowadays, the party treats their young generation worse than stray dogs, while the young people have been trying to open the windows to let in some air.
On the party's 25th anniversary celebration, the Speaker of Parliament and Head of the DP Z.Enkhbold stated, "The DP declares itself free of political factions starting today. The DP will not be divided into many factions, but will work together for the one and only DP faction."
Unfortunately, no one paid attention to his speech. People who were there because of the young people's protest were quite distracted. At this time, other members were probably wondering if Z.Enkhbold truly was the head of the Party.
Z.Enkhbold was to be promoted to full rank during the party's general assembly. The former head of the party, N.Altankhuyag, spent six years as deputy, and the next head seems to be following in his footsteps. Another subject of discussion for the assembly should also have been about DP Deputy Secretary L.Erkhembayar, who boldly stated, "The DP has done as much work in the two years of its governance as Mongolia has seen in the last ten years."
Although the three heads of state govern through democracy, there hasn't been free speech and human rights, with people and organizations being oppressed and afraid to speak up. Even MPs are turning away from each other.
The DP has an unwritten rule, in which whoever is stepping up their game must be taken down. Therefore, the young generation of the party held up posters reading "It is time for a revolution in the DP" and "It is suffocating. Open the doors and windows for some wind". The cast-off young people said, "We protested with posters during the speech by Z.Enkhbold. After the speech, we planned to continue the assembly in a calm order. We did not utter a word and did not cause a disturbance. We were simply standing there with our posters when people came and tore our posters and threw us out. This Party has long since stopped listening to young people's voices. Z.Enkhbold was abusing his power and singlehandedly decided the new areas for elections while violating other rules and regulations. So we stood up against this and expressed our opinions". They also stated, "Outdated democrats should move over and make room for the young generation."
Defending their disputes in the name of democracy, the DP does not care for its young generation. T.Khasbaatar even managed to take his brother from the party to court by snitching about his illegal actions. It was not long ago when Kh.Temuujin was worshipped, which brought a little victory to this party. Nowadays, organizations point out how he is neglected. Social media was full of statements yesterday such as "To save democracy, the DP must undergo a revolution within and force the 'oldies' who 'own' democracy to retire" and "Owning democracy is unsettling. Democracy blossomed in Mongolia, but it is becoming a weed too fast". More was said about how a handful of people are sitting on the throne, and they have closed their curtains and locked their doors.
N.Altankhuyag commented on this matter on his Facebook page, stating, "The DP's goal is to create a fear-free Mongolia" and, "We have walked on the historical path of wins and losses for the past 25 years. We must look back on this important time in history. The questions 'what has democracy given us', 'what mistakes were made', 'what can we fix to make it all better' are still lingering in the air". It seems that he has already started working on his quotes.
Busy fighting with each other, "crowning" and glorifying fake authorities, when will the DP acknowledge their true leaders and unite under one agenda?
Source: Uls Turiin Toim
EBRD BEEPS V Survey: Mongolia
April 9 (EBRD) In BEEPS V, the top three business environment obstacles identified by Mongolian firms were access to finance; competitors' practices in the informal sector; and electricity issues (Chart 1). Access to land was among the top obstacles for SMEs, young and manufacturing firms, while large firms were concerned about workforce skills and corruption. In BEEPS IV political instability replaced electricity issues as one of the main constraints.
High collateral requirements and limited access to land in the capital
Access to finance remained the top obstacle for Mongolian firms, despite the relatively high share of firms with bank loans (48.1%), well above the Central Asia (CA) and BEEPS V averages. However, out of the firms that needed a loan, 45.1% of SMEs and 61.6% of young firms were credit-constrained – they were either discouraged from applying or rejected when they did. Virtually all recent loans (99.5%) required collateral, the highest share across BEEPS countries. The median collateral value relative to loan value increased fivefold, from only 40% in BEEPS IV to 200% in BEEPS V (Chart 2). High collateral requirements discouraged 9.6% of firms from applying for a loan– all of them were SMEs.
Competitors' practices in the informal sector ranked second place. About 48% of Mongolian firms reported competing against firms in the informal sector, an increase of 5 percentage points compared with BEEPS IV (Chart 3). This puts Mongolia in first place among countries in Central Asia.
Electricity issues were identified as the third most severe obstacle. The wait for an electrical connection, at 94 days, more than quadrupled in BEEPS V compared with 20 days in BEEPS IV. The share of firms reporting that an informal payment was expected or requested to obtain an electrical connection more than doubled to 34.5%. While the share of firms experiencing power outages and the frequency of power outages decreased, their duration increased from 4.3 hours in BEEPS IV to 11.6 hours in BEEPS V, and the associated losses rose from 2.1% to 5.5% of total annual revenue.
Access to land moved from 12th place in BEEPS IV to 4th place in BEEPS V. This is perhaps counter-intuitive given how sparsely Mongolia is populated. However, it is proximity to the capital and land quality that matter. Population density in Ulaanbaatar has been growing in recent years, reaching about 50% of Mongolia's entire population. Approximately 45% of applicants for a construction-related permit reported that an informal payment was expected or requested – almost 14 percentage points higher than in BEEPS IV.
Mongolia Economic Forum: Building Credibility through Provincial Competitiveness Data
April 8 (The Asia Foundation) For years, Mongolia's economy outpaced most of the world, riding a mining boom to double-digit growth that peaked in 2011 at 17.5 percent (Mogi: readjusted to 17.3%). But since then, the economic tide has slowly turned, with growth dropping to 12.3 percent in 2012, 11.7 percent in 2013, and 7.8 percent in 2014. The Asian Development Bank predicts that economic growth will slow again this year, to a dismal 3 percent, before rebounding slightly to 5 percent in 2016.
Falling global commodity prices bear part of the blame for Mongolia's declining growth, but another factor is lack of investor confidence. Foreign direct investment in Mongolia fell 58 percent in 2014 according to the World Bank, due to conflicts over mining agreements and licensing, and investor insecurity over the stability of the regulatory framework.
On April 2 and 3 in Ulaanbaatar, Mongolia hosted the sixth annual Mongolia Economic Forum (MEF), under the theme, "Building Credibility." In his opening speech, Prime Minister Saikhanbileg called building trust among investors more important than ever to reviving Mongolia's economy. He was echoed on day two by President Elbegdorj, who called for Mongolians to recognize past mistakes and work together to build consensus on the nation's future.
A special session on the second day focused on competitiveness, particularly in local and regional economic development. The panel, moderated by distinguished Mongolian journalist B. Oyunchimeg, included L. Enkh-Amaglan, MP from Khuvsgul; Governor J. Batsuuri of Sukhbaatar province; Jean-Francois Lengelle, project manager of the OECD Eurasia Competitiveness Program; and Meloney C. Lindberg, country representative of The Asia Foundation.
Following a presentation on Mongolia's overall competitiveness by presidential Chief of Staff P. Tsagaan, chair of the Economic Policy and Competitiveness Research Center (EPCRC), the discussion turned to the results of the latest Mongolian Provincial Competitiveness Survey, recently conducted for the third time by the EPCRC with support from The Asia Foundation. The survey uses 180 criteria to rank Mongolia's 21 provinces or aimags in four main categories: economic performance, governance efficiency, business efficiency, and infrastructure. The survey combines statistical data with the results of questionnaires distributed to the private sector by the EPCRC in collaboration with local chapters of the Mongolian National Chamber of Commerce and Industry in each province.
This year, for the first time, results of the Provincial Competitiveness Survey have been made available online, on a new website developed by EPCRC and The Asia Foundation. Visitors can now compare economic competitiveness between all 21 provinces using easy-to-read graphs and tables. "Economic data can be quite dry and difficult to digest," said Lindberg during the session. "The website, for the first time, makes the data accessible to all in an easy-to-understand way, thereby enhancing transparency and providing an important basis for evidence-based advocacy, policy, and public-private dialogue by the local private sector and local governments." The Mongolian Provincial Competitiveness Survey is one of many economic governance indexes that the Foundation supports across Asia to promote private sector development.
The second day of the MEF also featured a session on economic development in the capital, Ulaanbaatar, which accounts for more than 60 percent of Mongolia's GDP. Capital City Governor and Mayor Erdene Bat-Uul delivered a presentation on the Ulaanbaatar Economic Development Strategy, launched in 2014 with support from The Asia Foundation. In a major shift from traditional top-down economic planning, city authorities spent a year on a series of structured dialogues with representatives from the private sector, civil society, academia, and the national government to develop a vision for Ulaanbaatar's future.
An executive committee and five sub-committees met over the course of six months to discuss the challenges and opportunities in each of five areas: growth and development; infrastructure and transportation; finance and taxation; health, education, culture, and tourism; and intergovernmental relations. The resulting economic development strategy lays out a vision for Ulaanbaatar until 2030, with clear long-term, mid-term, and short-terms goals and the steps needed to achieve them. The Asia Foundation is currently supporting the city's Economic Development Agency in implementing the strategy, which includes establishing an Ulaanbaatar Economic Development Corporation to attract and professionally manage foreign investment.
As Mongolia faces economic challenges, the sixth annual MEF showed that the government recognizes the need to rebuild its credibility. Going forward, policymakers at all levels must continue to make positive changes based on the survey results and the Ulaanbaatar Economic Development Strategy, so that Mongolia will once again become an attractive destination for foreign investors.
Election Comm. Chair: Election law should be revised immediately for 2016 election
April 7 (UB Post) The following is an interview with Chairman of the Mongolian General Election Commission (MGEC) Ch.Sodnomtseren, covering election related issues.
The MGEC began preparations for the 2016 elections already. How is this preparation work progressing?
We planned our works for 2015 for preparing for the 2016 elections. Generally, the MGEC starts preparation work for the next election as soon as elections finish. Our goal for this year is to implement election legislations and complete preparation works. We will revise all regulations, rules, and guidelines of the Election Law and have it approved at our commission's meeting. The fundamental works that we're prioritizing are to enforce new legislations, regulations and rules, as well as promote and introduce them to voters.
Regular elections weren't scheduled for 2014, but many re-elections and by-elections had to be organized. The MGEC conducted a comparative study on the four election laws and submitted a proposal to the parliamentary working group in charge of developing a new integrated draft election law. Our commission is executing works to fix technical devices of the automated election system and other preparatory tasks for the upcoming elections.
Can you elaborate on the re-elections and by-elections organized this year?
Provinces, the capital city, soums, and districts are constantly having re-elections and by-elections. Just in 2014, over 40 of these elections were organized. A by-election was announced in Govi-Sumber and Darkhan-Uul Provinces at the start of 2015. The MGEC is providing professional and technical guidance in accordance with the law.
There's a provision in the law to organize a re-election and by-election to fill a seat vacated by an MP. For instance, by-election is held if an MP who has been elected in a district dies, transfers to another job, is discharged for a valid reason such as health condition at his or her request. The Election Law specifies the time frames for organizing by-elections for parliamentary elections. However, it doesn't specify the time frame for City Council elections of provinces, soums and districts, so it slows work and makes us lose time.
Still, there's a provision stating that vacant seats will not be filled if less than a year is left until the end of the term of the City Council of provinces, soums and districts.
How is this issue managed in other countries?
The management in other countries is similar. They organize re-elections and by-elections. Some countries have practices for organizing re-elections and by-elections for all levels once in a specific year. For instance, Russia holds an integrated polling day in fall annually. All re-elections and by-elections of the State Duma and regions are held on this day. The MGEC included re-election and by-election issues in the proposal we submitted.
How is the MGEC participating in the development of the draft election law?
Representatives of the MGEC are working in the working group established by Parliament. Also, a working group led by the head secretary of the commission is working to develop proposals and conduct studies. This working group did a comparative study on the 835 chapters, articles, and provisions of the four election legislations about parliamentary, presidential, provincial, capital city, soum, and district elections. They highlighted over 50 things to take note on while producing the integrated draft law on election.
Has this draft law been sent back to the MGEC?
The MGEC hasn't received the integrated draft law yet. Our commission is preparing to submit our proposal again once the draft law is submitted. We have a table for checking if the articles and provisions in the draft law on elections are consistent with one another and if time frames clash. We'll be developing proposals and comments based on this.
A working group to revise the Constitutional Law has been formed at Parliament. Wouldn't it be more appropriate to revise the Election Law afterwards?
Time will be lost if we wait until amendments are made in the Constitution. The revision of the Election Law should be hastened so that we can do preparations for the upcoming election next year. The commission needs time to complete preparation works to develop regulations, rules and guidelines for the election law, promote the new law, develop a program, do technical preparation work, and run trials and much more. The Constitution has some provisions related to elections that should be looked over. For example, the Constitution specifies that selection procedures of the parliamentary, provincial, capital city, and district elections will be established by the law. Yet, it doesn't specify that the selection procedures of the presidential election will be established by the law. Also, it's stated in the Constitution that presidential elections are to be held in two stages. There are provisions about the first stage, but not a single provision on the second stage.
Attendance of voters is declining every election. Can you comment on this?
It's a fact that the attendance of voters is declining. According to research, the attendances of elections held in the 1990s exceeded 90 percent. Elections since 2000 had attendance of 70 to 80 percent, but the attendances of elections held since 2010 dropped to around 60 percent. In general, there are about a million people in Mongolia that vote. This number didn't change much in the last 20 years. The voting-age population is increasing, yet the same million people are voting. This is the reason behind low attendance.
Another factor influencing low attendance is the fact that many people of voting age are living, studying and working abroad. Although these people are included in the voters' list of Mongolia, they don't vote from anywhere. This issue is raised at every election, but the names of these people aren't removed from the list, causing the number of voters who didn't vote to increase. Mongolia should make a legal regulation to remove Mongolians who are living abroad that aren't able to return to Mongolia from the voters' list.
Do foreign countries take measured to boost voters' attendance?
Some countries have promotions and penalty systems to boost voters' attendance. For example, Australians have to pay a penalty of 10 USD if they don't vote. In Russia, new voters receive a book of the Constitution of Russia and cultural items. It would be economically efficient if Mongolia follows international standards to poll only with the attendance of voters that come. This way, Mongolia wouldn't have cost burdens from organizing re-elections and by-elections.
It's said that a special machine will be used in the next election. Can you comment on this?
Parliament decides whether to use automated election systems. Parliament passed the Automated Election System Law in 2011. Accordingly, Parliament and regional elections of 2013 and the presidential election in 2012 were conducted with this system. The MGEC is responsible for organizing elections consistent to the Automated Election System Law. Without a doubt, introducing this system was a big advancement. It prevents various interferences, suspicions and endless disputes. It also makes the process more sophisticated, provides fast and accurate polling regardless of manpower, and makes the election more open to public and transparent. International and domestic observers and media have reported on this.
Germany, Kirgiz, South Korea, Russia and Australia came to Mongolia to study this practice. Some countries requested Mongolia to rent technical devices of the automated election system, and asked engineers for cooperation cooperate. Recently, Mongolian engineers returned after introducing the automated election system in Russia at the invitation of the Central Election Commission of Russia.
I'd like to highlight that this practice has increased the reputation, international evaluation and interests to observe elections of Mongolia immensely. Not only did the number of international observers and researchers studying Mongolia's elections increase but also Mongolia obtained the right to observe international elections for short and long periods. I believe that Mongolia is being evaluated at international levels since international election organizations are sending invitations and requests.
At the previous election, supervision census was conducted. What kind of violations and deficiencies were discovered?
Supervisions census was done for the 2012 Parliament and regional elections, including the capital city election and the 2013 presidential election.
The polling station completed the census in the presence of party observers, information technology managers, civil registry certified personnel, and representatives from non-governmental organizations and the media, in accordance with the law.
Since the adoption of the Automated Election System Law, four elections have been organized with the automated election system. According to the supervision census completed during these elections, the results from counting devices and ballots were the same. Therefore, there weren't any sort of disputes or complaints.
Source: http://news.gogo.mn/r/159358
DP awards party veterans on 25th anniversary of foundation
Ulaanbaatar, April 7 (MONTSAME) On its 25th anniversary of foundation celebrated Tuesday, the Democratic Party (DP) awarded five members the Order of Chingis Khaan--the supreme prize of this political party.
The prize went to D.Rentsentavkhai, S.Batchuluun, Ts.Khurtsbileg, D.Battulga and Pagvabold for their contribution to the democracy.
New bill seeks to set standards for waste producers
April 7 (UB Post) Last week MP Ts.Oyungerel visited water treatment plants in Bayangol, Bagakhangai and Baganuur districts, as well as Buyant Ukhaa, conducting research for her draft law on waste management to be submitted to Parliament in May.
The MP believes that there is a "great risk" of the sudden outbreak of contagious diseases due to waste disposal issues. Her draft law will function to set up a regulatory system for the safe and environmentally friendly disposal of potentially dangerous waste.
MP Ts.Oyungerel brought her advisors, experts and the press along for the visits to raise public awareness of waste disposal issues and to highlight the need for regulation.
"We have to encourage public awareness to reduce water use because the excessive amount of water used is breaking water treatment facilities that are already in a fragile state. We have to be aware of how much water we use, reduce the production of waste water, and repair broken pipes and manholes so that rainwater doesn't put additional pressure on these facilities."
"If we view Ulaanbaatar as a household, this facility is the toilet. And we know what happens when a toilet starts to overflow. The same can happen at any moment in Ulaanbaatar," added the MP.
The Baganuur and Bagakhangai water treatment facilities conducted some parts of their processes manually, meaning that the larger waste from the processed water had to be scooped up in buckets by hand. The Baganuur plant also had technical issues with their plant engine. The Bagakhangai plant dumped treated water, around 80 to 90 percent purified, into an artificial lake local livestock drinks from. Bagakhangai officials said that they have warned herders not to water their livestock at the lake and are trying to set up fences around it.
The most concerning issues came from Ulaanbaatar's central water treatment plant in Sonsgolon, Bayangol District. Even as we approached the facility, we could smell a foul odor in the area.
Experts of the central water treatment plant report that their main problems are overly polluted water from factories, the deteriorated state of their treatment tanks, and 40 years of accumulated sludge.
They said that when meat, leather and other factories start boosting production in seasonal cycles, they produce heavily polluted liquid waste with particles and chemical properties, with pollution levels 10 times the amount the central treatment plant can handle.
Ts.Oyungerel said that the law will require liquid waste producers to conduct primary treatment to meet the central treatment plant's standards, or producers will have to pay additional fees.
"These treatment plants have to maintain a very specific standard for their biological treatment, which means that waste water suppliers shouldn't be supplying chemically dangerous waste that threatens this process. This basic standard has to be reflected in the law. This means that a primary treatment process will be required of liquid waste producers before waste is sent to central water treatment facilities."
The experts of the central plant said that although factories have to pay fines for liquid waste that exceeds permitted levels of pollution, it is cheaper for them to pay the fine instead of treating the water beforehand.
MP Ts.Oyungerel said that the law on waste disposal will require clauses that prompt liquid waste producers to build their own primary treatment facilities and provide soft loans to factories that do not have sufficient funds for building such facilities.
"The law will also require waste producers to have an expert that makes plans for waste recycling, safe disposal, and budget demands. The law will force waste producers to discuss waste management and what they should do with the sludge that is produced on a regular basis," she said.
According to technological engineer of the central plant Yu.Erdenejargal, the plant receives around 155 to 165 thousand cubic meters of liquid waste a day, which produces 20 to 30 thousand square meters of processed sludge. She noted that the sludge has accumulated for over 40 years, and the total estimated amount is around 400 thousand square meters, which is dumped on 15 hectares of land.
The experts of the plant said that there are possibilities to produce gas if the sludge is processed but that there are no facilities that do this in Mongolia.
When asked what should be done about the sludge, MP Ts.Oyungerel said, "This issue has to be addressed by experts and a consultation has to be made. We need to know if this sludge is reusable, if not, this waste has to be contained so it doesn't leak into the environment, whether it's through burial or other methods. So far no one has made estimations on how much capital this will require. But there are very dangerous risks here, which means that this area has become a dangerous zone in Ulaanbaatar where we can't build anything or do operations of any kind."
A tour of the facility revealed that the concrete tanks that treat the waste water have become extremely eroded. The plant staff said that the treatment process cannot be carried out up to standard because the tanks leak into the surrounding soil. Plant officials claim that 40 billion MNT in renovation is needed and highlighted that it can be done within a year.
After the tour, MP Ts.Oyungerel underlined the need for urgent reconstruction of the facility.
"We have to reconstruct this facility, because if we don't, one day Ulaanbaatar will be flooded in waste water. This means that all health risks will arise in the city… This renewal has to be supported by Parliament immediately," she said, also emphasizing the need to regulate waste disposal issues to prevent neglect in the future.
"By visiting these facilities, I have learned what I have not reflected on the draft law on waste disposal. We currently don't have any legislature on regulating waste producers… I have concluded that these matters have to be included in the law in a very specific manner.
"The law will require any new factories and waste producers to look into waste management and ways to recycle more. Factories don't filter their water sufficiently before draining it to water treatment plants, which gives treatment plants heavier workloads, and shortens their lifespan. To elongate the life of water treatment plants, we have to set standards for liquid waste producers," Ts. Oyungerel concluded.
Noble Group's Financial Alchemy in Mongolia – GMT Research March Newsletter
By Gillem Tulloch
Hong Kong, April 8 (GMT Research) Apologies, our March newsletter is out in early April. Our tardiness stems from immersion in Noble Group's (NOBL SP) financial statements these past months and the publication of a series of reports on the back of this. You can check out some of our videos at gmtresearch.com/gmtv/. The reason Noble Group fascinates is that it's a modern day alchemist – the mythical science of turning common metals into gold – metaphorically speaking. The simplified reality is that it ships base metals and coal around Asia.
So why do we think Noble a modern day alchemist? Let's start by looking at the Enkhtunkh Orchlon (EO) transaction in Mongolia where it appears to have turned coal into gold despite the misfortune suffered by everyone else in that country. It's been difficult to make money in Mongolia these past few years, especially in the mining sector where a lack of secure property rights and confusion over government mining concessions has undermined confidence. Problems have been compounded by recent declines in commodity prices. As a result, the main Mongolian stock exchange index is down 74% in US dollars, since peaking in February 2011, as the chart shows.
Figure 1: The Mongolian Stock Exchange Top 20 Index (US$): -74%
Source: GMT Research, Bloomberg
Noble Group has seemingly managed to buck this trend. At face value, the Group appears to have made 12.6x its money in just ten months through the sale and purchase of EO. Noble bought EO which has mining assets in Mongolia in February 2014 for US$3.7m, hardly a material amount for a Group which had shareholders' equity of US$5.1bn by end-2014. However, it seems to have sold this asset just ten months later for US$46.7m. That's an amazing return in difficult times.
Curiously, Noble's financial statements (page 108, Noble Group 2014 Annual Report) reveal an US$11.2m loss on the disposal. So how can the Group buy an asset for US$3.7m and then sell it for US$46.7m a few months later booking a loss of US$11.2m? Surely it should have booked a gain on disposal, not a loss? Clearly, something material must have happened in the intervening reporting periods.
An immediate US$64m asset revaluation of EO assets
A clue is revealed in a filing made by Noble (read the SGX release, as shown in Figure 2) upon the acquisition of EO. As at 27th of February 2014, EO had negative book value of US$6.4m. And yet just ten months later, by 31st December, this had risen to US$57.8m, according to Noble's annual report (see Figure 3). Normally, book value rises by either retained profits or increased capital but in this instance we think it represents a US$64m asset revaluation.
Historically, Noble has immediately revalued assets upon acquisition. If revalued equity exceeds the acquisition price, the difference has been recognised as negative goodwill through the income statement. For example, in 2014 it booked a US$178m profit from the revaluation of recent acquisitions, General Alumina Jamaica and San Juan Fuels. Without this, the Group would have been loss-making in 2014. Given that there is considerable subjectivity in deriving fair value, we consider these timely revaluations to be a very aggressive accounting treatment. Curiously, there appears no evidence that Noble has booked EO's revaluation as a profit although it will still have boosted equity. It is not the first instance we have come across inconsistent accounting treatment by Noble.
Figure 2: Noble Group: SGX Release on EO Purchase (27 Feb 2014)
Source: Singapore Exchange, Noble Group
The structure of consideration to be received by Noble is also curious. Payment of US$46.6m is "to be received in cash and royalties". Note our emphasis on the "to be received" and "royalties". In other words, the cash has yet to arrive.
Figure 3: Noble Group: Note on EO Sale (31 Dec 2014)
Source: Noble Group 2014 Annual Report
A US$41m gain on future royalties from EO
It transpires that EO has been sold to Guildford Coal (GUF AU) for US$6m (Guildford Coal Prospectus, 27/1/2015) which implies that Noble expects to receive US$41m in future royalties. Had Noble not booked the present value of these royalties as part of the consideration, it would have recorded a US$52m loss on the sale of EO which makes a mockery of its initial revaluation of EO's assets. This is the first time we have encountered future royalties being included as part of the consideration price. Once again, we consider this to be aggressive accounting.
A possible off-take agreement with EO
If Noble has recognised royalties from future EO production, we suspect that it has also booked a fair value gain through a long-term off-take agreement. After all, Noble's business model appears to have become increasingly reliant on the recognition of profit from long-term off-take agreements which have yet to commence. This off-take agreement might have been very material to Noble's bottom-line in order to justify such a hefty asset revaluation at EO. Perhaps the reason Noble did not also recognise EO's asset revaluation as a profit is that it would have been double accounting, meriting more disclosure and attracting greater scrutiny. We suspect fair value gains booked from this off-take agreement might be in excess of US$50m, but this is pure guesswork owing to limited disclosure.
Guildford Coal in financial distress
Given the correction in commodity prices and legal problems with mining in Mongolia, there must be valid concerns over the ability of some assets to make it to market. Those without strong financial support and a compelling business model are likely to be shelved. It transpires that Guildford Coal (to which Noble has sold EO and from which it is generating substantial profits) has been given a going concern qualification by its auditors for its 2014 financials and is in technical default with its major creditors, OCP Asia and Noble Group. Indeed, Guildford's 2014 financial statements revealed that it owed US$42m to Noble. In fact, without Noble's support it is likely that Guildford Coal would be liquidated making a mockery of the transaction.
EO is not even a hole in the ground
It also transpires that EO's main mining asset (lease EL12600X) is more of a concept than a plan (hence the below clip from the film Guardian of the Galaxies). In Guildford Coal's technical specialist report contained within its Lodgement of Target's Statement (24 December 2014), Xenith Consulting reveals that "…as no mine plan currently exists for these areas they have not been included in the DCF".
Put simply, we estimate that Noble Group has recognised somewhere between US$105-155m in gains (US$64m asset revaluation, US$41m fair value gain from royalties and a possible US$50m off-take agreement) from a patch of barren land in the middle of Mongolia from a counter-party in financial distress.
Unfortunately, this dubious gain is not a one-off occurrence; Noble's financial statements are peppered with billions of dollars of asset revaluations and fair value gains as we have detailed in our reports. Another favourite is the purchase of Alhasanie for US$0.3m in 2011 which was revalued upwards allowing Noble to book a US$46.5m gain through the income statement. And let's not forget the deals with Gloucester Coal, Noble Americas Energy Solutions, Bioenergia, Territory Recourses, and so on. And last but not least, Asset management would be far easier if fund managers could follow Noble's example by immediately revaluing their share purchases to what they considered to be fair value and then paying themselves based on this mark-to-model approach.
Sadly, alchemy, whether financial or otherwise, does not work. You can't turn lead into gold. It's still a lump of rock. Worse still, it could be a lump of rock buried deep in Mongolia.
Regards,
Gillem Tulloch
Gillem Tulloch is Founder of GMT Research, a Hong Kong based independent research company providing independent insight into markets, sectors and companies throughout Asia. If you enjoyed this post, please feel free to subscribe to GMT Research's free newsletter or why not check out our video channel.
Internet Marketing Conference Announced on April 16
Ulaanbaatar, April 7 (MONTSAME) Such a conference will run this April 16 at the exhibit hall of the Mongolian National Chamber of Commerce and Industry, supported by the Chamber, "Social Media Business" LLC, "Bayar Agency" LLC and the Marketing program by the Business School of the Mongolian State University (MSU).
A total of 15 lectors, comprising experienced specialists, Internet marketers, business administrators and professors majoring in Internet digital marketing, will give presentations themed "Developing digital content marketing", "Using large-scale data for company marketing", "How to do mobile application-based marketing", and "Marketing on Facebook and Twitter".
The "Internet Marketing Conference 2015" will be an event to provide knowledge about using Internet and digital approaches in running marketing and in gaining a desirable outcome in a reasonable cost. The action will also give new ideas and forward the development of the Mongolian companies' marketing, say the organizers.
Mongolia to Update Nat'l Civil Aviation Security Program
Ulaanbaatar, April 7 (MONTSAME) The program serves as the fundamental document that demonstrates the observance of Mongolia's duties before the "Safeguarding International Civil Aviation against Acts of Unlawful Interference", an appendix of the Convention on International Civil Aviation, also known as the Chicago Convention. The Cabinet of Ministers resolved on Monday to reflect new terms, conceptions and criteria to the National Civil Aviation Security Program, taking into account the recent changes in the Chicago Convention.
The Convention adopted new terms and criteria, considering the recently intensified operations of terrorist groups, and an increased number of their unlawful actions against civil aircrafts. The International Civil Aviation Organization (ICAO), therefore, has been modifying the Convention in harmony with the contemporary international security standards, and appealed its member-countries to make same changes to their national programs.
The amendments to the National program will not change its main principles.
AIIB will use its US$50 billion to help spur hydroelectric development in Asia
April 7 (HydroWorld.com) With 35 nations signing on as founding members, Beijing-based Asian Infrastructure Investment Bank (AIIB) has a reported US$50 billion foundation from which it plans to spur infrastructure growth in developing Asian countries with projects that include hydroelectric facilities.
AIIB was formed by the Chinese government and began formal operations in October 2014. It is a multilateral development bank meant to provide funding for infrastructure projects in developing countries of the Asia region. Reports indicate almost all Asian countries and most major countries outside Asia have joined the AIIB as of April, with notable exceptions being the U.S., Japan and Canada. AIIB rejected North Korea's application to join its organization.
AIIB, in part because of its location and China's enormous amounts of bilateral and unilateral lending ability, could become the Asia-based alternative to the World Bank and International Monetary Fund (IMF). However, on Tuesday, April 7, World Bank President Dr. Jim Yong Kim amongst his many comments, said, AIIB is "potentially a strong ally" and "a great new force," as it relates to providing means for poorly developed Asian nations to strengthen indigenous infrastructure.
Kim made the comments from Washington, D.C., where the World Bank is headquartered, just weeks ahead of the World Bank Group and IMF 2015 spring meetings being held there, April 17-19.
The World Bank, IMF and the Asian Development Bank, which is based in the Philippines capital city of Manila, have pledged to work with AIIB when possible, according to published reports.
To date, according to China's state operated Xinhua News Agency, the following nations are listed by AIIB as founding members: Bangladesh, Brunei, Cambodia, China, France, Germany, India, Indonesia, Iran, Italy, Jordan, Kazakhstan, Kuwait, Laos, Luxembourg, Maldives, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Oman, Pakistan, Philippines, Qatar, Saudi Arabia, Singapore, Sri Lanka, Switzerland, Tajikistan, Thailand, United Arab Emirates, United Kingdom, Uzbekistan and Vietnam.
Related:
Iran becomes founder member of Asian investment bank – APA (Azerbaijan), April 8
New Airport 27% Complete, Additional Financing Backed by Standing Committee
Ulaanbaatar, April 7 (MONTSAME) At its meeting on Tuesday, the parliamentary Standing committee on discussed an additional draft agreement to be established between the government of Mongolia and the Japan International Cooperation Agency (JICA) for a project on constructing international airport in Ulaanbaatar. A majority of the committee backed this agreement.
In 2008, Mongolia took a loan of JPY 28.8 billion (about USD 245 million at currency rate of that time) from Japan to build this international airport. For the time being, its construction is being financed by the loan. A contract was established between the sides in April of 2013 to resolve the additional financing. It means that the contract is established with a financing that exceeded the predicted budget because of a delay in the construction and price soar of construction materials.
Thus the additional agreement will reflect USD 300 million. A total cost of the airport is USD 560 million. The airport is supposed to be put into use in 2017 within the estimated budget. As of present, 27 of the construction has been completed.
The loan from Japan will be paid off in 40 years with the interest of four percent.
Days of UB 2015 exhibition to open in Russian Ulan-Ude, April 23-25
Ulaanbaatar, April 7 (MONTSAME) An exhibition of Mongolia-made products called "Days of Ulaanbaatar-2015" will be mounted this April 23-25 at the "Ulan-Udenskaya yarmarka" exhibition hall in Ulan-Ude city of Russia.
To be co-organized by the Ulaanbaatar city's Center for Small- and-Middle-sized Enterprises Support and the "Misheel" Group, the exhibition aims to advertise products made by our enterprises, to drill the Mongolian products to the Russian market, and to help establish business partnership between Mongolian and Russian companies and businessmen.
Officials say this action is open for the national producers of cashmere, leather goods, souvenir and jewelry makers.
Mongolia and Turkey Expand Energy and Free Trade Zone Cooperation
Publication: Eurasia Daily Monitor Volume: 12 Issue: 63
By: Alicia J. Campi
April 6 (The Jamestown Foundation) Cooperation between Mongolia and Turkey, particularly in the energy sector, intensified in the first quarter of 2015. On March 3, Mongolian Minister of Energy Dashdorj Zorigt, in a meeting with Turkish Ambassador to Mongolia Murat Karagoz, discussed training programs in Turkey for Mongolian engineers and technicians in renewable energy, especially hydropower, and Mongolian government acceleration of licensing on existing Turkish projects (Mongolia.gogo.mn, March 3). A few days, later the ambassador went to the Altanbulag Free Trade Zone on Mongolia's border with Russia to open a "Made in Turkey" Center and explore opportunities for agriculture, transport, education and food cooperation with Selenge provincial officials.
Two Turkish companies are already operating in Mongolia's energy sector. ZTM LLC has completed a feasibility study for a hydroelectric power plant on Tavaltain Khavtsal (Tavaltai Canyon) in Nogoonnuur soum (Bayan-Ulgii province, western Mongolia). The company will provide the capital to build an 88.7-megawatt (MW) power plant. ZTM is also interested in taking on a second project for a Khovd River hydroelectric power plant on a concession agreement basis. The Mongolian cabinet recently instructed Energy Minister Zorigt to organize financing for re-working the feasibility study for the Khovd hydropower plant in 2015 and then select a project contractor in the second half of 2016 (The Mongol Messenger, March 13). When these power plants come on line, Mongolia expects to fully supply its western region with electricity as well as export electricity. ZTM has created a "Hydropower Master Plan," based on studies conducted at 29 river basins in Mongolia, which has been submitted to the Ministry of Energy. The other Turkish company, Aidiner Global LLC, in 2009 began a wind power plant project with two measuring stations to conduct wind capacity studies in Sumber soum (Gobisumber province, central Mongolia). It signed an energy supply and purchase agreement in March 2012, which was renewed on January 14, 2014. Aidiner presently is negotiating with investment banks and international funds, wind turbine manufacturers, as well as transport and insurance companies.
Turkish Ambassador Karagoz's visit to Mongolia's northern free trade zone in Selenge province has a Eurasian regional integration context. Turkey has 19 free trade zones and is offering Mongolia its expertise re-creating a favorable environment for foreign investment and logistics. Following plans that Russia and China announced in Dushanbe, Tajikistan, in September 2014, to develop rail, road and pipeline infrastructure with Mongolia (see China Brief, September 25, 2014), Turkey also seeks to extend its economic footprint in Northeast Asia. In a press interview, Ambassador Kartagoz noted the special importance of Selenge province's location next to Russia, its demographic setting, and the fact that it hosts key roads, a cross-border rail network, water resources, and a free trade zone: "The Republic of Turkey is willing to cooperate with this strategic locality and to promote Turkish businesses here" (The Mongol Messenger, March 13). He suggested the next step will be to establish sister-city relations.
Turkey is currently working with Mongolian construction companies in the south Gobi city of Dalanzagad, the gateway to both Mongolia's huge Oyu Tolgoi (OT) coal and copper project with Rio Tinto as well as its massive Tavan Tolgoi coal mine, to be developed with China's Shenhua, Japan's Sumitomo and Mongolia's Energy Resources. Dalanzagad authorities want to utilize Turkish construction technology to quickly build apartments with a small workforce. Ten Turkish specialists are advising about financial measures in the construction of a seven-story building for 140 households over just two months. These techniques are to be expanded throughout a new settlement area to be completed in 2025 for 10,000 residents (The Mongol Messenger, March 13).
Trade volume between Turkey and Mongolia has reached $40 million, and direct flights between Istanbul and Ulaanbaatar, which began in the middle of 2012, are expected to further intensify such bilateral collaboration. The two governments want to expand cooperation in agriculture, construction, environment, small- and medium-sized enterprises (SME), tourism, mining, and logistics. The larger goal is to advance the relationship to a partnership level.
A significant aspect of the bilateral relationship is deep cooperation on strategic issues. The year 2014 was the 45th anniversary of the 1969 establishment of diplomatic relations, and a number of bilateral defense-related meetings were held. In May 2014, Turkey's Center for Strategic Research (SAM) met in Ulaanbaatar with the Institute for Strategic Studies (ISS), which is under the auspices of the National Security Council of Mongolia. The two sides discussed third-neighbor policy cooperation, Ankara's integrations into the European Union and the Shanghai Cooperation Organization (SCO), Turkey's energy security strategy, Ulaanbaatar's and Ankara's participation in regional integration organizations such as the SCO and the Organization for Security and Cooperation in Europe (OSCE), as well as Mongolia's and Turkey's cooperation with the North Atlantic Treaty Organization (NATO) (Sam.gov.tr, May 15, 2014). Turkish Defense Minister Ismet Yilmaz paid an official visit to Mongolia on September 25–26 (News.mn, September 23, 2014). Yilmaz signed an agreement on military financial cooperation with then–Mongolian defense minister Dashdemberel Bat-Erdene and met with then–prime minister Norov Altankhuyag. Turkey has been cooperating with Mongolia on military matters since 1999 and annually provides $1 million for defense projects. Moreover, 79 Mongolian officers have graduated from the Turkish Military Academy since 2000 (Infomongolia.com, September 26, 2014).
Turkey only opened an embassy in Ulaanbaatar in 1996, while Mongolia opened its Ankara embassy in 1997. Turkey's special interest in Mongolia stems from their common historical roots, as well as because "Turkey considers Mongolia as a strategically important country with its huge landmass and vast resources," according to the Turkish foreign ministry (Mfa.gov.tr, accessed April 1) Mongolia's foreign policy strategists, meanwhile, see Turkey as a key "Third Neighbor." The two countries established an inter-governmental economic and trade commission in 1994, the same year the Turkish International Cooperation and Development Agency (TIKA) initiated the "Turkish Monuments Project in Mongolia" to preserve the Orkhon stone stele monuments outside the old Mongolian capital of Karakorum, 400 kilometers from Ulaanbaatar. Since 2004, TIKA has invested in educational, health, cultural and technical cooperation projects worth around $20 million. More than 1,000 Mongolian students today are enrolled in Turkish universities and many Mongolian universities have developed "Turkology Studies." Last June, Turkey's National Assembly Speaker Cemil Cicek agreed to parliamentary cooperation with Mongolia's State Khural (parliament) (News.mn, June 24, 2014). Mongolia and Turkey adopted a visa-free regime in 2013. This, regular flights, and educational exchanges add to the burgeoning ties between the two countries at opposite ends of Eurasia.
Hungary's President on Official Visit to Singapore, South Korea and Mongolia
April 8 (Hungary Today) Hungary's President János Áder is paying an official visit to Singapore, South Korea and Mongolia. Áder will be accompanied by his wife, Anita Herczegh, the president's office said. In Singapore, Áder will meet President Tony Tan Keng Yam, Prime Minister Lee Hsien Lung and Speaker of Parliament Halimah Yacob. He will visit the Marina Barrage Complex, a water treatment facility, and attend a lecture by the Ministry of Environment and Water Management.
Áder will also visit the science centre A-Star and the eco-park Garden by the Bay. In South Korea Áder is scheduled to open the 7th World Water Forum in Daegu, where he will also attend roundtable meetings. On the sidelines of the forum Áder will meet with Benedito Braga, the president of the World Water Council, and Yvo de Boer, the managing director of the Global Green Growth Institute, which helps developing countries. Then the Hungarian president will hold bilateral talks with Thomas P Bostick, Chief of Engineers of the United States Army and Commanding General of the US Army Corps of Engineers.
President Áder will also meet President of South Korea Park Geun-hye. In Mongolia, János Áder will meet President Tsakhiagiin Elbegdorj and Prime Minister Chimediin Saikhanbileg. The last time a Hungarian president paid an official visit to Mongolia was in 1994. The Mongolian president visited Hungary in 2014. János Áder will return to Hungary on 16th of April.
Ambassador of Belarus Stanislav Chepurnoy held a meeting in the Ministry of Foreign Affairs of Mongolia
April 9 (Ministry of Foreign Affairs, Belarus) On April 9, 2015 Ambassador Extraordinary and Plenipotentiary of the Republic of Belarus to Mongolia Stanislav Chepurnoy met with the Vice Minister of Foreign Affairs of Mongolia Ms. Navaan-Yunden Oyundari.
The meeting focused on the preparation for the consultations between the foreign ministries of Belarus and Mongolia to be held in April 2015.
Stanislav Chepurnoy and Navaan-Yunden Oyundari also discussed issues of visits exchange, prospects of the development of relations between Belarus and Mongolia, including economic, scientific and educational ties, widening of the legal base of the bilateral interaction and cooperation between Mongolia and EAEU.
LISTEN: The Meaning of Mongol by Uuganaa Ramsay
BBC World Service: Imagine your nationality was used by people all around the world to describe someone with a learning disability or a stupid person. That is what happened to Uuganaa Ramsay. A Mongol, born and brought up on the Mongolian steppe, living in a yurt and herding goats, she came to live in the UK and when her son Billy was diagnosed, she realised that the word mongol meant someone with Down's Syndrome. Insult was added to injury when she discovered derivatives of mongol such as mong, are used as a term of abuse meaning an idiot.
Uuganaa wants to know how this happened. Searching for answers she explores the life of John Langdon Down, who initially diagnosed Down's Syndrome as Mongolian idiocy, and discovers how the term travelled the world. Did anyone do anything about it, she wonders, and why and when was the term finally changed.
Just as mongol fizzled out of common parlance, new forms of the word, meaning both Down's Syndrome and idiot, became more popular, revealing worrying social attitudes towards disability. Having lost her child, and her clear sense of identity, Uuganaa returns to Mongolia to see what Mongols think of these different meanings of the word, and ultimately reconnects with the true meaning of Mongol she grew up with.
Every nation has right to self-determination
By Punsalmaagiin Ochirbat - Former President of Mongolia
April 9 (Hurriet Daily News) The defining feature of human perception of the world is a desire to live freely in peace and quiet without war and strife. This is the deepest desire of all mankind. We are the children of one planet. We have one common home, whose name is Earth. We are members of a common family-humanity. The peoples of the world have different races, different religions, unique culture, traditions customs etc.
But all the same prayers, fighting for a prosperous peaceful life. Mongolians treasure their national spiritual unity and freedom of belief and religion.
In Mongolia, since of the Genghis Khan, we had no religious conflicts. We Mongolians peacefully coexisted Buddhists, Christians, Muslims. We took this tradition and resumed at democratization of the society.
In today's world, one of the most frequent negative phenomena that prevent the establishment of universal peace is religious contradictions. Why is this so? At the root, all religions preach spiritual cleansing, humane attitude towards all living things, love for life. It's tantamount to recognition and confirmation peaceful ideals. Of course, it is impossible not to recognize the role of public policy and religious tenets in the maintenance of peace.
Both have a huge impact and importance in promoting peace and harmony among peoples. These two factors are interrelated, and thus should be considered on a par with them in order to maintain a healthy atmosphere loyal both in individual countries and in international relations. The Constitution of Mongolia is fixed and sacred principle is observed: "... The State respects religion, and religion honors statehood."
This is one of the core values of democratic Mongolia to promote universal civilized, peaceful life. Most holy purpose for which all States, all religions, all mankind must unite their efforts, the consolidation of peace and security in the world through peaceful coexistence. The path of peaceful coexistence, and approved in the practice of international relations entrenched as a result of the collapse of the Cold War and today is the guiding principle of peaceful development. Recognition and observance of this principle is the main lesson of the twentieth century bequeathed us. But unfortunately, this principle is violated in some places increasing the risk of armed clashes. Therefore, the task of reducing restrictions and complete elimination of nuclear, biological and chemical weapons, all types of weapons of mass destruction, remains acute, more urgent, urgent.
Mongolia, authority the international community announced its country, non-nuclear area and in 2000 in the Parliament passed a special law about this. This is our initiative has the full support of the leading nuclear powers-permanent members of the UN Security Council. President of Mongolia Tsakhiagiin Elbzgdorzh made in 2013 with a new peace initiative on the need for a permanent consultative mechanism to discuss security issues in Northeast Asia. This was followed in Ulaanbaatar, a series of working sessions on various topics with experts and officials concerned countries of our region. More recently, another meeting was devoted to discussion of problems of energetic supply in the region. There are presence representatives from Russia, China, the two Koreas and Mongolia. This cycle will continue.
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I'm sure that our friendly Ukrainian people in this critical situation will be able to summon the courage to overcome all difficulties and obstacles in the peaceful settlement of internal conflicts. Of course, it's a not easy. The situation requires fine judgment insight, foresight and consideration of the international dimension around the created reality in their country. No one has the right to convert Ukrainian incident into an international scandal, bring the matter before the armed clash the war. Every nation has the right to self-determination. Let no one hurt Ukrainian peoples follow this principle and to solve their problems at home.
I'm sure that our friendly Ukrainian people in this critical situation will be able to summon the courage to overcome all difficulties and obstacles in the peaceful settlement of internal conflicts. Of course, it's a not easy. The situation requires fine judgment insight, foresight and consideration of the international dimension around the created reality in their country. No one has the right to convert Ukrainian incident into an international scandal, bring the matter before the armed clash the war.
Every nation has the right to self-determination. This is recognized democratic principles are respected in the world. Let no one hurt Ukrainian peoples follow this principle and to solve their problems at home.
Maidar: An eco-city in the Mongolian steppe
April 8 (Deutsche Welle) A new eco-city is being built in Mongolia. Designed by German city planners and complying to strict environmental standards, Maidar City is to become the new political and religious center of the country.
For Stefan Schmitz, it is something like the project of his life. The Germany-based architect, together with other urban planners, is designing a model eco-city - in the middle of the Mongolian steppe.
Although not much construction has taken place so far, the plan foresees the building of a new urban center - Maidar City - in this location that houses 300,000 inhabitants. It will also have its own university, museums and religious centers, along with areas dedicated for tourism and film industries.
The city is also expected to become the seat of the Mongolian government one day, away from the current capital Ulan Bator. Sites have already been earmarked for the construction of buildings. Schmitz believes the Mongolian parliament will approve the construction this month.
The city had been originally planned for only 20,000 people, but it gradually became a construction project of national significance as the situation in Ulan Bator - which lies just 30 kilometers away - turned precarious.
Downsides of urbanization
Mongolia is the country with the lowest population density in the world. The landlocked Asian nation tucked between China and Russia has an area that is four and a half times the size of Germany, but has a population of just over three million people. Yet, the country faces all kinds of urban problems such as housing shortages, overcrowding and traffic jams.
This is because a huge proportion of the nation's population is concentrated in the capital, as many Mongolians see low economic prospects elsewhere in the country.
"Ulan Bator was actually built for 600,000 inhabitants, but now more than 1.2 million live there," said the city planner Schmitz. "Real estate prices in the city are sky-rocketing, higher than in Europe," he added, stressing that a Mongol with an average income cannot afford to live in Ulan Bator. The city's population growth is mainly due to the migration of nomads, who raise yurts around the city.
"Nomads can freely choose where they set up their yurts. So whoever finds work in the city looks to raise a yurt near by. And raw coal is used for heating in these yurts, thus causing smoke and air pollution," Schmitz told DW. The problems, however, are not limited to pollution as the city's infrastructure, water and power supplies are now completely overwhelmed by the influx of nomads, the city planner explained.
An ecological urban development
This is why Mongolia is planning Maidar City as an ecological urban development project with the help of Stefan Schmitz. The city, which is to draw most of its energy from renewable sources, will follow ecological principles and feature an independent drinking water supply as well as an environmentally-friendly and decentralized traffic and living concepts.
For instance, the rain water coming down from the surrounding hills will be collected, cleaned and then channeled as drinking water onto a lake which will also serve as a local recreational area, said Schmitz.
The urban planner told DW that Mongolia offers very good conditions for generating renewable energy. "There is a lot of wind in this area and the sun shines almost continuously during the winter." A nearby wind farm is set to be expanded in order to meet the electricity needs of Maidar City.
And to the south of the city, land is already reserved for sustainable agriculture. This is to supply the city with food, and also aimed at halting the increasing desertification in the region. The city's districts are planned in such a way that they exist independently of each other, with their own centers, noted Schmitz, pointing out that "public transport and electric cars will be a priority."
Years of experience
The architecture firm RSAA, where Schmitz works, has years of experience in China and Mongolia. More than ten years ago, the company won the bidding for planning the construction of China's Tianjin Eco-City. "This really gave us a boost in Asia," said Schmitz. "More than half of our projects are now linked to Asia."
Maidar City is just one of several projects planned by RSAA in Mongolia. Now that the city's design has been finished on the drafting board, it's time to realize the project.
So far, only the lower half of a Buddha statue is all that stands. But once completed, the statue is set to soar 54 meters (177 feet) into the sky and symbolize the city's religious and political center. The first stage of construction for an estimated 90,000 people is set to be ready by 2030, although Schmitz warns that many factors may impact the schedule.
Once a month, the architect flies to Mongolia to promote his project, make arrangements and keep an eye on building works. "There is good communication with the Mongolians. They are calm, serene, and very clear discussion partners," said the architect, adding that it was great fun to take part in such pioneering work.
Schmitz pointed out, however, that while all Mongolian ministries have been open-minded to the idea of the new eco-city, the country remains largely dependent on foreign funds and consultants for its realization.
"Many investors, particularly from China, are interested in taking part in this project," he said, adding that he supports the idea of selling single parcels of land to investors from around the world. The architect emphasized in this context that what's key for Mongolian authorities is that they remain in control.
Moreover, every investor has to meet strict requirements to allow the project to keep the label of eco-city. "There are no such things as development or land-use plans in Mongolia," Schmitz explained.
This is why requirements and restrictions have to be stipulated in every single purchase agreement. "The key is to find a balance which allows us to both meet the ecological requirements of the city and keep investors happy."
Mongolian Entry Wins Grand Prix at Auto Tuning 2015 in Japan
April 7 (UB Post) A car tuned by Obo Customs Car Club participated in the Auto Tuning 2015 auto show, which took place in Nagoya, Japan last March and won Grand Prix in the VIP category.
The following is a brief interview with director of Obo Customs Car Club D.Oyunbaatar.
We heard that your team won a prize from a tuning completion in Japan. Which competition did you participate in?
We did not prepare a car for the competition. We renewed a car design and tuned it for a car tuning company in Japan, which participated in the tournament. This type of job offer comes very often. But we have lots of things to do. We can't receive all offers. Car tuning needs a lot of expenses. It is important to tune cars with quality. This time, we finished our order and gave it to our customer. The customer received his order very happily.
The car participated in the Auto Tuning 2015 in Nagoya, Japan. We heard that it won the Grand Prix prize in the VIP category from among 200 cars.
Why did the staff of Obo Customs Car Club go to Japan?
Japan is the center of car tuning. We came to Japan to study new technologies, to exchange experience, and to prepare car parts for cars that are going to be in a Russian car show.
When will you come back to Mongolia?
We are planning to go back in May. We will prepare for the Baikal Motor Show 2015 when we arrive in Mongolia.
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