Download to read offline
![laboring under, and the wider global mining industry has its own problems, according to auditor
PricewaterhouseCoopers' (PwC) "Mine 2014" report. PwC cited ―diminished profitability and
shrinking cash, [and] underlying performance in the industry‖ for 2013, as well as the market
capitalization of the industry falling by USD 280 billion.
PwC found that miners operating in emerging markets last year outperformed their developed
counterparts, earning USD 24 billion collectively compared with losses of USD 4 billion in developed
markets. That is a sentiment echoed by the chief executive of local junior explorer Erdene
Resources Development Corp. ―I think we've seen a return to favor for juniors, generally,‖ said
Peter Akerley about mining worldwide. ―In regard to Mongolia, you're seeing an uptick in activity in
the past few months, but the main issue globally is there is still difficulty in attaining funds for
exploration and that‘s compounded by Mongolia being a difficult place to do business.‖
One thing holding back investors is that Mongolia‘s new Investment Law remains untested. Some
also have little faith the laws will remain consistent for very long or that Mongolia will stand by the
tax stabilization agreements introduced by the 2013 Investment Law. ―Honestly I don‘t think it‘s
been a positive change,‖ says one investor who is actively seeking to buy mining assets in Mongolia.
―It‘s quite dubious, these investment guarantees, as opposed to international agreements because
the [former] are now just permits that a Mongolian agency is giving out. They can change their mind
any time.‖ The investor, who requested anonymity, added that there was no comfort in the fact
that disputes would likely have to be resolved locally rather than through international arbitration
under the new scheme. ―The local agency will never side against the local implementers.‖
Source: BNE
NORTH KOREA MAKES MOVES TOWARD OIL EXPLORATION
A Mongolian oil company with ties to North Korea is planning to entice foreign investors in the
country‘s energy sector by showing them geological data which could indicate the presence of oil
and gas resources.
Mongolian Stock Exchange-listed HBOil JSC is planning on opening for what is known in the industry
as a data room—a place where interested parties can inspect geological information on underground
structures that could indicate the presence of oil and gas fields. The DPRK has two ageing refineries
in Seungri and Bongwha, but both need upgrading, and HBOil, via their buyout of Ninox
Hydrocarbons last year, has set its sights on tapping into onshore oil basins in the DPRK. The
purchase made HBOil the owners of a joint venture with the Korea Oil Exploration Corp (KOEC),
North Korea‘s state run oil company. Now the company is looking to assess geological data that will
tell interested companies where to begin their exploration.
―The reason people have data rooms is because they‘re trying to persuade another company to
spend money in their block, on their well. They are looking for investment. In order for companies
to make decisions about that investment, they need to see the data,‖ Alistair Fraser, EGI chair in
petroleum geosciences at Imperial College London said.
The data room will be working on digitizing data from the 1960s through to more recent 3D seismic
data. HBOil will then aim to use the data to attract international bids on onshore oil and gas blocks
on behalf of KOECII, an international subsidiary of North Korea‘s state run oil company. Mongolian
investment bank and HBOil underwriters BDSec JSC did their best in an October report on the DPRK
to dispel potential investor fears. The report calls that KOEC‘s management ―highly intelligent and
dynamic, as well as enthusiastic and appreciative of the investment HBO has made and shall make
into the country.‖
Source: NK News](https://image.slidesharecdn.com/bcmnewswireissue332-160215022710/85/04-07-2014-NEWSWIRE-Issue-332-8-320.jpg)
![also makes for more environmentally friendly steelmaking, something Chinese policy makers are
targeting). Another reason for the expansion of the discount is reduced supplies of high-grade
Chinese concentrate production, which is needed for blending with lower grade material.
It looks increasingly likely that production and projects outside China will also have to be cut to
bring the market back into balance. As yet there are few signs of that happening. Gina Rinehart‘s
Roy Hill project in Australia is due to come on stream next year, while the acquisition of Aquila, an
Australian junior, by a Chinese led consortium could see some of its expansion plans become a
reality.
Source: Financial Times
SUN FINALLY SHINES ON COMMODITIES
After years of losses and investor pessimism the sun finally shone on commodities in the first half of
2014.
The Dow Jones-UBS index, which tracks the prices of 21 commodities, delivered total returns of 7.1
percent, outpacing U.S. equities, 10-year Treasuries and high yield corporate bonds. But the clouds
could quickly gather again if this year‘s big improvement in performance fails to entice long-term
investors back into commodities, say analysts.
―There‘s a lot resting on what happens in the second half of this year, in terms of the long term
viability of commodities [as an asset class],‖ said Kevin Norrish, commodities strategist at Barclays.
Attracted by strong returns, China‘s seemingly insatiable appetite for raw materials and low
correlation to other asset classes, investors piled into commodities before the financial crisis. In
recent years, however, long-term investors have shunned the sector as big picture strategists and
powerful consultants turned cold on oil, metals and grains because of lackluster returns and tight
correlation with other asset classes. But sentiment has started to improve this year as some of the
reasons that saw commodities become part of balanced portfolios in the first place have returned.
Strong gains have helped as has declining correlation between commodities and other asset classes.
During and after the global financial crisis, commodities moved in lock-step with equities, bonds
and the U.S. dollar as markets were gripped by bouts of ―risk-on risk-off‖ trading. That annoyed
many investors because commodities were supposed to provide diversification from other asset
classes. But that tight correlation has started to fade.
Returns from commodity investing have also improved because of a broad ―backwardation‖ in
futures markets—when prices for more immediate delivery are above those for later. A downward
sloping futures curve means investors are able to pick up a small yield each time they roll out of an
expiring futures contract.
Source: Financial Times
CHINA CATCHES INDUSTRIAL POLLUTERS WITH DRONE MISSIONS
China is turning to aerial drones to monitor pollution, with its biggest mission to date finding illegal
emissions by some of the largest industrial companies in the country‘s northern provinces.
A unit of Hebei Iron & Steel Group, China‘s No. 1 steelmaker, Shanxi Huaze Aluminum & Power Co.,
and Inner Mongolia Yihua Chemical Co. were found to have ―serious environmental problems,‖ the
Ministry of Environmental Protection said on its website yesterday. Data gathered by the drones
indicate a quarter of the 254 businesses targeted may be involved in illegal practices, it said.
Premier Li Keqiang declared war on pollution in March after swathes of northern China were
blanketed in smog and the government‘s climate-change adviser said the situation had reached
intolerable levels. Poor air quality in the world‘s biggest carbon emitter is a regional health issue
and damaging foreign investment and talent retention, World Health Organization chief Margaret
Chan warned the same month.
Hebei, Shanxi and Inner Mongolia are among the worst polluters and the focus of government
efforts to clean the environment. Seven of the 10 Chinese cities with the worst air pollution in the
third quarter of last year were located in Hebei, according to government data. Inner Mongolia is
among the country‘s biggest coal-producing provinces.
The use of unmanned aircrafts means that companies secretly discharging pollutants at night or on](https://image.slidesharecdn.com/bcmnewswireissue332-160215022710/85/04-07-2014-NEWSWIRE-Issue-332-13-320.jpg)
![weekends will find no place to hide, the official Xinhua News Agency reported, citing Chen
Shanrong, deputy head of environmental supervision at the ministry.
Source: Bloomberg Businessweek
POLITICS
PARLIAMENT ADJOURNS FOR SUMMER RECESS
Parliament broke for summer recess on 1 July—barely squeaking in some landmark legislation.
―Parliament is adjourning until the Autumn Plenary Session, while the fourth Spring Session lasted
for 62 working days,‖ said Speaker Zandaakhuu Enkhbold.
The spring session saw 9 laws, 43 amendments, 4 treaties, and 21 resolutions passed by Parliament,
in addition to two law reversals. That includes the 2015 state budget guidelines, budget forecasts
for 2016 and 2017, a socio-economic development strategy for 2015, the Protection of Cultural
Heritages law, the Law on Crude Oil, and the Law on Glass Accounts. Also noteworthy was the
passage of an amendment to the Mineral Resources Law.
During the last meeting for the spring session Parliament appointed parliamentarian D. Ganbat to
replace fellow parliamentarian Sh. Tuvendorj as chairman of the Legal Standing Committee
following Tuvendorj's appointment to Minister of Industry and Agriculture.
Source: Info Mongolia
AGENDA FOR 2014 FALL SESSION OF PARLIAMENT
The following is the legislation scheduled for discussion for the 2014 fall session of Parliament.
[Some titles do not provide further details than the vague terms provided by the Source while some
items were addressed on the final day of Parliament, before the adjournment for summer recess -
ed]:
• Draft law on the state budget 2015
• Draft law on the budget for the human development fund 2015
• Draft law on the budget for social insurance fund in 2015
• Draft resolution for the aim of state monetary policy in 2015
• ―Glass Accounts‖ transparency bill
• Trade bill
• Proposed amendments to the Minerals Law
• Revision to tax code
• Crime bill
• ―Violations‖ bill
• Domestic violence bill
• Mongolian language bill
• Proposed amendment to the Law to Prohibit Mineral Exploration and Mining Operations at
Headwaters of Rivers, Protected Zones of Water Reservoirs and Forested Areas
• ―Controls‖ bill
• Elections bill
• Political party financing bill
• Four miscellaneous bills
• Narrow gauge rail for use to transport goods to China bill
Source: Zuunii Medee
MONGOLIA ENDS MORATORIUM ON ISSUING MINERAL EXPLORATION LICENSES
Mongolia ended a four-year moratorium on issuing mineral exploration licenses, boosting
opportunities for mining companies as the nation seeks to spur investment.
A law passed by Parliament on 2 July also extends periods of exploration to 12 years from 9,
according to Otgochuluu Chuluuntseren, director general of the Ministry of Mining‘s strategic policy
and planning department. The law must be formally published before it is effective, and the](https://image.slidesharecdn.com/bcmnewswireissue332-160215022710/85/04-07-2014-NEWSWIRE-Issue-332-14-320.jpg)
![JOCKEYS UNDER AGE 7 BANNED FROM NAADAM HORSE RACING
The State Specialized Inspection Agency has issued an order to the Federation of Mongolian Horse
Racing Sport and Trainers prohibiting children under 7 years old from participating in horse racing
this year, among other orders targeted at ensuring safety.
The order demands that all child jockeys wear protective gear and clothing, be subject to
inspection by related regulatory bodies, and advise those who take part as to their responsibilities
in managing risks. Any failures by the horse racing group would be made public, read the order.
Source: UB Post
PRESIDENT INTRODUCES “SMART GOVERNMENT” BILLS SLATED FOR AUTUMN
President Tsakhia Elbegdorj Monday introduced to parliamentarians the bills under development by
his office for his "Smart Government" initiative.
The bills, which are expected to come before Parliament in the fall session, focus on holding
elected or high-level appointed officials accountable and creating ―glass accounts‖ for greater
transparency. A bill for public hearing says about 7 basic kinds of hearings focused on the legislative
process, the monitoring of activities and budgets, appointment making, the investigation process,
administrative norms, local planning powers, and ensured civil participation in state management,
said the president. He added that Mongolia still does not have any way of regulating special laws for
state actions, which he said would be addressed by the General Law on Administration.
Source: Montsame
PUBLIC OUTRAGE FORCES GOVERNMENT TO WITHDRAW LAND BILL
Social media and the press are in a frenzy over a proposed land law that many believe would grant
foreign investors the right to buy land. The furor came shortly after anger faded out over the
proposed use of Chinese-gauge rail.
Although some experts argue in favor of the narrow gauge railway because it would save money on
coal deliveries versus the broad gauge, critics say it would threaten national security to give China
unbridled access to the country's rail network. They further point out that rail from Sainshand
Soum, where trillions of tugrug worth of industrial projects could eventually unfold, utilizes the
broad gauge and cannot make use of those same savings. The coal industry, they say, should be no
different.
―I hope the [Chinese standard] gauge bill is dropped today in Parliament,‖ reads a popular post on
Facebook by the nationalist group Dayar Mongol. ―We see the members who are pressing their
buttons while the public is clearly against it.‖
The anger expressed on social media has been attributed largely to nationalist political views and
Sinophobia, or anti-Chinese sentiment. Similar sentiment has erupted into protests over the Land
Law, a bill which was withdrawn by the prime minister last week. Many in the public were incensed
by the law because of misleading claims that it contained clauses that would make it possible for
foreign citizens to purchase and own land.
Members of the Democratic Party defended the law, saying it was wrongfully represented, and that
no clauses allowing foreign ownership were included. Various media, including Mongol TV, reported
that if passed, the law would allow foreign citizens and organizations based in Mongolia for over six
months to lease land for 60 to 100 years. But there is little difference between these long-term
leasing agreements and ownership for many. Mongolians believe that foreign ownership of land,
especially by Chinese, is a serious national security issue.
Source: UB Post
CABINET BACKS ADB CREDIT LINE FOR GER DISTRICT REDEVELOPMENT
The Cabinet Secretariat on 28 June backed a draft credit agreement for the first phase of
redevelopment of Ulaanbaatar's ger districts with the Asian Development Bank (ADB). The Cabinet
granted Minister of Economic Development Nyamjav Batbayar authorization to sign credit
agreements as a representative of the government of Mongolia for this first phase of
redevelopment.](https://image.slidesharecdn.com/bcmnewswireissue332-160215022710/85/04-07-2014-NEWSWIRE-Issue-332-16-320.jpg)
![Forces (MAF).
Beginning on 20 June, role players took turns challenging the students in different scenarios. In one
scenario, a man walks to the gate, a simulated unexploded bomb in his hands. The gate guards,
seeing this, direct the man to place the unexploded ordnance in a safe area and alert their
command. All the while, the instructors mark the performance into their notebooks in order to give
feedback after the training cycle is complete. After the Mongolians‘ turn, their U.S. counterparts
took their turn. In the first scenario, a group of people approach, firing AK-47 Kalashnikov rifles into
the air. The moment is tense, as they radio for backup. The group, however, does not act in a
threatening manner, and though alerted by the situation the soldiers maintain a safe posture,
allowing the group to pass by. In the after action review, the instructors inform the U.S.
participants that the group was celebrating a wedding and were firing their weapons into the sky as
is tradition in some cultures. They were right to let them pass.
A common theme that exists throughout the FTX is the need to learn to overcome language and
culture barriers, especially when working with multinational forces in operational environments
where communication is key. ―It‘s a little rough in the mornings with translation,‖ said Staff
Sergeant. Aaron Callahan, a combat medic section noncommissioned officer at the Alaska Army
National Guard. It takes a lot longer than we had anticipated for some of the slideshows, but the
MAF forces really picked up on all the treatments well.‖
Source: Defense Video & Imagery Distribution System
MONGOLIA DROPPED FROM FINANCIAL ACTION TASK FORCE MONITORING
The Financial Action Task Force (FATF) said it had found Mongolia had addressed security issues
related to the financing of criminal and terrorist groups at a plenary meeting in Paris, France on 25
to 27 June.
FATF noted the significant progress Mongolia had made on its anti-laundering regime as well as
efforts to combat the financing of terrorist groups. The group first identified Mongolia's weaknesses
on these fronts in June 2011 and the country has since worked to mend these gaps. Mongolia was
one of five countries to have the need for monitoring lifted. The others were Kenya, Kyrgyzstan,
Nepal, and Tanzania.
Source: Info Mongolia
AUTHORITIES CLOSE 34 BANK ACCOUNTS OPENED BY STATE ORGANIZATIONS
Finance Minister Chultem Ulaan has advised Parliament to take legal action against the state
organizations that have opened illegal bank accounts.
The National Audit Office (NAO) has closed 34 illegal accounts belonging to 53 organizations out of a
total 108 accounts it says are illegal. Total transactions made through the accounts have grown to
MNT 4.435 million. The remaining 74 accounts belong to the same 53 organizations, holding a sum
total MNT 2.561 million.
The 74 account names were disclosed publicly [although the Source omits those names or where
they can be found -ed].
Source: Undesnii Shuudan
GIA INVESTIGATES GENCO PROGRAM SPECULATING ON ETHNIC ORIGIN OF MPs
A criminal case has been filed against the management of the Hero Entertainment production
company for a program critical of government and speculating on whether members of Parliament
are of full Mongolian birth.
The program, titled ―100 important topics‖, was broadcast on television [Source does not cite a
date -ed]. The General Intelligence Agency is investigating the company, which is owned by former
Agriculture Minister Khaltmaa Battulga, for the "goal of sabotaging and breaking up national unity"
and "inciting animosity by nationality, origin, language and religious views." Battulga is the owner of
Genco Group and recently exited the Cabinet Secretariat because of his support for the so-called
Double Deel bill, which would ban parliamentarians from serving as Cabinet ministers. In a recent
interview, Battulga, who still sits in Parliament, said he wrote the script for the program but did](https://image.slidesharecdn.com/bcmnewswireissue332-160215022710/85/04-07-2014-NEWSWIRE-Issue-332-18-320.jpg)
![INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
Year 2012 *14.0% [source: NSOM]
Year 2013 *12.5% [source: NSOM]
May 31, 2014 *13.7% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 13.9% y-o-y, Ulaanbaatar city, May 31, 2014
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
January 25, 2013 12.50% [source: Mongol Bank]
April 8, 2013 11.50% [source: Mongol Bank]
June 25, 2013 10.50% [source: Mongol Bank]
CURRENCY RATES – 3 JULY 2014
Currency Name Currency Rate
US Dollar USD 1,826.95
Euro EUR 2,495.98
Japanese yen JPY 17.92
British pound GBP 3,134.22
Hong Kong dollar HKD 235.71
Chinese Yuan CNY 294.02
Russian Ruble RUB 53.35
South Korean won KRW 1.81
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.](https://image.slidesharecdn.com/bcmnewswireissue332-160215022710/85/04-07-2014-NEWSWIRE-Issue-332-27-320.jpg)
Uploaded byThe Business Council of Mongolia
04.07.2014, NEWSWIRE, Issue 332
The document summarizes news from the Business Council of Mongolia newsletter dated July 4, 2014. It covers several topics: - The Oyu Tolgoi copper mine director said the tax dispute with the government should not delay $4 billion in project financing for expansion. Meanwhile, the feasibility study is still delayed. - Oyu Tolgoi and the government signed an agreement for the mine to receive power from a planned coal-fired power plant at the Tavan Tolgoi coal mine. - Viking Mines signed a non-binding agreement with the Erdenet Power Plant for future coal supply from its Berkh Uul coal project, its second such agreement with a Mongolian authority.
More Related Content
Similar to 04.07.2014, NEWSWIRE, Issue 332
More from The Business Council of Mongolia
04.07.2014, NEWSWIRE, Issue 332
- 1. BUSINESS COUNCIL ofMONGOLIA NewsWire www.bcmongolia.org info@bcmongolia.org Issue 332 – July 4, 2014 NEWS HIGHLIGHTS: Business Oyu Tolgoi dispute should not derail $4 bn funding, says OT director; Oyu Tolgoi LLC makes cooperation agreement for energy generation; Viking Mines signs second coal MoU with Mongolian power authorities; Petro Matad loss narrows but search for farm-out partners goes on; Development Bank borrows $75m to finance power plant; APU opens new dairy plant; FLSmidth nets $43 mn in orders from MAK; MGG fills building occupancy with medical group; Tenger Plaza opens as largest food storage market in Mongolia; Famed German chocolate shop opens in Zaisan; Trade Office of Mongolia opens in Hong Kong; ADB helps Mongolia’s micro-, small- and medium-sized businesses access bank financing; EBRD considers $15 mn in loans for small business and sustainable energy; Voyager Resources announces management changes; Four Mongolian university schools receive international accreditation; GE partners with Notre Dame to build turbine research and test facility; Australia Future Unlimited Education Fair Mongolia 2014; Korean Air donates computers to Mongolian school; Mongolia’s junior explorers drill despite political, financial challenges; North Korea makes moves toward oil exploration. Economy Mongol Bank: FX auction, swap agreements, 1-week bills, treasury bills; Investment official sees more diversity in investment while FDI continues to fall; IMF director calls for fiscal tightening; Food lab provides safer eating; Construction for petroleum refinery on hold while seeking new location; New road creates Peace Ave.-Seoul St. 4-way intersection; Tourist visa changes for Mongolia in hopes of stimulating tourism; Three Przewalski’s horses sent from Prague zoo to Mongolia; Amur falcons return to Mongolia via Assam and Nagaland; Copper traders look beyond China; Surplus iron ore spells trouble for miners; Sun finally shines on commodities; China catches industrial polluters with drone missions. Politics Parliament adjourns for summer recess; Agenda for 2014 fall session of Parliament; Mongolia ends moratorium on issuing mineral exploration licenses; Minerals law amendments passed by parliament, to boost exploration; President plans to see 'Double Deel' bill passed next fall; Jockeys under age 7 banned from Naadam horse racing;
- 2. President introduces“Smart Government” bills slated for autumn; Public outrage forces government to withdraw land bill; Cabinet backs ADB credit line for ger district redevelopment; Government ministers called out by media for travel expenses; Mongolia ranked 129th on Fragile States Index 2014; Canada adds Mongolia to development assistance list; Mongol Bank signs letter of cooperation with Japanese finance body; Multinational partners conduct field-training exercise in Mongolia; Mongolia dropped from Financial Action Task Force monitoring; Authorities close 34 bank accounts opened by state organizations; GIA investigates Genco program speculating on ethnic origin of MPs; Video of racist attack against Mongolian on Barcelona train goes viral; Mongolia’s approach: guidelines for U.S. failing North Korea policy; Welcome to Stanistan. Others New Mongolian Law; Announcements; BCM Updates - Working Groups; Websites; Social Networks; Photo Gallery. ECONOMIC INDICATORS Weekly Market Indicators; Inflation; Central bank Policy Rate; Currency Rates. *Click on titles above to link to articles. SPONSORS Khan Bank International SOS Wagner Asia Automotive Invest Mongolia Agency BUSINESS OYU TOLGOI DISPUTE SHOULD NOT DERAIL $4 BN FUNDING, SAYS OT DIRECTOR Turquoise Hill Resources Ltd.'s tax dispute should not derail USD 4 billion of project financing to expand the Oyu Tolgoi copper mine part owned by Rio Tinto Group, a local director at the
- 3. resource‘s operator said. ―Don‘tmix the political importance of the project with this tax audit issue,‖ Ganbold Davaadorj, a director of Oyu Tolgoi LLC, said yesterday by phone from Ulaanbaatar. The ―tax authority report is one thing and importance of investment in the project is a completely different thing.‖ Turquoise Hill, based in Vancouver, said it had filed a notice of dispute with the Mongolian government over an audit claiming unpaid taxes, penalties and disallowed entitlements. The dispute delays distribution of a feasibility study for the mine‘s expansion needed for project financing, it said. The filing is the first step in a resolution process including 60 days of negotiation, Turquoise Hill said. The dispute may move to international arbitration if a deal isn‘t reached in that time, it said. Investment in underground expansion depends on resolution of the tax claims and other shareholder issues, according to the statement from Turquoise Hill, 51 percent-held by Rio Tinto. The Rio unit owns two-thirds of the mine operator. Ganbold said on June 23 the tax claim seeks payment of about USD 130 million. The director, also chief executive officer of Erdenes Oyu Tolgoi LLC, the Mongolian state company with 34 percent of the project, said the feasibility study shouldn‘t be delayed after the tax claims. ―Investors should have provided the feasibility study two years ago, but it was always delayed,‖ he said. Mongolia will work to resolve the disagreement without resorting to international arbitration, Ganbold said. Turquoise Hill said March the study would be available in the first half. Oyu Tolgoi shareholders and the Mongolian Minerals Council need to approve the study for a project financing package with bank terms that are set to expire Sept. 30. ―If both sides have interest to move the project as quickly as possible, they could provide some general information earlier,‖ Ganbold said. ―But we have zero information that is the problem.‖ Source: Mine Web, Bloomberg OYU TOLGOI LLC MAKES COOPERATION AGREEMENT FOR ENERGY GENERATION The Cabinet Secretariat on 3 July resolved to make a cooperation agreement with Oyu Tolgoi LLC for a regular power source to replace its current energy sourcing from China's Inner Mongolia Autonomous Region. Energy Minister M. Sonompil and Energy Regulation Committee Chairman S. Otgonbayar signed the agreement, which sets out to provide power to the copper mine from a coal-fired plant at the Tavan Tolgoi coal mine. The government plans to develop the 450-megawatt Tavan Tolgoi Power Plant near the licensed coal deposits owned by state miner Erdenes Tavan Tolgoi LLC. Construction would include a 150-kilometer power line from the Tavan Tolgoi site, which is located near Tsogttsetsii Soum and 450 kilometers from Ulaanbaatar, to the Oyu Tolgoi mine, which would be a main consumer of the energy generated from the plant. The 2009 Oyu Tolgoi investment agreement the Mongolian government signed with investors Rio Tinto PLC and Ivanhoe Mines Ltd. (now known as Turquoise Hill Resources Ltd.) requires that a power plant be built within four years of the launch of production. The agreement allows for the power to come from a power plant funded by the investors, a third party, or the country's central energy grid. Oyu Tolgoi plans to have its power supply ready by the second half of 2017. Source: Info Mongolia VIKING MINES SIGNS SECOND COAL MOU WITH MONGOLIAN POWER AUTHORITIES Viking Mines Ltd. has signed a second future coal supply agreement with a Mongolian government power authority for its Berkh Uul bituminous coal project in northern Mongolia. The non-binding Memorandum of Understanding was signed with Erdenet Power Plant state-owned stock company (EPP), a major supplier of electricity to the Erdenet copper mine. ―The fact that the Berkh Uul project continues to be recognized by the Mongolian Government as a potential key supplier of coal to the EPP is a further significant milestone in the development of the project,‖ managing director Peter McMickan. He added, ―This second MoU provides more evidence of the potential customer base for Berkh Uul‘s coal.‖
- 4. The Erdenet PowerPlant is a 36-megawatt power plant that consumes about 250,000 tons of coal a year. The memorandum relates to the intent by EPP to enter into future purchase agreements for Berkh Uul coal. It also establishes a basis for technical evaluation of the quality and quantity of coal, which includes testing of a bulk sample. The agreement with Erdenet follows an earlier agreement with Darkhan Thermal Power Plant, the major supplier of electricity to Mongolia‘s second largest city, the commercial and industrial center of Darkhan, and the northern region of Mongolia. Source: Proactive Investors PETRO MATAD LOSS NARROWS BUT SEARCH FOR FARM-OUT PARTNERS GOES ON Petro Matad Ltd. on Monday said its pretax loss narrowed in 2013, as expenses fell at the company, but it continues to struggle in its search for development partners for its operations in Mongolia. The oil exploration company, with operations in central Mongolia, said its pretax loss narrowed to USD 7.5 million from USD 12.2 million the previous year. The company, which is yet to produce any revenue, said the reduction in losses resulted from reductions in its employee benefits expenses and in exploration expenditures. Petro Matad opened up a range of major fundraising and farm-out initiatives during 2013 in order to develop its exploration assets in Mongolia, but found that investors were unsure about its assets in the country and so not enough funding was raised to develop the sites significantly. The company said its search for a partner has been frustrating as many have concerns over the investment climate and geology of Mongolia. It carried out a range of new tests on its assets towards the end of 2013 and into 2014 to help improve its prospective opportunities. Petro Matad said the process has rekindled interest in possible partners at the site, but no agreements have yet been reached and finalizing a farm-out agreement could yet take some time. Source: Alliance News DEVELOPMENT BANK BORROWS $75 MN TO FINANCE POWER PLANT The Cabinet Secretariat 25 June approved a request from the Development Bank of Mongolia‘s board of directors for a USD 75 million refinancing agreement with Vnesheconombank of Russia. The funds will be used to purchase and install a 100-megawatt turbine generator at Thermal Power Plant No. 4. Vnesheconombank has requested adjusted financing terms so that repayment is due in 2022. Mongolia has so far provided USD 48.5 million in financing to expand the capacity of Power Plant No. 4. The Cabinet also approved the bank‘s board to make credit agreements going forward to fund projects, allowing for maximum debt equivalent to 10 percent of the bank‘s capital. Source: UB Post APU OPENS NEW DAIRY PLANT APU JSC opened a dairy factory able to process 45 million liters a year—enough to meet annual domestic demand. APU partnered with Germany's GEA for E.U.-standard construction of the factory, along with 26 domestic companies and around 60 specialists from 5 countries for the assembly of machines and equipment. APU is set to hire 100 employees to operate the factory. Ulaanbaatar and Tuv Aimag have 10 milk collection centers between them, with up to 80 farmers providing between 60 and 80 tons of milk a day. Source: Udriin Sonin FLSMIDTH NETS $43 MN IN ORDERS FROM MAK FLSmidth has received orders worth USD 43 million from Mongolyn Alt Corp. (MAK) Group to supply engineering, procurement and site-construction services for the Tsagaan Suvarga copper- molybdenum concentrator project. The greenfield plant, with a capacity of 40,000 tons a day of ore, will be located in the central part of the Oyu Tolgoi south Gobi porphyry copper belt in southeast Mongolia. FLSmidth is currently
- 5. supplying all themain process technology for the project under a separate, previously awarded contract announced in 2011. The order will be booked by the mineral processing division and will contribute beneficially to FLSmidth's earnings until mid-2017. Source: Mining Magazine MGG FILLS BUILDING OCCUPANCY WITH MEDICAL GROUP Real-estate development firm Mongolia Growth Group (MGG) Ltd. on 2 July announced the completion of renovations to create a new 1,110 meter medical facility in the downtown core of Ulaanbaatar. MGG last April signed a lease with a ―well-established medical tenant‖ who will occupy the building beginning in early July. The new tenant will mean the building will be fully leased. ―This renovation has been our first renovate-to-suit mandate where we have specifically designed a property for the unique needs of a tenant,‖ said MGG Chief Executive Officer Paul Byrne. ―Furthermore, by repositioning this previously underperforming asset, we have diversified the portfolio into a segment of the economy that is less sensitive to economic volatility.‖ Source: Mongolia Growth Group Ltd. TENGER PLAZA OPENS AS LARGEST FOOD STORAGE MARKET IN MONGOLIA Prime Minister Norov Altankhuyag attended the opening ceremony of a new food market that was financed with government funds. The new market is the biggest trade center with storage capacity in the country, with 20 tons of storage capacity, including 10 tons of vegetable and fruit storage capacity. The facility is also equipped with a meat processing shop able to produce 10 tons daily. The government granted a MNT 9 billion loan for the project, using funds from the proceeds of the 2012 Chinggis bond. The market has partnered with 70 small businesses and individuals to create 1,500 new jobs. The government plans to build five more similar structures able to store meat, fruit, and vegetables, said Industry and Agriculture Minister Sh. Tuvdendorj. Source: Undesnii Shuudan FAMED GERMAN CHOCOLATE SHOP OPENS IN ZAISAN Weinrich chocolates will be carried at a new brand shop in Zaisan as well as supermarkets in Ulaanbaatar. German chocolate company Ludwig Weinrich GmbH & Co. KG has opened a shop at Zaisan Square. The Weinrich 1895 label has 18 varieties of chocolate at a cost of MNT 5,000 each, while the organic chocolate label Vivani has 24 varieties at MNT 7,000 each. Source: Unuudur TRADE OFFICE OF MONGOLIA OPENS IN HONG KONG The Trade Office of Mongolia has opened in Hong Kong to facilitate trade and promote market opportunities with Hong Kong, Mainland China, and East Asia. The founders of the Mongolia Club in Hong Kong registered the trade office during President Tsakhia Elbedgdorj`s visit to Hong Kong while attending The World in 2014 international summit in November 2013. Source: News.mn ADB HELPS MONGOLIA‟S MICRO-, SMALL- AND MEDIUM-SIZED BUSINESSES ACCESS BANK FINANCING Asian Development Bank (ADB) is helping Mongolia‘s micro-, small- and medium-sized enterprises (MSME) get better access to bank financing from one of its biggest banks, through a USD 40 million loan approved on 1 July. The loan will be used to expand the small business portfolio of Khan Bank LLC to 35 percent of its total loans by 2020 from 26 percent in 2013. ―Access to credit remains one of the most critical obstacles to the development of the MSME sector in Mongolia,‖ said Monisha Hermans, an ADB investment specialist. ―ADB will help address this gap by making available at Khan Bank more loans and longer repayment terms.‖
- 6. Small-and medium sizedbusinesses comprise 98 percent of all enterprises in Mongolia, with three- quarters of them considered as microenterprises. It is estimated that only 10 percent of them regularly access financing through banks, as many banks are focusing their operations on top-tier and larger companies which are perceived to be less risky. In December 2013, ADB provided a USD 40 million loan to Tenger Financial Group including XacBank LLC and XAC leasing LLC for MSME relending and leasing market development. Source: Asia Development Bank EBRD CONSIDERS $15 MN IN LOANS FOR SMALL BUSINESS AND SUSTAINABLE ENERGY The London-based European Bank for Reconstruction and Development (EBRD) is considering disbursing a local-currency loan equivalent to USD 5 million to XacBank LLC, a lender to micro-, small and medium-sized businesses in Mongolia. The loan, if approved, would be used for on-lending to ―private micro, small and medium enterprises in Mongolia.‖ EBRD also is studying the possibility of disbursing a local-currency loan equivalent to USD 10 million to XacBank under EBRD‘s Mongolian Sustainable Energy Financing Facility. If the loan is approved, EBRD would also aim to assist XacBank with capacity building regarding financing projects such as energy conservation. If funding can be secured, the EBRD loan would be supplemented with technical cooperation to ―support the identification of sustainable energy projects‖. Source: Microcapital.org VOYAGER RESOURCES ANNOUNCES MANAGEMENT CHANGES Voyager Resources Ltd. on 1 July announced that Joe Burke has resigned as chief executive officer, with no replacement named as of yet. The board also announced that Scott Funston has been replaced by Jonathan Hart as the company secretary. Hart is a lawyer who has previously worked at Perth-based law firm Steinepreis Paganin. His experience includes due diligence investigations, general corporate and commercial drafting, public and private mergers and acquisitions, general corporate advice in relation to capital raising, and Corporations Act and Australian Securities Exchange (ASX) compliance. Hart is company secretary of Paradigm Metals Ltd., Black Star Petroleum Ltd., Wolf Petroleum Ltd. and Caravel Energy Ltd. Source: Voyager Resources Ltd. FOUR MONGOLIAN UNIVERSITY SCHOOLS RECEIVE INTERNATIONAL ACCREDITATION Four Ulaanbaatar-based schools recently received accreditation from the Accreditation Council for Business Schools and Programs (ACBSP). The Computer Science and Management School of the Mongolian University of Sciences and Technology, Etugen Institute, Mandakh Burtgel Institute and San Institute were selected from a list of 22 colleges and universities in four countries for accreditation and reaffirmed by ACBSP on 29 June in Chicago. "These campuses have shown their commitment to teaching excellence and to the process of quality improvement by participating in the accreditation process. The initial accreditation and reaffirmation of accreditation granted to these institutions demonstrates their commitment to provide the highest quality business education for their students," said Steve Parscale, ACBSP director of accreditation. Source: Montsame GE PARTNERS WITH NOTRE DAME TO BUILD TURBINE RESEARCH AND TEST FACILITY The University of Notre Dame and a group of partners that includes General Electric Co. (GE), the supplier of turbines to the Salkhit wind farm, announced on June 26 a USD 36 million project to establish the nation‘s foremost research and test facility for advancing the technology in the massive gas turbine engines used by commercial and military aircraft, power plants and the oil and gas industry. Construction in South Bend‘s Ignition Park on a 43,000-square-foot building—of which 25,000 square
- 7. feet will befor the Notre Dame Turbomachinery Facility—will begin this summer and be completed by March. The facility will be fully operational in July 2016. Notre Dame will contribute USD 7.5 million to the project. General Electric Co. has committed USD 13.5 million to fund research and testing for five years ―The center will allow GE‘s industrial businesses to simulate full-scale engine operating environments,‖ said Rick Stanley, vice president and chief technologist for GE‘s Power and Water business and a Notre Dame graduate. ―The important rig testing we will do at the center builds upon GE‘s already strong and long-standing technical relationship with the University. For years, GE has turned to Notre Dame for top technical talent.‖ Notre Dame‘s current turbomachinery laboratory has worked with industry and government partners to advance gas turbine engine technologies since 2003. Center researchers focus on the design and operation of test facilities that simulate full-scale engine operating environments. The new facility, which will feature five test bays for compressor and turbine rig testing, will advance previous work. It also will be used to advance current working relationships with both government sponsors and all manufacturers of gas turbine engines. Source: University of Notre Dame AUSTRALIA FUTURE UNLIMITED EDUCATION FAIR MONGOLIA 2014 The Australia Future Unlimited Education Fair Mongolia will be held 19 and 20 September in Ulaanbaatar. Now in its third year, this year‘s fair will provide Australian education providers an opportunity to raise awareness of their institution‘s profile in Mongolia and demonstrate the quality and innovation of the Australian education sector. Eighteen Australian institutions participated last year and there were more than 2,000 visitors. Source: Australian Trade Commission KOREAN AIR DONATES COMPUTERS TO MONGOLIAN SCHOOL Korean Air held a donation ceremony on 26 June at Gun Galuutai Complex School nearby Baganuur, Ulaanbaatar to formally handover to the school 30 computers with desks and chairs. Gun Galuutai Complex School has 1,800 students from the first to 12th grades. The school has experienced teaching difficulties because of the poor IT facilities. Korean Air‘s computer donation program started last year when it provided 30 computers for the Bolovsrol School in Mongolia. The aim of Korean Air‘s donation program is to enable Mongolian students to keep up with technology and learn the skills to enable them to be computer literate. Korean Air has other corporate social responsibility projects in Mongolia, including its ―Global Planting Project,‖ which has seen the planting of trees in Baganuur since 2004 to help counteract desertification. Students at Gun Galuutai have also participated in this project. The Korean Air Forest in the Baganuur area now extends to 44 hectares (440,000 square meters), consisting of some 83,000 trees. The airline has also employed local forestation experts who are residing in the area to manage the planted trees and educate residents on forestation. Source: Travel Daily News MONGOLIA‟S JUNIOR EXPLORERS DRILL DESPITE POLITICAL, FINANCIAL CHALLENGES The summer months in Mongolia are a time of big exploration for the country's army of junior mining companies as they drill in search of the coal, iron ore, copper and gold that have put this country on the world map for natural resources. Investor sentiment toward these companies is still rather cool compared with the weather here, but a joint venture deal between Australia's Aspire Mining Ltd. and Noble Group has given the sector a lift. On June 13, Aspire Mining, which is developing coking coal assets in northern Mongolia, said it had agreed to buy 50 percent of a venture with Noble Group as it looks to expand their partnership in Mongolia, which already involves the Hong Kong-based global supply chain manager providing project financing and transport for the Australian miner. But junior miners are struggling to attract the kind of investment they are looking for due to the wider economic struggles that the country is
- 8. laboring under, andthe wider global mining industry has its own problems, according to auditor PricewaterhouseCoopers' (PwC) "Mine 2014" report. PwC cited ―diminished profitability and shrinking cash, [and] underlying performance in the industry‖ for 2013, as well as the market capitalization of the industry falling by USD 280 billion. PwC found that miners operating in emerging markets last year outperformed their developed counterparts, earning USD 24 billion collectively compared with losses of USD 4 billion in developed markets. That is a sentiment echoed by the chief executive of local junior explorer Erdene Resources Development Corp. ―I think we've seen a return to favor for juniors, generally,‖ said Peter Akerley about mining worldwide. ―In regard to Mongolia, you're seeing an uptick in activity in the past few months, but the main issue globally is there is still difficulty in attaining funds for exploration and that‘s compounded by Mongolia being a difficult place to do business.‖ One thing holding back investors is that Mongolia‘s new Investment Law remains untested. Some also have little faith the laws will remain consistent for very long or that Mongolia will stand by the tax stabilization agreements introduced by the 2013 Investment Law. ―Honestly I don‘t think it‘s been a positive change,‖ says one investor who is actively seeking to buy mining assets in Mongolia. ―It‘s quite dubious, these investment guarantees, as opposed to international agreements because the [former] are now just permits that a Mongolian agency is giving out. They can change their mind any time.‖ The investor, who requested anonymity, added that there was no comfort in the fact that disputes would likely have to be resolved locally rather than through international arbitration under the new scheme. ―The local agency will never side against the local implementers.‖ Source: BNE NORTH KOREA MAKES MOVES TOWARD OIL EXPLORATION A Mongolian oil company with ties to North Korea is planning to entice foreign investors in the country‘s energy sector by showing them geological data which could indicate the presence of oil and gas resources. Mongolian Stock Exchange-listed HBOil JSC is planning on opening for what is known in the industry as a data room—a place where interested parties can inspect geological information on underground structures that could indicate the presence of oil and gas fields. The DPRK has two ageing refineries in Seungri and Bongwha, but both need upgrading, and HBOil, via their buyout of Ninox Hydrocarbons last year, has set its sights on tapping into onshore oil basins in the DPRK. The purchase made HBOil the owners of a joint venture with the Korea Oil Exploration Corp (KOEC), North Korea‘s state run oil company. Now the company is looking to assess geological data that will tell interested companies where to begin their exploration. ―The reason people have data rooms is because they‘re trying to persuade another company to spend money in their block, on their well. They are looking for investment. In order for companies to make decisions about that investment, they need to see the data,‖ Alistair Fraser, EGI chair in petroleum geosciences at Imperial College London said. The data room will be working on digitizing data from the 1960s through to more recent 3D seismic data. HBOil will then aim to use the data to attract international bids on onshore oil and gas blocks on behalf of KOECII, an international subsidiary of North Korea‘s state run oil company. Mongolian investment bank and HBOil underwriters BDSec JSC did their best in an October report on the DPRK to dispel potential investor fears. The report calls that KOEC‘s management ―highly intelligent and dynamic, as well as enthusiastic and appreciative of the investment HBO has made and shall make into the country.‖ Source: NK News
- 9. SPONSORS Oxford Business GroupMongolian Economy Magazine Milestone GRP ECONOMY MONGOL BANK: FX AUCTION, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY BILLS The Bank of Mongolia on 3 July auctioned USD 4 million and CNY 47 million to commercial banks for closing rates of MNT 1,827.60 and MNT 294.32, respectively. The central bank also reported that it had received an equivalent of USD 50.8 million from swap agreements with commercial banks. The central bank reported on 4 July the issue of 1-week bills worth MNT 211.5 billion at a weighted interest of 10.5 percent a year. The central bank reported on 2 July MNT 36 billion in bids for the issue of 28-week treasury bills with a face value of MNT 20 billion. Each unit was sold at a discounted price of MNT 1 million each with a weighted average yield of 9.787 percent. The central bank also reported on 2 July MNT 11.5 billion in bids for the issue of five-year treasury bills with a face value of MNT 10 billion. Each unit was sold at a discounted price of MNT 1 million each with a weighted average yield of 14.75 percent. Source: Mongol Bank INVESTMENT OFFICIAL SEES MORE DIVERSITY IN INVESTMENT WHILE FDI CONTINUES TO FALL Although Mongolia saw foreign direct investment fall last year, it has seen some gains in indirect investment, said Invest Mongolia Agency Director Sereeter Javkhlanbaatar. Mongolia saw investment of USD 600 million in investment for the first quarter of this year compared with USD 800 million last year, said Javkhlanbaatar. He added that the number of new companies registered was about the same as last year, with 8,600 foreign companies registered in total. ―As of the first quarter this year, foreign direct investment was approximately USD 300 million and foreign indirect investment was approximately USD 300 million; in total more than USD 600 million was invested to the country,‖ said Javkhlanbaatar. The Bank of Mongolia reported a 65 percent fall in foreign investment for the first quarter of 2014, year-on-year. Source: Undesnii Shuudan IMF DIRECTOR CALLS FOR FISCAL TIGHTENING The deputy managing director of the International Monetary Fund (IMF) recommended fiscal tightening and closer adherence to the principles of the Fiscal Stability law while in Ulaanbaatar at the conclusion of his visit to Mongolia: ―In recent years, Mongolia has been one of the world‘s fastest-growing economies, vaulting into the ranks of middle-income countries in just a few years,‖ said Naoyuki Shinohara. ―This growth was
- 10. earlier driven bylarge investments in the mining sector, spearheaded by substantial foreign direct investment. But as these have dropped, growth has been held up increasingly by fiscal and monetary stimulus. This has led to growing balance of payments pressures, the depreciation of the tugrug, and higher inflation.‖ Shinohara said he discussed with Mongolia‘s top-ranking government officials the importance of tighter macroeconomic policies and including spending by the Development Bank of Mongolia in the deficit total for the country. That would mean greater fiscal prudence to maintain debt within the restrictions in the Fiscal Stability Law. The law requires the debt-to-gross-domestic-product ratio to remain below 2 percent. ―We also discussed the importance of strengthening bank supervision and the need to maintain Mongolia‘s flexible exchange rate system. While such measures might entail a somewhat slower growth path in the near term, they are critical to safeguarding domestic and external stability, and making growth—still rapid by international comparison—more sustainable.‖ Source: International Monetary Fund FOOD LAB PROVIDES SAFER EATING The recently constructed Central Food Laboratory operated by the SAMO Scientific Food Research and Manufacturing Institute opened Wednesday to improve food safety in Mongolia. The new facility is a part of a Mongolia-Korea partnership to assist Mongolia in producing healthier agricultural products, with Korea International Cooperation Agency (KOICA) providing financing. The cost of the facility was USD 1 million, with USD 600,000 spent on equipment purchases and installation and USD 400,000 on training researchers, according to reports. ―The Food Safety Law of Mongolia was approved last year and we faced an urgent need to establish a high-capacity laboratory to enforce the law. The newly opened laboratory can detect the content and origin of all types of food products, including meat, vegetables and flour, using nano- technology,‖ said Deputy Minister of Industry and Agriculture Ts. Tuvaan at the opening ceremony. Source: UB Post CONSTRUCTION FOR PETROLEUM REFINERY ON HOLD WHILE SEEKING NEW LOCATION The call for a new location for what is still being called the Darkhan Petroleum Refinery has delayed construction for the project. The National Security Council decided it would be better to have a location closer to the Mongolian Tamsag oil fields, where there are oil exploration and production operations. That location is also closer to the Chinese border, which is where crude oil could be imported for refinement. An unnamed source said a new location for the refinery would likely be at Gobi-Sumber Aimag. The feasibility study and technical assessment was made for Darkhan, where the plant project developers originally planned to have it located. Project developers had planned to take out a loan of USD 700 million from Japan for the project, the terms of which would remain, said the unnamed source, and would still include a partnership with Japan's Toyo Engineering. Prime Minister Norov Altankhuyag said the government could not provide a guarantee to any loans for the refinery, despite hopes from project developers that it would. Source: Unuudur NEW ROAD CREATES PEACE AVE.-SEOUL ST. 4-WAY INTERSECTION Prime Minister Norov Altankhuyag and Economy and Development Minister Nyamjav Batbayar attended an opening ceremony for Marshall Street, a new road connecting the Tsetseg Center intersection on Peace Avenue with Seoul Street. HIB Co. led planning of the MNT 2 billion road construction project while Express Zam handled road construction and Japan's CTI Engineering supervised. The street gets its name from its close proximity to the Marshal Choibalsan Winter Palace. The street runs 160 meters long and is 10 meters wide. It is guaranteed for between 5 and 10 years. The road project is one of the roads being commissioned for Ulaanbaatar's Streets program, which was funded using proceeds of the 2012 Chinggis bond. Another intersection at Zuun Ail is also
- 11. nearly finished. Source: UndesniiShuudan TOURIST VISA CHANGES FOR MONGOLIA IN HOPES OF STIMULATING TOURISM Dreaming of a trip to Mongolia or Kazakhstan? After a change in visa regulations, they're more accessible than ever Many visitors to Mongolia will not need a tourist visa if they travel between 25 June 2014 and 31 December 2015. The country's immigration department has relaxed visa requirements for 42 nationalities, including: Andorra, Argentina, Austria, Bahamas, Belgium, Brazil, Bulgaria, Chile, Costa-Rica, Croatia, Cyprus, Czech, Denmark, Estonia, Finland, France, Gibraltar, Greece, Grenada, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Panama, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom of Great Britain, Northern Ireland and Uruguay. The United States, Germany, and Canada nationals have been able to travel to the country without tourist visas in the past, but it is hoped that this new legislation will encourage visitors from other countries too. Kazakhstan officials have also relaxed tourist visa requirements. From 14 July, nationals of the following countries no longer need visas for visits of 15 days or less: United States, Britain, Germany, France, Italy, Malaysia, Netherlands, UAE, Korea and Japan. Source: Wanderlust THREE PRZEWALSKI‟S HORSES SENT FROM PRAGUE ZOO TO MONGOLIA Three Przewalski‘s horse mares from Prague zoo were sent to Mongolia, their country of origin, aboard a CASA military transport planes today. This has been the fourth transport of Przewalski‘s horses to Mongolia, organized by the Prague Zoo in cooperation with the Czech military. Since 2011, 12 Przewalski‘s horses have been sent to the Gobi B National Park in Mongolia. All of them could stand the trip quite well and they got used to the new habitat. This year, three other mares will join them: Ulla, Gretel and Bayan. At the very last moment, the fourth selected mare had to be replaced but no suitable candidate was found, and this is why only three flew to Mongolia to eliminate risks, Prague Zoo director Miroslav Bobek told reporters. The flight lasts 17.5 hours with an intermediate landing in Kazan and Novosibirsk. The plane will finally land in Bulgan, and not directly in the Gobi Desert as originally planned, since the local authorities did not allow that. From Bulgan, the mares will be driven for 7 hours to special enclosures for acclimatization. They will stay there until next spring, when they are to be released among other Przewalski‘s horses in the national park. Prague Zoo is one of the main organizers of the transfers of the Przewalski‘s horse, the last of which was shot dead in the wild 40 years ago, back to its original homeland. The transfers from Western Europe started in the 1990s, and more than 100 horses have returned to Mongolia since then. At present, about 1,900 Przewalski‘s horses live all over the world, including some 300 in two national parks in Mongolia. Prague Zoo started breeding the Przewalski‘s horse in 1932. It has kept the international pedigree book of this species since 1959. Source: Prague Post AMUR FALCONS RETURN TO MONGOLIA VIA ASSAM AND NAGALAND The migration route of the Amur falcon, probably the longest bird migration from Mongolia to Africa via Assam and Nagaland, has been confirmed recently for the first time. The two birds—Naga and Pangti—which were fitted with tracking devices, have already returned to Mongolia from South Africa where they had gone from Nagaland in November along with flocks of birds they were traveling with and have reached their roosting sites in Mongolia. While starting their journey back home, the Amur Falcon named Naga was the first one to lead the journey and has reached Gujarat coast after taking different route during its backward journey. Naga and Pangti have taken a different route while returning from South Africa and had entered the Indian
- 12. Subcontinent through theGujrat coast. The two birds flew over Gujrat, Madhya Pradesh, Jharkhand, Meghalaya and Manipur and avoided the Bay of Bangal while returning to Mongolia. Moreover, 28 other Amur falcons were also fitted with leg bands or rings for proper study of these migratory species, which travel about 22,000 kilometers every year from Mongolia to Africa via Assam and Nagaland. It was in 2010 that 10 Amur falcons were fitted with satellite-tracking devices in South Africa by a group of scientists led by Bern-Ulrich Meyburg of Germany. However, only one bird returned to Newcastle in South Africa after completing the migration route. Amur falcons raptors with pigeon looks are said to have one of the longest migratory routes. These birds travel from Siberia, Mongolia and North China to Africa via India where they rest at Doyang in Nagaland and at Nellie in Assam. Source: Eurasia Review COPPER TRADERS LOOK BEYOND CHINA Some copper cargoes originally bound for China are changing course, traders and analysts say, as falling prices in the world's biggest consumer of the industrial metal make other destinations more attractive for sellers. Although it's unclear exactly how much copper on ships is being diverted from China, signs of a shift in the global metals market illustrates the probe's ripple effects and raises questions about demand for copper from industrial consumers. Instead of being fabricated into wire and pipes, copper in China is often used as collateral for loans. Some investors worry that copper prices, which are sensitive to developments in China, could fall if Chinese imports slow due to the regulatory crackdown. The so-called copper premium in China has shrunk to USD 60 to USD 70 a ton above the current benchmark price of USD 6,970 a ton on the London Metal Exchange, according to traders. That's half of what it was a month ago. In contrast, the premium in the U.S. has hovered around USD 160 a ton, an indication of robust demand. The premium is a component of the copper price that buyers pay when they want speedy delivery of the metal. When buyers are clamoring to get their hands on the metal, the premium tends to rise, and vice versa. "Shanghai premiums being so low, it is more profitable for traders to sell in many other locations," said Ivan Szpakowski, a commodities strategist at Citi Research in Shanghai. The falling price of copper in China is also spurring holders of the metal to sell their stockpiles. A trader based in Singapore said some copper is flowing from China's warehouses to other nations such as South Korea. Some economists say solid demand for copper in China from the construction industry should keep prices buoyant, with better China manufacturing data this past week boosting investor confidence. But over the longer term, demand could fade because of slowing property sales. Source: Wall Street Journal SURPLUS IRON ORE SPELLS TROUBLE FOR MINERS As the half year end approaches one commodity stands out from the others--and not in a good way. Iron ore has slumped 30 percent in 2014 as a wave of new supply has crashed onto the market overwhelming demand. Barclays estimates the seaborne iron ore market is heading for a surplus of 79 million tons this year and 67 million next--but only if Chinese steel production grows at 5.1 percent. The benchmark price of ore with 62 percent iron content recently fell below USD 90 a ton for the first time since 2012, putting a question mark over the size of potential share buybacks by the world‘s biggest mining companies BHP Billiton and Rio Tinto PLC. But it is not just the spot price that has captured the attention of investors, analysts and traders. So too has the widening price differential between benchmark and lower grade ore. The spread between 62 percent and 58 percent ore is currently about USD 17 a ton, versus an average of 10 last year. Above and beyond the market moving into surplus James Rilett, analyst at MVS, a research house, says a couple of factors are driving the widening ―quality spread‖. First, there is currently a lot of lower grade product in the market due to the aggressive expansion plans of Fortescue Metals Group. Second, there is a lower demand from Chinese steel mills, which are favoring higher-grade material because of a push to improve utilization rates. (High grade ore
- 13. also makes formore environmentally friendly steelmaking, something Chinese policy makers are targeting). Another reason for the expansion of the discount is reduced supplies of high-grade Chinese concentrate production, which is needed for blending with lower grade material. It looks increasingly likely that production and projects outside China will also have to be cut to bring the market back into balance. As yet there are few signs of that happening. Gina Rinehart‘s Roy Hill project in Australia is due to come on stream next year, while the acquisition of Aquila, an Australian junior, by a Chinese led consortium could see some of its expansion plans become a reality. Source: Financial Times SUN FINALLY SHINES ON COMMODITIES After years of losses and investor pessimism the sun finally shone on commodities in the first half of 2014. The Dow Jones-UBS index, which tracks the prices of 21 commodities, delivered total returns of 7.1 percent, outpacing U.S. equities, 10-year Treasuries and high yield corporate bonds. But the clouds could quickly gather again if this year‘s big improvement in performance fails to entice long-term investors back into commodities, say analysts. ―There‘s a lot resting on what happens in the second half of this year, in terms of the long term viability of commodities [as an asset class],‖ said Kevin Norrish, commodities strategist at Barclays. Attracted by strong returns, China‘s seemingly insatiable appetite for raw materials and low correlation to other asset classes, investors piled into commodities before the financial crisis. In recent years, however, long-term investors have shunned the sector as big picture strategists and powerful consultants turned cold on oil, metals and grains because of lackluster returns and tight correlation with other asset classes. But sentiment has started to improve this year as some of the reasons that saw commodities become part of balanced portfolios in the first place have returned. Strong gains have helped as has declining correlation between commodities and other asset classes. During and after the global financial crisis, commodities moved in lock-step with equities, bonds and the U.S. dollar as markets were gripped by bouts of ―risk-on risk-off‖ trading. That annoyed many investors because commodities were supposed to provide diversification from other asset classes. But that tight correlation has started to fade. Returns from commodity investing have also improved because of a broad ―backwardation‖ in futures markets—when prices for more immediate delivery are above those for later. A downward sloping futures curve means investors are able to pick up a small yield each time they roll out of an expiring futures contract. Source: Financial Times CHINA CATCHES INDUSTRIAL POLLUTERS WITH DRONE MISSIONS China is turning to aerial drones to monitor pollution, with its biggest mission to date finding illegal emissions by some of the largest industrial companies in the country‘s northern provinces. A unit of Hebei Iron & Steel Group, China‘s No. 1 steelmaker, Shanxi Huaze Aluminum & Power Co., and Inner Mongolia Yihua Chemical Co. were found to have ―serious environmental problems,‖ the Ministry of Environmental Protection said on its website yesterday. Data gathered by the drones indicate a quarter of the 254 businesses targeted may be involved in illegal practices, it said. Premier Li Keqiang declared war on pollution in March after swathes of northern China were blanketed in smog and the government‘s climate-change adviser said the situation had reached intolerable levels. Poor air quality in the world‘s biggest carbon emitter is a regional health issue and damaging foreign investment and talent retention, World Health Organization chief Margaret Chan warned the same month. Hebei, Shanxi and Inner Mongolia are among the worst polluters and the focus of government efforts to clean the environment. Seven of the 10 Chinese cities with the worst air pollution in the third quarter of last year were located in Hebei, according to government data. Inner Mongolia is among the country‘s biggest coal-producing provinces. The use of unmanned aircrafts means that companies secretly discharging pollutants at night or on
- 14. weekends will findno place to hide, the official Xinhua News Agency reported, citing Chen Shanrong, deputy head of environmental supervision at the ministry. Source: Bloomberg Businessweek POLITICS PARLIAMENT ADJOURNS FOR SUMMER RECESS Parliament broke for summer recess on 1 July—barely squeaking in some landmark legislation. ―Parliament is adjourning until the Autumn Plenary Session, while the fourth Spring Session lasted for 62 working days,‖ said Speaker Zandaakhuu Enkhbold. The spring session saw 9 laws, 43 amendments, 4 treaties, and 21 resolutions passed by Parliament, in addition to two law reversals. That includes the 2015 state budget guidelines, budget forecasts for 2016 and 2017, a socio-economic development strategy for 2015, the Protection of Cultural Heritages law, the Law on Crude Oil, and the Law on Glass Accounts. Also noteworthy was the passage of an amendment to the Mineral Resources Law. During the last meeting for the spring session Parliament appointed parliamentarian D. Ganbat to replace fellow parliamentarian Sh. Tuvendorj as chairman of the Legal Standing Committee following Tuvendorj's appointment to Minister of Industry and Agriculture. Source: Info Mongolia AGENDA FOR 2014 FALL SESSION OF PARLIAMENT The following is the legislation scheduled for discussion for the 2014 fall session of Parliament. [Some titles do not provide further details than the vague terms provided by the Source while some items were addressed on the final day of Parliament, before the adjournment for summer recess - ed]: • Draft law on the state budget 2015 • Draft law on the budget for the human development fund 2015 • Draft law on the budget for social insurance fund in 2015 • Draft resolution for the aim of state monetary policy in 2015 • ―Glass Accounts‖ transparency bill • Trade bill • Proposed amendments to the Minerals Law • Revision to tax code • Crime bill • ―Violations‖ bill • Domestic violence bill • Mongolian language bill • Proposed amendment to the Law to Prohibit Mineral Exploration and Mining Operations at Headwaters of Rivers, Protected Zones of Water Reservoirs and Forested Areas • ―Controls‖ bill • Elections bill • Political party financing bill • Four miscellaneous bills • Narrow gauge rail for use to transport goods to China bill Source: Zuunii Medee MONGOLIA ENDS MORATORIUM ON ISSUING MINERAL EXPLORATION LICENSES Mongolia ended a four-year moratorium on issuing mineral exploration licenses, boosting opportunities for mining companies as the nation seeks to spur investment. A law passed by Parliament on 2 July also extends periods of exploration to 12 years from 9, according to Otgochuluu Chuluuntseren, director general of the Ministry of Mining‘s strategic policy and planning department. The law must be formally published before it is effective, and the
- 15. ministry must setout exploration boundaries, he said. Erdenebulgan Oyun, vice minister for mining, said in May the law would expand the area of Mongolia‘s land available for mining and exploration to about 20 percent from 8 percent. Mongolia is seeking to boost the economy after almost two years of declining foreign direct investment, including a 52 percent slump last year and 64 percent in the first five months of 2014. ―Lifting the moratorium for new exploration licenses was needed to save a sector which was otherwise becoming non-existent because of the age of the existing licenses and limited land available,‖ Sam Spring, chief executive officer of Vancouver-based Kincora Copper Ltd., said by e- mail. License rules including procedures for companies to extend them have been eased to spur investment, Otgochuluu said. The passage of the law also increases the chance of reversing the cancellation of 106 exploration licenses, he said. ―It is now closer to resolving that issue,‖ Otgochuluu said. ―We can handle it case-by-case.‖ The licenses, with 11 held by foreign investors including Kincora, were revoked by the government. Source: Bloomberg MINERALS LAW AMENDMENTS PASSED BY PARLIAMENT, TO BOOST EXPLORATION Parliament yesterday approved changes to the nation‘s 2006 Minerals Law, a development that may spur renewed investment in the flagging economy. Passage of the amendments was announced on Parliament's website. The legislature, which ended its spring session Tuesday, also passed a new law on energy to help expand that sector. In another vote, parliament blocked government investment in the Tsagaan Suvarga copper and molybdenum project, according to Otgochuluu Chuluuntseren, director general of the Ministry of Mining‘s department of strategic policy and planning. The flurry of activity comes amid Prime Minister Altankhuyag Norov‘s 100-day push to jump start the economy after more than two years of slowing growth and plunging foreign investment. FDI fell 52 percent last year and dropped 64 percent in the first five months of 2014, due in part to plunging coal prices and disputes with key investors, including Rio Tinto Group. Drafts of the Minerals Law amendments included the creation of a National Geological Survey and the formation of a Policy Council to oversee legal changes in the mining industry. The final version of the changes hasn‘t yet been made public. Mining law amendments will increase the proportion of Mongolia‘s area available to mining and exploration to 20 percent from about 8 percent, by lifting a 2010 ban on new licenses, according to comments made in May by Mining Vice Minister Erdenebulgan Oyun. The period of exploration will also increase to 12 years from 9 years, he said. Passage of the amendments may also lead to a resolution to last year‘s cancellation of 106 mining licenses, according to Otgochuluu. ―Uncertainty that has been hanging over the mining and exploration sector for quite some time has been finally resolved with minimal amendments,‖ Dale Choi, head of the consultant Independent Mongolian Metals & Mining Research, said by e-mail. Investors should ―be content that major parties can agree at the last minute on some major issues.‖ Source: Bloomberg Businessweek PRESIDENT PLANS TO SEE 'DOUBL DEEL' BILL PASSED NEXT FALL President Tsakhia Elbegdorj can rejoice now that Parliament has passed his bill that he says will improve transparency in government spending, while he remains undeterred by the denial by Parliament earlier this year for his so-called ―Double Deel‖ bill as he seeks to resubmit the bill for passage before the end of the year. Parliament on 2 July voted in favor of a bill the president has dubbed the ―Glass Accounts‖ Law, which aims to improve transparency in government spending. President Tsakhia Elbegdorj first submitted the bill last April. Meanwhile the president hopes to resubmit another bill that failed earlier during this session in the up-coming fall session of Parliament. The so-called ―Double Deel‖ bill would ban sitting members of Parliament from serving on the Cabinet Secretariat. Source: News.mn, Udriin Sonin
- 16. JOCKEYS UNDER AGE7 BANNED FROM NAADAM HORSE RACING The State Specialized Inspection Agency has issued an order to the Federation of Mongolian Horse Racing Sport and Trainers prohibiting children under 7 years old from participating in horse racing this year, among other orders targeted at ensuring safety. The order demands that all child jockeys wear protective gear and clothing, be subject to inspection by related regulatory bodies, and advise those who take part as to their responsibilities in managing risks. Any failures by the horse racing group would be made public, read the order. Source: UB Post PRESIDENT INTRODUCES “SMART GOVERNMENT” BILLS SLATED FOR AUTUMN President Tsakhia Elbegdorj Monday introduced to parliamentarians the bills under development by his office for his "Smart Government" initiative. The bills, which are expected to come before Parliament in the fall session, focus on holding elected or high-level appointed officials accountable and creating ―glass accounts‖ for greater transparency. A bill for public hearing says about 7 basic kinds of hearings focused on the legislative process, the monitoring of activities and budgets, appointment making, the investigation process, administrative norms, local planning powers, and ensured civil participation in state management, said the president. He added that Mongolia still does not have any way of regulating special laws for state actions, which he said would be addressed by the General Law on Administration. Source: Montsame PUBLIC OUTRAGE FORCES GOVERNMENT TO WITHDRAW LAND BILL Social media and the press are in a frenzy over a proposed land law that many believe would grant foreign investors the right to buy land. The furor came shortly after anger faded out over the proposed use of Chinese-gauge rail. Although some experts argue in favor of the narrow gauge railway because it would save money on coal deliveries versus the broad gauge, critics say it would threaten national security to give China unbridled access to the country's rail network. They further point out that rail from Sainshand Soum, where trillions of tugrug worth of industrial projects could eventually unfold, utilizes the broad gauge and cannot make use of those same savings. The coal industry, they say, should be no different. ―I hope the [Chinese standard] gauge bill is dropped today in Parliament,‖ reads a popular post on Facebook by the nationalist group Dayar Mongol. ―We see the members who are pressing their buttons while the public is clearly against it.‖ The anger expressed on social media has been attributed largely to nationalist political views and Sinophobia, or anti-Chinese sentiment. Similar sentiment has erupted into protests over the Land Law, a bill which was withdrawn by the prime minister last week. Many in the public were incensed by the law because of misleading claims that it contained clauses that would make it possible for foreign citizens to purchase and own land. Members of the Democratic Party defended the law, saying it was wrongfully represented, and that no clauses allowing foreign ownership were included. Various media, including Mongol TV, reported that if passed, the law would allow foreign citizens and organizations based in Mongolia for over six months to lease land for 60 to 100 years. But there is little difference between these long-term leasing agreements and ownership for many. Mongolians believe that foreign ownership of land, especially by Chinese, is a serious national security issue. Source: UB Post CABINET BACKS ADB CREDIT LINE FOR GER DISTRICT REDEVELOPMENT The Cabinet Secretariat on 28 June backed a draft credit agreement for the first phase of redevelopment of Ulaanbaatar's ger districts with the Asian Development Bank (ADB). The Cabinet granted Minister of Economic Development Nyamjav Batbayar authorization to sign credit agreements as a representative of the government of Mongolia for this first phase of redevelopment.
- 17. Source: Montsame GOVERNMENT MINISTERSCALLED OUT BY MEDIA FOR TRAVEL EXPENSES The General Audit Authority reported last week in during Parliament that 11 ministers exceeded their allowed spending for foreign travel last year by hundreds of millions of tugrug. The ministers were criticized for spending taxpayer money on ―leisure and travel‖ by local news outlets and on social media. Foreign Affairs Minister Luvsanvandan Bold, who was reported to have exceeded his travel expense budget by MNT 558 million last year, responded in a press statement that the allegations were untrue and that his ministry saved more than MNT 650 million last year. ―The claims of overspending for official travel of USD 558 million by the minister of foreign affairs' for alleged travel and leisure doesn‘t match the reality, since 96 percent of this expense includes the cost of commissioning and travel costs for the return of 39 diplomatic representative organization workers,‖ Bold said. Last year, Prime Minister Norov Altankhuyag promised to hold government responsible for wasting taxpayers‘ money on travel. He said ministers would be allowed a quota for only two trips. No actions have been taken against these ministers, although news outlets and social media are putting on pressure for some sort of consequences. Source: UB Post MONGOLIA RANKED 129TH ON FRAGILE STATES INDEX 2014 Mongolia was included in the "less stable states" category on this year's Fragile States Index (FSI), published by the Washington D.C.-based non-profit Fund for Peace. With a moderate 58.1 points, Mongolia has been placed 129th among 178 countries, along with the likes of Montenegro, Greece, Bulgaria, Kuwait and Romania. The index focuses on the indicators of risk based on thousands of articles and reports that are processed electronically. FSI divides a total of 178 countries into ten groups from "very sustainable" to "very high alert.‖ The "very sustainable" group includes only Finland, who scored remarkably low with 18.7 points, while African countries such as South Sudan, Somalia, Central African Republic, Congo (D.R.) and Sudan were labeled "very high alert". Source: Montsame CANADA ADDS MONGOLIA TO DEVELOPMENT ASSISTANCE LIST Mongolia has been added to Canada's list for official development assistance. The list is updated every five years and includes 25 countries that will receive 90 percent of Canadian foreign aid for the next five years. In 2013, the 20 listed countries received a sum total USD 5.2 billion, or 80 percent of Canada's foreign aid during that period. Canadian Ambassador to Mongolia Gregory Goldhawk said Canada was willing to support Mongolia's democracy and that its inclusion would increase aid to Mongolia dramatically. Canadian aid to Mongolia has totaled USD 5.1 million since 1997. Source: Unuudur MONGOL BANK SIGNS LETTER OF COOPERATION WITH JAPANESE FINANCE BODY Central Bank Governor Naidansuren Zoljargal and Japanese commissioner of its Financial Services Agency, R. Hatanaka, on 25 June exchanged letters of cooperation to share experience and expertise on financial markets. Source: Bank of Mongolia MULTINATIONAL PARTNERS CONDUCT FIELD-TRAINING EXERCISE IN MONGOLIA Nestled in a grass-covered valley surrounded by a panoramic view of rolling hills and low mountains lined with skyward-reaching rock formations, covered by an expansive sky that seems to go on forever, the Five Hills Training Area of the Mongolian Armed Forces came to life with the arrival of Soldiers for the Field Training Exercise (FTX) portion of Khaan Quest 2014, a regularly scheduled, multinational exercise co-sponsored by U.S. Army, Pacific, and hosted annually by Mongolian Armed
- 18. Forces (MAF). Beginning on20 June, role players took turns challenging the students in different scenarios. In one scenario, a man walks to the gate, a simulated unexploded bomb in his hands. The gate guards, seeing this, direct the man to place the unexploded ordnance in a safe area and alert their command. All the while, the instructors mark the performance into their notebooks in order to give feedback after the training cycle is complete. After the Mongolians‘ turn, their U.S. counterparts took their turn. In the first scenario, a group of people approach, firing AK-47 Kalashnikov rifles into the air. The moment is tense, as they radio for backup. The group, however, does not act in a threatening manner, and though alerted by the situation the soldiers maintain a safe posture, allowing the group to pass by. In the after action review, the instructors inform the U.S. participants that the group was celebrating a wedding and were firing their weapons into the sky as is tradition in some cultures. They were right to let them pass. A common theme that exists throughout the FTX is the need to learn to overcome language and culture barriers, especially when working with multinational forces in operational environments where communication is key. ―It‘s a little rough in the mornings with translation,‖ said Staff Sergeant. Aaron Callahan, a combat medic section noncommissioned officer at the Alaska Army National Guard. It takes a lot longer than we had anticipated for some of the slideshows, but the MAF forces really picked up on all the treatments well.‖ Source: Defense Video & Imagery Distribution System MONGOLIA DROPPED FROM FINANCIAL ACTION TASK FORCE MONITORING The Financial Action Task Force (FATF) said it had found Mongolia had addressed security issues related to the financing of criminal and terrorist groups at a plenary meeting in Paris, France on 25 to 27 June. FATF noted the significant progress Mongolia had made on its anti-laundering regime as well as efforts to combat the financing of terrorist groups. The group first identified Mongolia's weaknesses on these fronts in June 2011 and the country has since worked to mend these gaps. Mongolia was one of five countries to have the need for monitoring lifted. The others were Kenya, Kyrgyzstan, Nepal, and Tanzania. Source: Info Mongolia AUTHORITIES CLOSE 34 BANK ACCOUNTS OPENED BY STATE ORGANIZATIONS Finance Minister Chultem Ulaan has advised Parliament to take legal action against the state organizations that have opened illegal bank accounts. The National Audit Office (NAO) has closed 34 illegal accounts belonging to 53 organizations out of a total 108 accounts it says are illegal. Total transactions made through the accounts have grown to MNT 4.435 million. The remaining 74 accounts belong to the same 53 organizations, holding a sum total MNT 2.561 million. The 74 account names were disclosed publicly [although the Source omits those names or where they can be found -ed]. Source: Undesnii Shuudan GIA INVESTIGATES GENCO PROGRAM SPECULATING ON ETHNIC ORIGIN OF MPs A criminal case has been filed against the management of the Hero Entertainment production company for a program critical of government and speculating on whether members of Parliament are of full Mongolian birth. The program, titled ―100 important topics‖, was broadcast on television [Source does not cite a date -ed]. The General Intelligence Agency is investigating the company, which is owned by former Agriculture Minister Khaltmaa Battulga, for the "goal of sabotaging and breaking up national unity" and "inciting animosity by nationality, origin, language and religious views." Battulga is the owner of Genco Group and recently exited the Cabinet Secretariat because of his support for the so-called Double Deel bill, which would ban parliamentarians from serving as Cabinet ministers. In a recent interview, Battulga, who still sits in Parliament, said he wrote the script for the program but did
- 19. not pay tohave it broadcast. Mongolian newspaper Udriin Sonin called the program ―fascist and racist" for its anti-Chinese sentiment, which focused on suspicions of the ethnic origins of some members of Parliament as well as President Tsakhia Elbegdorj. The Government warned that "decisive measures are to be taken." Source: Olloo.mn, Independent Mongolian Metals & Mining Research VIDEO OF RACIST ATTACK AGAINST MONGOLIAN ON BARCELONA TRAIN GOES VIRAL Spanish police have arrested a teenager suspected of beating up a Mongolian man inside a Barcelona subway train in an alleged racist attack after a video of the incident posted online went viral. The 56-second video shows a blond youth, dressed in a black T-shirt and jeans and whose face is pixelated, repeatedly punching the seated man before other passengers intervened late on Saturday. It was reportedly first posted on Sunday to a Twitter account that contained Nazi symbols and the slogan: "Always a patriot, white Europe". The owner of the account, who appeared in his profile picture with a shaved head and his mouth covered by a bandanna, tweeted that he had filmed his friend carrying out the attack on his mobile phone. The victim, a 25-year-old Mongolian man who lives in Spain, filed a complaint with police on Sunday. Police said in a statement on Monday they had detained a young man who is suspected of carrying out the beating and charged two others, including another minor, who acted as accomplices. Police did not give the nationality of the suspect who was arrested, but Spanish media reported that he was Russian. The video, which was repeatedly played on Spanish television stations and had over half a million views on YouTube, sparked angry reactions from anti-racism campaigners and government officials. "We want to make it clear that attitudes like this are not acceptable in our city," Barcelona city hall said in a statement. Source: AFP MONGOLIA‟S APPROACH: GUIDELINES FOR U.S. FAILING NORTH KOREA POLICY On May 23, 2014, Mongolia provided North Korea and the United States neutral ground in its capital for track 1.5 meetings. Presumably, North Korea‘s chief nuclear envoy met with two former U.S. State Department officials to discuss resumption of the Six-Party talks, which have reached a complete standstill since 2009. Ulaanbaatar has been keen on normalizing Pyongyang‘s fractious relations with its adversaries and assisting its Soviet-era ally in implementing economic reform. In this way, Mongolia unveils an alternative strategy that could incrementally reconfigure Pyongyang‘s behavior, offering the U.S. some lessons for its failing North Korea policy. Mongolia has pushed for lucrative cooperation and investment deals. Seeking to ease both countries‘ dependency on China and Russia, President Tsakhia Elbegdorj during a visit to North Korea concluded significant trade and cultural accords. Through warming its relations with Pyongyang, some analysts claim that landlocked Mongolia seeks to obtain sea outlets to ship its energy resources and minerals to other Asian nations, and thus ironically gain potential access to international markets. Apart from being potentially profitable, these engagement efforts make Ulaanbaatar a crucial stakeholder in North Korea‘s economy. Mongolia‘s activist approach towards North Korea does offer some basic guidelines for a more sensible strategy. The Obama administration‘s current policy of strategic patience (which most Korea observers refer to as ―doing nothing‖), did not bring about any efforts towards denuclearization or a desired change in North Korean behavior; rather the opposite. Nor did diplomatic isolation and punitive sanctions alter the regime‘s actions or hamper its continuity during the last five decades. Even though North Korea remains anxious about its security position in East Asia, and therefore hard to deflect from its strategic-military arrangement, Mongolia‘s approach of investing in the North and becoming a stakeholder in its development, represents a far more promising alternative. Source: International Policy Digest
- 20. WELCOME TO STANISTAN Ata signing ceremony in the Kazakh capital, Astana, on May 29, the presidents of Russia, Belarus, and Kazakhstan ratified the Eurasian Economic Union (EEU) into existence. Yet, what if, instead of becoming a little fish in Russia's big pond, Kazakhstan dared to dream of being the big fish in a pond of its own creation? A pond comprising all the 'stans, for example—not just the former Soviet ones, but also the ones further south. The Kazakh-inspired superstate would occupy a strategic place on the global map, linking Europe (yes, Kazakhstan is so massive that it's partly in Europe as well) to the Indian subcontinent. It would also bridge the geostrategic gap between the Middle East and the Far East. It would have an annual gross domestic product (GDP) of just under USD 600 billion (2013), which would rank it somewhere between Switzerland and Sweden—though in per capita terms, it would roam the bottom half of the tables, with Kazakhs averaging USD 12,000 a year (slightly less than Hungarians), and Afghans surviving on one- seventeenth of that (USD 700; slightly more than Rwandans). In addition to its economic advantages, it would be ethnically and linguistically diverse, with Slavic, Turkic, and Persian influences swirling about. But it would also have a few important unifying traits. It would be predominantly Muslim, and it would share many historical and cultural similarities, from the memory of the Silk Road and the legacy of Chinggis Khan to the celebration of Nowruz—the Iranian New Year. They're not all "stans"—which means "land" or "country" in Persian—by accident. But what would be the name of this new country? Of course, something predictable and boring like the Central Asian Federation would be proposed. But the flash of lightning that could jolt this strangely assembled beast to life would be the epithet that refers to the suffix they all share. And if "Country of Countries" sounds a bit generic in English, the original is of a simple, unforgettable beauty. Source: Foreign Policy NEW MONGOLIAN LAWS The following amendments to a law were published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after publication. Date Law 30.06.2014 Amendments to Law on National Holiday Please visit BCM's website, Legislative Working Group, for a summary of Mongolian laws. BCM members who wish to access complete versions of the laws and regulations in Mongolian language are welcome to email the BCM office. ANNOUNCEMENTS BCM FOOTBALL CUP-2014 SPONSORED BY MONGOLIAN PROPERTIES AND TRANSWEST MONGOLIA Dear Members, We are pleased to invite you to the 3rd annual "BCM Football Cup-2014" tournament which will be held on School #5‘s field on July 5-6. Our sponsors are Mongolian Properties and Transwest Mongolia. The annual event has become one of the prestigious football tournaments among non-professional players in the private sector. We have expanded to a 2-day event with 16 teams this year. We apologize that we could not include all interested entities. "BCM Football Cup 2014‘s" technical session with the Team captains was held on Tuesday, July 1. Team allocation was selected by lottery during the technical session. Please come out and join us at the tournament! Contact otgoo@bcmongolia.org, 70114442 for additional information.
- 21. BCM WORKING GROUPNEWS The BCM Environmental Working Group met on Thursday, 26 June with 15 members attending. Bayarmaa A, Vice Director, BCM, moderated the session. New member: Shinetsetseg-Breakthrough PR Participants: Binderya Oyunbaatar, Dolzmaa Davaasuren-The Nature Conservancy, Tirza Thevnissen- The Asia Foundation Guests: Baigalmaa Puntsagmaa-Mongolian Water Forum, Tsenguun Tumurkhuyag, Munkhjargal Bayarlkhgva-Sustainability East Asia, Altai Onkhor, Kevin Trzcinski-Mongolian National University. Speakers and topics were: - Introduction of Urban Services Program by Tirza Theunissen, TAF Deputy Country Representative, Asia Foundation; - Impact of Climate Change on Water Resources by P. Batima, Director, Mongolia Water Forum; - Application and Use of Solar Thermal and Energy Efficient Technologies in Mongolia by Kevin Trzcinski, Vice President of International Relations, Mongolian National University. If you have any questions, please contact Erdenetsetseg at erka@bcmongolia.org. ___________________________________________ The BCM Logistics Working Group met on Tuesday, 10 June, with 7 members attending. Mattias Ahlin-Scania, Chairman, moderated the session. New members: D Enkhbat CEO-Mongolian Express; Rentsendorj Yondon, Mongolian Opportunities Fund; Buyanderler Tsogt-Ochir, Logistics Supervisor, Cummins Mongolia; Nobuo Okada, General Manager, Mitsui Co. BCM`s Logistics Working Group Chair, Mattias Ahlin is leaving the country. Tengis Garamgaibaatar, Chief Executive Officer, Monroad, was elected as WG chairman. Congratulations to him for his new role as BCM`s Logistics Working Group Chairman! Speakers and topics were: 1. Follow up from last meeting‘s discussion a. Main challenges for the Mongolian Logistic sector 2. Discussion about BCM Logistics Working group role and focus areas (Mission Statement) a. Transport modes; road, rail, air b. Customs efficiency c. Legal framework; Loads and dimension, safety, standards d. Stakeholders: Ministries, customs, transport organizations, vehicle manufacturer association e. Transport efficiency 3. Discussion about meeting intensity and organization 4. Other business Next meeting was scheduled on 7 August 2014. If you have any interest joining the new and growing Logistics Working Group, please contact Erdenetsetseg at erka@bcmongolia.org ___________________________________________ The BCM Capital Markets Working Group met on Thursday, 29 May, with 11 members attending. Howard Lambert /ING Bank/ and Nick Cousyn /BDSec/, Co-chairmen, moderated the session. Guest: Michael O`Malley-Executive Director at ISG MineElect. Speakers and topics were: Facilitating foreign direct investment (FDI) and Capital Markets update - by Byambaa Losolsuren, Leader of FDI Capital Markets group of 100 Day Revitalization Council, and Partner of Mandal Capital LLC. If you have any recommendations on Capital Markets for the Revitalization Council, please contact: erka@bcmongolia.org
- 22. ___________________________________________ The BCM TaxWorking Group met Thursday, May 22, with 12 members attending. Onch D. - Co-chair, BCM‘s Tax WG and Deloitte Onch a moderated the session. Attending were representatives from the following BCM member entities - Deloitte Onch, PwC, Ernst & Young, KPMG Tax, OT, Terra Energy, Petro Matad, MahoneyLiotta, TMZ and BCM. New members: Amarbayasgalan and Tuvshinbayar from Terra Energy. Meeting agenda: • Overview - B. Byambasaikhan, Secretariat, 100 Day Revitalization Program; Chairman, BCM; • Initial new tax policy thoughts from WG members. On May 29 BCM‘s Tax Working Group sent a detailed study of the current value added tax (VAT) deficiencies and recommendations for efficiencies to result in greater tax revenue to the 100 Days Revitalization Council. Please contact T.Erdenetsetseg, BCM Working Group Coordinator, erka@bcmongolia.org . ____________________________________________ The BCM ‗expanded‘ Legislative Working Group (LWG) met on Tuesday May 20, with 42 members attending at Corporate Hotel meeting room. This was the third expanded WG meeting on the draft Amendments to the Minerals Law. The 2 ½ hour session included BCM members from mining companies, embassies and the MNMA. Special guests were 5 members of Parliament and others from the Mining Ministry, Geological Society and Export Society. LWG Co-chair, James Liotta, Mahoney Liotta, moderated the session. The following 11 presentations were made: -A healthy Private Sector Driven Industry (1997 and 2006 Minerals Law / Amendments / what to look for. By Doug McGay – longtime resident in the Minerals and petroleum industry; - Investor views and concerns about making investments in Mongolia and its mining sector. By Randolph Koppa – Vice Chairman, BCM and President, TDB; - A view from the Mining Majors by Sunjidmaa Jamba from Peabody Energy; - A supply side view by Stephen Potter, Wagner Asia; - Tax Issues impacting the Minerals Industry by D. Onchinsuren – Co-chair BCM Tax Working Group and Deloitte Onch Audit; - Use of MSE for State Privatizations by Nick Cousyn – Co-chair, BCM Capital Markets Working Group and BDSec; - Views from within the Industry by N. Algaa – Executive Director, MNMA; - Transparency and Public Comment by David Wyche – Economic/Commercial Section Chief, Embassy of the United States of America - International Agreements that attract bi-lateral investment, and views on the State ownership of assets by Maxim Berdichevsky – Counselor & Senior Trade Commissioner, Embassy of Canada - Some specific thoughts on the Amendments by James Liotta – Co-chair, BCM LWG and MahoneyLiotta Law Firm; Bayar Budragchaa - Co-chair, BCM LWG and ELC Law Firm. As MP Garamgaibaatar, Chair of the Standing Committee on Economic Affairs and Head of the Parliamentary Working Group on the Draft Amendments to the Minerals Law, commented at the meeting's conclusion - "We should not really change general structure and core contents of the draft Amendments." Also MP Garamgaibaatar welcomed BCM sending any additional comments directly to his Working Group which was accomplished by the BCM Legislative Working Group. Note: Amendments to the Minerals Law were passed by Parliament on 2 July 2014.
- 23. BCM WEBSITES MONGOLIAN WEBSITE:„PRESENTATIONS‟ The following statistics and reports posted on Presentations section in Mongolian: http://bcmongolia.org/mn/илтгэлүүд • Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 4 сарын байдлаар, Үндэсний статистикийн хороо • Мандал Женерал Даатгал тайлан, 2014 оны 5 сар • Сант марал сангаас гаргасан УЛС ТӨРИЙН БАРОМЕТР №13(47), 2014 ОН 3 САР • Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 3 сарын байдлаар, Үндэсний статистикийн хороо • ―Anti-Corruption legislation and State Policy‖ (Mongolian) by D. Munkhjargal, Prevention and Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption (IAAC) Mongolia at the ―ANTI-CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training seminar, Mar 06, 2014 ___________________________________________ ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „INTERVIEWS„, MONGOLIAN BUSINESS NEWS‟, „PHOTO GALLERY‟ 2 presentations from BCM monthly meeting on June 23, 2014: • T. Gansuld, Executive Director, Outotec Mongolia – ―Outotec Mineral Processing Solutions and Experience in Mongolia‖ • Lisa Gardner, Journalist & Media Trainer – ―Mongolia‘s Media Laws: Defamation, Libel and Threats to Press Freedom‖ 3 presentations from BCM monthly meeting on May 26, 2014: • B. Lakshmi, Director, Mongolia Economic Forum – ―Why Mongolia Business Summit?‖ at the BCM Monthly meeting May 26, 2014 • Nick Cousyn, Co-chair, BCM Capital Markets Working Group – ―Use of MSE for State Privatizations‖ at the BCM Monthly meeting May 26, 2014 • Peter Benson, VicRoads Team Leader, ADB Capacity Building Project – ―Mongolia Roads – Achievements and Challenges‖at the BCM Monthly meeting May 26, 2014 • China Metals & Mining Thermal Coal, Coking Coal, Copper, Gold, Steel by Macquarie Capital Securities Limited 4 presentations from 3rd Mongolia Trade and Commodity Finance Conference, May 13, Blue Sky-UB: • Mongolia – New Investment Laws, Stephen Tricks, Consultant, Clyde & Co; • Mongolia Investment Law: select issues, B. Enkhbat, Partner, MDS & KhanLex Law Firm; • Mongolia‘s promise of mineral wealth, Arnout van Heukelem, Head of Metals & Mining Asia ING; • Utilising international partnerships to extend access to trade finance, Marco Nindl, Trade Finance Banker, EBRD. 16 Presentations at 2014 Mongolia Investment Summit London, April 30-May 1: • Assessing developments in current economic policy and how the government will manage and improve existing regulations, Ochirbat Chuluunbat, Vice Minister for Economic Development, Ministry of Economic Development, Mongolia • How should investors interpret the shift in government policy and the introduction of the new investment law?, Andrew Danenza, Founder and Managing Partner, Melbury Capital, UK • Examining legal developments and what this means for the stimulation of FDI, Chris Melville, Partner, Hogan Lovells, Mongolia • Examining Mongolian mining policy and how it could benefit the production and export of mineral
- 24. resources, Rentsendoo Jigjid,State Secretary, Ministry of Mining, Mongolia • Analyzing the Mongolian coal market: how could mining companies best respond to the operating environment and fluctuations in demand?, Battsengel Gotov, Executive Director and CEO, Mongolian Mining Corporation, Mongolia • Examining how Mongolian banks and financial institutions are dealing with the challenges and opportunities of a fast growing economy, Norihiko Kato, CEO, Khan Bank, Mongolia • Spotlight presentations: a chance to showcase your services and projects to a wide investor audience, Leading bank of Mongolia: Golomt Bank - Munkhbat Davaatseren CEO, Golomt Securities LLC, Mongolia • To what extent has Mongolia retained its previously high levels of investment appeal? Alisher Ali Chairman, Eurasia Capital, Mongolia • How can Mongolia attract private investment in power development? Philip Lam, Senior Banker, Power and Energy Utilities, EBRD, UK • Examining the potential for successful renewable energy projects in Mongolia and the benefits cleaner energy will bring for foreign investors, Bolor J. Artan, Deputy CEO, Newcom Group, Mongolia • Spotlight presentations: a chance to showcase your services and projects to a wide investor audience, Michael Jonas Director, Genie Mongolia and Executive Vice President, Genie Oil and Gas, Mongolia • Assessing the Mongolian Stocks Exchange‘s cooperation with the London Stock Exchange and how this can benefit investors, Jon Edwards Deputy Head of Primary Markets- Emerging Markets, London Stock Exchange, UK • Spotlight presentations: a chance to showcase your services and projects to a wide investor audience, Boldbaatar Lamjav, Board Member, Nuudelchin, Mongolia • Mining infrastructure case study: examining the development of infrastructure to support Erdenes Tavan Tolgoi and how a continuation will bring, Badarch Enkhbat, CFO, Erdenes Tavan Tolgoi, Mongolia • Developing strategic mineral assets and infrastructure in Mongolia: Examining the timescales and how obstacles can be overcome, Sainbuyan Odon CEO, Erdenes MGL LLC, Mongolia • How could you ensure an effective IPO and the raising of the necessary capital for your business?, Ayuna Nechaeva, Business Development Manager – Russia, CIS and Mongolia, London Stock Exchange, UK. ___________________________________________ Mongolia reports: http://bcmongolia.org/en/mongolia-reports • World Investment Report 2014 by United Nations Conference on Trade and Development ; • Social and economic situation of Mongolia as of May 2014 by National Statistical Office of Mongolia; (available in Mongolian language - Монгол улсын нийгэм эдийн засгийн байдал 2014 оны 3 сарын байдлаар, Үндэсний статистикийн хороо); • Real Estate Report 2014 by Mongolia Properties; • ASIA Reaching for the Top by International Monetary Fund, June 2014; • ASIA Achieving Its Potential by International Monetary Fund, June 2014; • Mongolia: Economy outlook 2014, by Asian Development Bank; • Polit Barometer by Sant Maral Foundation, March 2014. Interview Section: http://bcmongolia.org/en/interviews • Talking to United World, the Executive Director of the Mongolian Drilling Association (MDA) Professor J. Tseveenjav. Source: http://www.worldfolio.co.uk/ • Jim Dwyer, Executive Director, BCM – ―Business need more business‖; • Damshnamjil Tsogtbaatar, Chairman of the SPC: ―Privatizing Mongolia‖; • Jan Hansen, Economist, ADB: ―The depreciation should help to increase the competitiveness and to develop the non-mining industrial sector‖;
- 25. BCM's English websiteincludes the ―Mongolia Business News‖ section. BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business News‖ before they are all put together each week for Friday's weekly NewsWire. The ―Photo Gallery‖ contains photos from the 6th Anniversary BCM Renewal dinner on November 11, 2013. BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350- en/album?albumid=200 The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home page for a consolidated account of the week‘s events. SOCIAL NETWORK WITH BCM The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks. Keep up to date on the latest business deals in Mongolia and how the climate for investment is improving each day with BCM. Add BCM on Facebook at https://www.facebook.com/TheBusinessCouncilOfMongolia to read the latest announcements and comment on events carried in the NewsWire with the community. Hear breaking news and announcements as they happen when you follow BCM on Twitter at https://twitter.com/bcmongolia. The bulk of the content on BCM‘s new LinkedIn page is Mongolian language to better cater to BCM's Mongolian-speaking audience and members. Please click on the below link to follow us on our new LinkedIn page. http://www.linkedin.com/company/business-council-of-mongolia?trk=company_logo Social stats: BCM now has 5,839 fans on our Facebook fans page, 626 connections on LinkedIn network, and 1,136 followers on Twitter. Of course for news information, interviews, event photos, VIDEOS and announcements regarding our organization, visit the official BCM website at http://bcmongolia.org/en/
- 27. INFLATION Year 2006 6.0%[source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] Year 2009 *4.2% [source: NSOM] Year 2010 *13.0% [source: NSOM] Year 2011 *10.2% [source: NSOM] Year 2012 *14.0% [source: NSOM] Year 2013 *12.5% [source: NSOM] May 31, 2014 *13.7% [source: NSOM] *Year-over-year (y-o-y), nationwide Note: 13.9% y-o-y, Ulaanbaatar city, May 31, 2014 CENTRAL BANK POLICY LOAN RATE December 31, 2008 9.75% [source: IMF] March 11, 2009 14.00% [source: IMF] May 12, 2009 12.75% [source: IMF] June 12, 2009 11.50% [source: IMF] September 30, 2009 10.00% [source: IMF] May 12, 2010 11.00% [source: IMF] April 28, 2011 11.50% [source: IMF] August 25, 2011 11.75% [source: IMF] October 25, 2011 12.25% [source: IMF] March 19, 2012 12.75% [source: Mongol Bank] April 18, 2012 13.25% [source: Mongol Bank] January 25, 2013 12.50% [source: Mongol Bank] April 8, 2013 11.50% [source: Mongol Bank] June 25, 2013 10.50% [source: Mongol Bank] CURRENCY RATES – 3 JULY 2014 Currency Name Currency Rate US Dollar USD 1,826.95 Euro EUR 2,495.98 Japanese yen JPY 17.92 British pound GBP 3,134.22 Hong Kong dollar HKD 235.71 Chinese Yuan CNY 294.02 Russian Ruble RUB 53.35 South Korean won KRW 1.81 Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is selected from various news sources. Opinions are those of the respective news sources.