1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 93, November 6, 2009
NEWS HIGHLIGHTS:
Business:
Xanadu Mines accelerates coal, copper and gold projects in Mongolia;
CIC’s investment seen as an endorsement of SouthGobi’s credibility;
Centerra still awaits heap leach go-ahead at Boroo;
Sparton to evaluate new rare-earth discovery;
Leighton to expand production capacity at Energy Resources mine;
Cameco adjusted earnings down y-o-y;
Rio Tinto doubles 2010 capex to at least USD5 billion;
Chinalco admits “following” OT developments, denies talks with Rio;
Ulaanbaatar store doing well, says LV chief;
Rio Tinto warns Australia on cheap Mongolian coal;
Nissan's upbeat projection;
BHP may seek more JVs, wary of sluggish recovery.
Economy:
Moody's changes Mongolia's rating outlook to stable;
World Bank says no increase in GDP likely for Mongolia this year;
Unusual delay in taking up discussions on budget;
“We are like clowns,” says MP;
Revenue collection being speeded up;
"Discover Mongolia 2009" Mining Investors Forum opens;
Mongolia has said “Yes” to development and investment, Forum told;
MP’s plan to make everybody invest in stocks;
Labor leader ends strike after agreement with Ministers;
Inspections are just a name for corruption, businessmen complain;
Banks back with apartment loans;
Minister clarifies apartment price limit;
Small and medium enterprises can now insure projects;
Standing Committee supports devolution of financial powers;
Tripartite labor talks to start;
Livestock insurance program spreads;
Copper jumps as U.S. Q3 figures signal end to recession;
Gold returns to near record high as dollar drops;
Miners eye sea as land resources diminish.
Politics:
“High alert” announced as H1N1 spreads, killing 6;
Batbold says Government should be “close to people”;
Policemen likely to be charged only with abuse of power on July 1, 2008;
R.Bold tipped to be Foreign Minister;
Enkhbayar gets a clean chit in both charges against him;
Parents unhappy that International School is kept open;
DP pleads for all citizens to receive easy apartment loans;
2. MPRP wants the poor and elders to get money first;
Bayankhongor MPs asked to spend their allowance on creating jobs;
Mongolia ahead of USA and Canada in Gender Gap Index;
Mongolia plans to open duty-free area in Chinese port;
Police worried about rise in prostitution;
No retail selling on streets.
BUSINESS
XANADU MINES ACCELERATES COAL, COPPER, AND GOLD PROJECTS IN MONGOLIA
Xanadu Mines intends to take immediate advantage of the renewed investment interest now
evident in Mongolia following the recent signing of the Oyu Tolgoi Investment Agreement. The
unlisted Australian-based company intends to accelerate exploration in its coal, copper and gold
projects in Mongolia.
Chairman Brian Thornton says, “With four projects under way, including drilling on three, a
successful recent capital raising and rising gold and copper prices, Xanadu‟s exposure to one of the
last great frontiers of mining and the adjacent powerhouse that is China, presents an unrivaled
opportunity.” Apart from the major mining houses, Xanadu is one of the very few Mongolia-focused
explorers who will take immediate advantage of the new „minerals blueprint‟ in the country, Mr.
Thornton asserts.
Xanadu has four major exploration and development initiatives in train:
• At the Khar Tarvaga thermal coal project in the main Trans-Mongolian railway corridor, Nexant
Inc. is undertaking a Coal to Liquids (CTL) technical scoping study on Xanadu‟s 327 million-ton JORC
resource.
• It is evaluating and drilling two new coal projects in Southern Mongolia near China which, if
concluded, would potentially take Xanadu‟s total coal resources to in excess of 500 million tons.
• Further diamond drilling is taking place at the Hutag Uul porphyry copper project in the South
East Gobi near China.
• Drilling at the Elgen-Zos gold exploration joint venture, also in the South East Gobi, is targeting a
large sediment hosted gold system with widespread anomalous gold in rock chips up to 5.5
grams/ton gold.
Source: www.xanadumines.com
CIC’S INVESTMENT SEEN AS AN ENDORSEMENT OF SOUTHGOBI’S CREDIBILITY
SouthGobi Energy Resources Ltd., a unit of Ivanhoe Mines Ltd., is aiming to be a major coal supplier
to western China, with the help of China's sovereign-wealth fund, SouthGobi Chief Executive Officer
Alexander Molyneux said last week. China Investment Corp. has agreed to invest USD500 million in
the form of debentures in SouthGobi, which mines coal in Mongolia as well as in Indonesia.
CIC can advise the Canadian company, and also help it with contacts in China, Mr. Molyneux said,
adding, "CIC can provide us advice on marketing, logistics, and procurement in China." But more
important, he said, is the endorsement of SouthGobi's business model and credibility that comes
with the CIC investment. This will allow the company greater access to potential customers in
China.
SouthGobi's flagship coal mine in Ovoot Tolgoi in Mongolia started delivering coal to China in
September 2008. A year later, "we already represent 18% of the coal trade from Mongolia to China.
The CIC money will help us soon become a major supplier for China's western provinces," Mr.
Molyneux said.
If it exercises the debenture fully following a planned listing by SouthGobi in Hong Kong, CIC would
have a 22% stake in SouthGobi, which is planning the initial public offering in Hong Kong early next
year. Mr. Molyneux said SouthGobi will keep its listing on the TSX Venture Exchange in Toronto after
it lists in Hong Kong, but declined to elaborate.
Source: The Wall Street Journal
CENTERRA STILL AWAITS HEAP LEACH GO-AHEAD AT BOROO
Centerra Gold is hoping to receive the final approval from the Mongolian Government to resume
heap leaching operations at the company's Boroo mine, CEO Stephen Lang has said. The mine has
been hit by a string of setbacks this year, after workers went on strike over wages in June, and then
authorities issued an order to suspend the mine's operating licenses.
The strike ended in mid-June, and the Government said in late July it would reinstate the main
3. operating licenses. However, the heap leach remains shut down, which affects production at Boroo
by about 3,000 oz/m, COO Ron Colquhoun said. “Unfortunately the heap leach required more
testing and scrutiny by the authorities. But we have passed all the aspects of that and we are
awaiting the final decision to authorize the final permit,” he said.
As soon as the company gets approval, it plans to resume operations as quickly as possible, Mr. Lang
said. “As well, we continue to work with the Mongolian authorities to fully resolve all of the issues
which led to the suspension of the main mine and mill operating licenses.” He said the company
was “encouraged by the recent changes to the country's tax regime” which is “a positive change to
the country's fiscal regime and bodes well for the Gatsuurt investment agreement”.
Centerra reported third quarter net earnings of USD20.2 million, compared with USD16.9 million a
year earlier, mainly thanks to strong gold prices. Revenue increased to USD158.8 million from
USD139.4 million in the third quarter of 2008, despite a decline in gold output year-on-year.
Source: www.miningweekly.com
SPARTON TO EVALUATE NEW RARE-EARTH DISCOVERY
Toronto-based Sparton Resources has reported the execution of an agreement with Minvesco LLC, a
private Mongolian company, to evaluate Minvesco's new Zoson Teeg (ZT) rare-earth element (REE)
discovery located in the Dundgovi area approximately 350 km southwest of Ulaanbaatar.
Under the terms of the option agreement Sparton is to conduct a due diligence evaluation of the ZT
license area which will involve detailed mapping, sampling and possibly an induced polarization
survey. The due diligence period will expire on January 15, 2010. The exploration license, covering
an area of 4,500 hectares, was explored independently by Minvesco in reconnaissance programs
completed in 2006-7.
Source: www.spartonres.ca
LEIGHTON TO EXPAND PRODUCTION CAPACITY AT ENERGY RESOURCES MINE
Leighton Holdings Ltd.'s Asian business has secured an AUD195 million (USD175 million) expansion on
a Mongolian coal mine contract, with Energy Resources requesting it to expand production capacity
at the UHG coal mine in Mongolia's South Gobi region. Leighton Asia won the mining contract for the
UHG mine in February this year, and coal production began in March.
The contract has been expanded from production of 2.5 million tons of coal per year to five million
by December 2010, taking the value of the contract to AUD480 million (USD432 million).
Source: www.watoday.com.au
CAMECO ADJUSTED EARNINGS DOWN Y-O-Y
Uranium giant Cameco Corporation has revealed an 18.1% decline in its third quarter core profit
compared with a year earlier, mainly because of weaker uranium sales and higher costs. Cameco
earned 27% higher in the third quarter than last year but, excluding some once-off items, adjusted
net earnings came in 18% lower than the net income in the third quarter of 2008.
Profit was affected by lower earnings in the uranium and gold businesses, partially offset by higher
results in the fuel services and electricity businesses, the company said.
Source: www.miningweekly.com
RIO TINTO DOUBLES 2010 CAPEX TO AT LEAST USD5 BILLION
Rio Tinto has doubled its planned capital expenditure (capex) for 2010 from the previously
anticipated USD2.5 billion to between USD5 billion and USD6 billion, of which between USD2.5
billion and USD3.5 billion would be invested in its growth projects.
“Since the start of the year, we have recapitalized the balance sheet and taken decisive action to
reduce operating costs and respond to the sharp decline in global economic conditions. We have
emerged from these challenges a stronger business. Coupled with early signs of economic recovery,
we are now well placed to look ahead to 2010 and beyond,” CEO Tom Albanese said.
He commented that Rio Tinto would continue with its program to reduce costs and repay debts, but
said that its “renewed strength” would allow the group to focus on disciplined capex on “premier
growth options”, which would allow the group to take advantage of the expected recovery in
demand over the longer term.
Source: www.miningweekly.com
CHINALCO ADMITS “FOLLOWING” OT DEVELOPMENTS, DENIES TALKS WITH RIO
The Aluminum Corp. of China (Chinalco) is “indeed following and observing” the progress of the Oyu
Tolgoi copper and gold project in Mongolia “and have been for some time", said an unidentified
4. official with the Overseas Department of the company, who, however, denied any talks between
the company and Rio Tinto on the project, as suggested by an Australian media report that the two
companies were planning to co-invest in the deposit, in an attempt to repair the recent rift in their
relationship.
Chinalco set up an office in Mongolia a few years ago for investing in local copper mines. The Oyu
Tolgoi agreement stipulates that if any new investor joins the project, it should get approval from
all the existing investors, including the Mongolian Government.
Source: iStockAnalyst, Xinhua
ULAANBAATAR STORE DOING WELL, SAYS LV CHIEF
Mr. Yves Carcelle, chairman of Louis Vuitton, the fashion house that opened its first store in
Mongolia on October 23, has said, "In just a few days, we already know the store is doing well and
we should make as much in Ulaanbaatar as in a good-sized provincial town in China." Indeed, with
spending on luxury goods down across the developed world in the economic crisis, luxury brands are
increasingly looking far beyond the chic avenues of New York, London or Paris for revenue.
"The desire for luxury is more and more universal so the luxury sector has to reach its clients around
the world," Mr. Carcelle said. Mr. Antoine Belge, luxury expert at British bank HSBC, explained the
strategy. "In Mongolia or in Kazakhstan, the big luxury brands are targeting pockets of wealth. In
countries which are making revenues from energy, there are small communities of people that have
money," he said.
Source: AFP
RIO TINTO WARNS AUSTRALIA ON CHEAP MONGOLIAN COAL
Rio Tinto has warned that cheap coal from Mongolia could undermine export markets for the
Australian commodity. Referring to the leader of an energy company who likened opportunities in
Mongolia to a “religious experience”, Chief Executive Tom Albanese warned an investors‟
conference in Sydney, “Coal from Mongolia to China is happening. It is expanding, probably
doubling every two years. Will that coal get to the seaborne markets? I suspect it will. Will it get to
the seaborne markets at a lower delivered cost than Australian coal? I suspect it will too,” he said.
“We should remind ourselves that Australia is not the only source of supply for the Asian seaborne
market, so if the coal chain does not pick up, others will find their way to that market,” he said.
Mr. Albanese said his company was continuing to look to invest in Mongolia, where coal horizons
were 300 meters or more in thickness. “We have coal interests through our stake in Ivanhoe, but we
also have coal interests on our own in Mongolia via Rio Tinto explorations,” he said.
Source: www.theage.com.au
NISSAN’S UPBEAT PROJECTION
Nissan Motor Co., Japan's third-biggest car maker by sales volume, reported a 65% drop in its fiscal-
second-quarter net profit because of falling demand in some markets and a stronger yen. But the
car maker now expects a narrower net loss and a return to an operating profit for the full fiscal
year, becoming the latest Japanese auto company to boost its outlook.
Nissan cars are among the most popular in Mongolia. The company‟s upbeat projection reflects
Nissan's strong push in China, which is expected to topple the U.S. to become the world's biggest
auto market as early as this year.
Source: The Wall Street Journal
BHP MAY SEEK MORE JVs, WARY OF SLUGGISH RECOVERY
BHP Billiton is considering more joint ventures like its 50:50 iron-ore deal with Rio Tinto as it seeks
to increase production while keeping costs under control. BHP's stance as the world's biggest mining
company means takeovers would be rare since it is only seeking huge assets, CE Marius Kloppers
told shareholders in London.
The group, which said it expects a sluggish recovery from the global downturn, was always looking
for opportunities and these are likely to include more joint ventures. "Our strategy basically
constrains us to large, low-cost long-life, expandable assets that are export oriented, and these
assets only come to market very, very seldom," Mr. Kloppers said. "You shouldn't expect that we do
transactions of smaller companies with smaller assets, but from time to time we're going to do
things like the Rio Tinto JV."
Mr. Kloppers also warned that a recovery from the global downturn was expected to be weaker than
in previous recessions. "It is our view that we will come out of this recession less strongly than in
previous cycles. We therefore believe it won't be until mid-2010 before we see clean underlying
5. demand that is not masked by inventory effects."
Source: Reuters.com
ECONOMY
MOODY’S CHANGES MONGOLIA’S RATING OUTLOOK TO STABLE
Moody‟s Investors Service has changed its outlook on Mongolia‟s B1 Government bond ratings as well
as on its Ba2 and B2 foreign currency bond and bank deposit ceilings to stable from negative. “The
rating action was supported by the Government‟s policy tightening which has contributed to a
shoring-up of the country‟s balance of payments, the containment of its burgeoning fiscal deficit,
and the elimination of nearly runaway inflation,” says Mr. Tom Byrne, a Moody‟s Senior Vice
President. These policy actions were essential to bringing stability to an economy that has
undergone a boom-bust cycle, and which is characterized by weak fundamentals and insufficient
institutional strengths.
Moreover, the investment agreement on Oyu Tolgoi and “the likely development of other strategic
mining projects will bring very sizable fiscal benefits and lead to a surge in foreign exchange
earnings. But, the development of the mining sector will also pose policy challenges in terms of
maintaining macroeconomic stability in the years ahead,” says Mr. Byrne.
If the Government is successful in passing into law its draft fiscal responsibility act, budgetary
stability over the long run would be enhanced, and the oscillations endemic to a commodity-
dependent economy would be dampened. Such a development would most likely improve
Mongolia‟s long-term credit fundamentals. On the other hand, a relapse into economic and financial
sector instability and a fraying of the policy framework would renew negative ratings pressure.
Read more…
Moody‟s had initially assigned Mongolia‟s B1 ratings in October 2005 and they have been unchanged
since. In effect, the ratings have looked through the commodity price boom-and-bust cycle, which
occurred over the past several years. The last rating action with respect to Mongolia was on June
10, 2009 when Moody‟s concluded a review for possible downgrade of Mongolia‟s ratings by
affirming the government‟s B1 rating, while maintaining a negative outlook.
Standard & Poor's rates Mongolia BB-/Negative and Fitch Ratings B/Stable.
Source: www.moodys.com
WORLD BANK SAYS NO INCREASE IN GDP LIKELY FOR MONGOLIA THIS YEAR
In its latest East Asia and Pacific Update report, the World Bank estimates that apart from China,
Indonesia and Vietnam, other countries in the region, including Mongolia, will grow only 1% in 2009.
China has been the major influence in the economic recovery in the region, but the impact has
been uneven.
“East Asia‟s growth would only be better than in sub-Saharan Africa. Mongolia and some of the
Pacific Islands are likely not to show any increase in their GDP,” the report says.
Source: VIVAnews
UNUSUAL DELAY IN TAKING UP DISCUSSION ON BUDGET
Usually the budget for next year dominates the Autumn session of Parliament but this year, even a
month after the session began, Parliament has not discussed it even once. The budget has to be
debated four times before it is approved latest by December 1. Discussions might be further
delayed because of a Constitutional requirement that with a new Prime Minister in office, all
Government members must resign and then be re-appointed. This will also take up some of the
MPs‟ time.
MPs are taking longer than usual to approve the general guidelines for the economic and social
policy for 2010, which will be the basis of the budget. Most MPs defend this by saying that well-
formulated guidelines make it easier to understand and identify the budget contents. However,
many of them are concerned that a curtailed discussion might not be adequate, given the
imperative of having a balanced budget in these times of crisis.
A possible anomaly might arise when Parliament discusses several draft laws and protocols about
tax rebates after it approves the budget, as these rebates would lead to a reduction in the already
approved budget income. The final budget will have a maximum deficit of MNT358.6 billion or five
percent of the GDP. The actual deficit now is estimated at MNT433.7 billion which is six percent of
the GDP, but foreign aid and loans for projects are expected to take care of some of this.
Parliament has the authority to ask the Government to find the sources for the money, but it must
also give it adequate time to do so. With MPs unlikely to discuss the draft budget any time this
6. week, things may become difficult for the Government with a new Prime Minister.
Source: en.News.mn
“WE ARE LIKE CLOWNS,” SAYS MP
Expressing serious concern that “we may end up with a very bad budget” as there is little time left
to discuss proposals thoroughly, DP MP Z.Altai has said the “Government has put itself above
Parliament under the name of being a coalition. We are like clowns here.” He was reconciled to
having “a meaningless budget in any case as the money is not spent on what is really important”.
He was annoyed with the skewed priorities being followed. “More than 50 percent of the population
is in Ulaanbaatar, but 70 percent of the state budget is spent in the countryside. It is said that 8
kilometers of road would be built in the capital in 2010, while more than 400 kilometers would be
built in the provinces,” he said.
Source: Ardiin Erkh
REVENUE COLLECTION BEING SPEEDED UP
Finance Minister S.Bayartsogt has asked the Erdenet Mining Corporation and Mongolrostsvetmet to
deposit MNT10.5 billion and MNT0.7 billion respectively of their operational net profit in 2008 with
the state budget. He has also asked budget managers at all levels to speed up collection of revenue
and meet targets. At last week‟s meeting of the Cabinet the Government also decided that all
receipts from the windfall profits tax on gold were to be placed in the budget and the Ministers of
Finance and Internal Affairs, along with the head of the Tax Administration, were asked to see this
was done without delay.
The budget managers have also been instructed to take all steps to maximize collection of revenue,
to ensure expenses are kept within limits already approved, and not to release any funds for New
Year parties and other ceremonies.
Source: Montsame
“DISCOVER MONGOLIA 2009” MINING INVESTORS FORUM OPENS
The two-day "Discover Mongolia 2009," an international forum of mining investors, opened in
Ulaanbaatar on Thursday, with leading mining companies from Canada, France, Russia, China,
Australia, Great Britain, South Korea, Japan and the USA participating. The Tavan Tolgoi coking
coal deposit, said to be the largest untapped coal field in the world, and uranium exploration were
expected to top the forum agenda, according to observers.
Russia reportedly is interested in implementing contracts and agreements clinched with the
previous Mongolian administration, and hopes its prospective investment in the Tavan Tolgoi
deposit comes true through the forum.
A report on geological exploration in Mongolia was given to investors by Peter Akerley, Chairman &
CEO of Erdene Resources Development Corp., for the first time during the gathering.
Source: Xinhua
MONGOLIA HAS SAID “YES” TO DEVELOPMENT AND INVESTMENT, FORUM TOLD
Mr. Nicholas Hill, Chargé d'Affaires at the U.S. Embassy, told delegates at the “Discover Mongolia
2009” Forum on Thursday morning that the OT Investment Agreement has proved that “Mongolia
can say „Yes‟ to development, investment, and investors”. Events over the past year “highlight a
deep and profound stability and desire to make the political system work”, he said, adding that
“Mongolia‟s institutions are strong and sophisticated enough to endure traumas”.
Calling the OT agreement “a clear win-win for all parties to the deal”, he said while “the political
process” leading to it was “bruising”, it also “created experience and wisdom”. Public expectations
of immense benefits to flow from mining projects, he said, “are consistent with the hefty promises
made throughout the negotiating process”.
Mr. Hill expressed concern that the “massive increase in administrative responsibilities related to
the development of OT has the potential to overwhelm the current institutional framework” and
said “it will take a collective response from the international community, the Government and
Parliament of Mongolia” and the entire industry in the country to deal with it.
Source: mongolia.usembassy.gov
MP’S PLAN TO MAKE EVERYBODY INVEST IN STOCKS
Talking to the media “perhaps for the last time in a personal capacity” before taking over as a
party spokesman, Mr. L.Gantumur, recently named Deputy Leader of the DP group in Parliament,
7. said that he supported “the idea of giving a share of the mining revenue to the people” but not in
any of the ways that are being proposed. A nation‟s economy moved on two feet - the banking
system and the stock market – but there is a disjoint between the two in Mongolia. The stock
market offers investing citizens quicker returns, but it keeps shrinking as banks get larger.
He wants to revive the stock market by placing the MNT50,000 proposed to be given to everybody in
a centralized deposit in the stock exchange under individual names. Everyone would become an
investor. Asked if the Mongolian Stock Exchange is capable of serving 2.6 million people, Mr.
Gantumur said it was set up to serve the entire people. “Unfortunately, its capability has gone
down because it was not used correctly. It is still capable of reaching all the people by reactivating
its brokering departments in the provinces.”
Read more…
An alternative to people buying shares is for the Government to put the money in a National
Development Corporation it will set up to finance projects. These can include a copper smelter,
tourism projects, or infrastructure that will yield returns in a short time. “Let‟s shoot two rabbits
with one bullet. Using the mining revenue like this will fulfill our election promises as well as give
the country some big projects,” he said.
“Those who are really in urgent need of the money can take it,” he said, adding that there were
also many who do not need this money in cash and would be happy to join his scheme. Asked
whether the Government will not find it easier to please people by giving them the MNT50,000 than
to implement such projects, Mr. Gantumur said both Parliament and the Government were working
for the future of Mongolia. He was confident his suggestion will be appreciated and adopted for
implementation.
Source: Ardiin Erkh
LABOR LEADER ENDS STRIKE AFTER AGREEMENT WITH MINISTERS
The Head of the Mongolian Labor Union, Mr. S.Ganbaatar, ended his sit-in strike last week after
reaching an agreement with the Government. He was protesting against the non-implementation of
a decision taken in 2008 determining that around MNT2 trillion will be returned to the Social
Insurance Fund by the Government. His talks with the Minister for Finance S.Bayartsogt and Minister
for Social Security and Labor T.Gandi ended in an agreement whereby the Government will pay
back MNT236.3 billion in yearly installments until 2015. The Ministers also promised to revise the
draft law on health insurance for children under 18.
Mr. Ganbaatar thanked people for their support and for realizing the threat to their future and felt
his protest was a success. He now planned to begin a movement against the decision to give 90
percent of the Employment Encouragement Fund to big business.
Later, Ms. Gandi clarified that the MNT236.3 billion to be paid back to the Social Insurance Fund
should not be understood as cash. It has not been included in the budget so far, but will be part of
it from 2010. It will go towards added payments to those people who started receiving pensions
before 1995. The main part of the funds will come from the mining sector.
Source: Onoodor
INSPECTIONS ARE JUST A NAME FOR CORRUPTION, BUSINESSMEN COMPLAIN
An open forum focusing on standards and fair trade last week, organized jointly by the
Standardization Department, the Anti-Corruption Authority, the Professional Monitoring Authority,
the Mongolian Employers Union and the United Council of Mongolian Professional Unions, was told
that nearly 57% of the 3,600 standards, 753 procedures and 338 norms prescribed for businesses in
Mongolia were adopted before 2001 and that in a bid to update the system, the State Professional
Monitoring Authority proposes to install 228 new standards, change 440 and cancel nine.
Inspections in 2008 showed that 75 percent of hotels and 77 percent of tourist camps worked
according to standards, but 70 percent of medicine and medical equipment factories did not.
Employers and business representatives complained that inspections in the name of enforcing
standards and procedures are actually exercises in corruption. There was near unanimity that the
entire present system did not help businesses, but only caused trouble for them.
The Mongolian Construction Union said 120 of the 400 standards in the sector must be changed. A
review of standards should be done every two years, instead of the present five. Interestingly, no
new standards have been set for the printing industry in more than 20 years.
Source: Ardiin Erkh
BANKS BACK WITH APARTMENT LOANS
All banks have resumed issuing apartment loans. They have their own rates and terms, but they all
8. follow some basic criteria. The borrower has to be a Mongolian citizen, and at least 25% of the
apartment price must have been paid before the loan is applied for.
Source: Zuunii Medee
MINISTER CLARIFIES APARTMENT PRICE LIMIT
Minister for Road, Transportation, Construction and City Development Kh.Battulga has clarified a
misconception that the apartments the Government will buy to be then sold to its employees will
not cost more than MNT650,000 per square meter. Construction companies have always complained
this is very low and now the Minister has explained that the buyer can choose a more expensive
apartment, but the loan will cover the price on the basis of the fixed rate. Whatever is over and
above that has to be paid by the buyer on his own.
Source: en.News.mn
SMALL AND MEDIUM ENTERPRISES CAN NOW INSURE PROJECTS
Under a tripartite agreement signed recently by the Department of Small and Medium Industries,
the Financial Regulation Bureau and 15 insurance companies SMEs can get their business projects
insured from next year. The insurance will be valid for two years during which the project has to
show results. This should boost their growth as they can take more risks. SMEs are already entitled
to loans on easy terms.
Source: Zuunii Medee
STANDING COMMITTEE SUPPORTS DEVOLUTION OF FINANCIAL POWERS
The Standing Committee on the Economy met yesterday for the first discussion of the general
guidelines for the social and economic policy in 2010 and considered some 60 suggestions submitted
by party groups in Parliament, and other Standing Committees. Among the proposals approved were
those seeking to give more financial power to local authorities in the provinces, to develop a
general policy to enforce hygiene norms for livestock so that their products could be exported, to
create irrigation facilities for agriculture under the Atar-3 program, and to have at least five wells
in each district.
Source: Undesnii Shuudan
TRIPARTITE LABOR TALKS TO START
The Prime Minister has asked for tripartite negotiations to start among the Ministry for Social
Security and Labor, the Mongolian Labor Union, and the Union of Employers. The labor union has
submitted 29 proposals and the employers 30.
Source: Undesnii Shuudan
LIVESTOCK INSURANCE PROGRAM SPREADS
The indexed insurance for livestock project, implemented by the Government with support from
the World Bank, continues to be a success. More and more areas are being brought under it and it is
expected that by 2012 the program will cover herds all over the country.
Some two million heads of livestock belonging to 15,000 families in four outlying regions are the
latest to have been insured. Of the MNT388 million so far paid out, 35% came from what the herders
had paid as premium, 46% from the Government and the rest from the insurance companies. Khan
Bank runs a special program to provide loans to herders to enable them to pay the insurance
premium.
Source: Udriin Sonin
COPPER JUMPS AS U.S. Q3 FIGURES SIGNAL END TO RECESSION
Copper rallied on the last trading day in October after above-forecast U.S. growth figures signaled a
tentative end to recession, boosting metal demand prospects and denting the dollar. Copper for
three-month delivery on the London Metal Exchange rose to USD6,636.75 a ton. The U.S. economy
grew in the third quarter for the first time in more than a year, unofficially ending the worst
recession in 70 years and soothing recent jitters about the pace of recovery.
Copper prices have more than doubled this year boosted by a weak dollar, strong investment
interest and record imports from China, the world's biggest metals consumer. Earlier this week,
data showed China's refined copper imports surged by more than a quarter in September, defying
calls for a drop in second half imports.
Source: Reuters.com
9. GOLD RETURNS TO NEAR RECORD HIGH AS DOLLAR DROPS
Gold rose towards last month's record on Tuesday as the dollar slipped ahead of a U.S. interest rate
decision, and on news the IMF had completed half of a planned gold sale. The IMF said on Monday it
sold 200 tons of gold to the Reserve Bank of India for USD6.8 billion, quietly executing half of a
long-planned bullion sale that had threatened to slow gold's rally.
Spot gold hit a near two-week high of USD1,066.15, within sight of a lifetime high of USD1,070.40
struck on October 14. Persistent weakness in the dollar had spurred fund buying of gold, which sent
cash and futures to record highs last month. Gold is seen as a hedge against both inflation and a
depreciating dollar.
Source: Reuters.com
MINERS EYE SEA AS LAND RESOURCES DIMINISH
The diminishing nature of some land-based mineral resources has increased the importance of
marine mining and has reignited the interest of mining houses in this new frontier. The onset of the
global economic crisis has significantly affected the mining industry with many mines and smelters
being shut down during the worst part of the crisis. During this time, with limited cash burn,
increasing volume was the name of the game. This started to shift the focus of mining houses
towards the seas, which offer a plethora of readily available resources.
Undersea mining began off the west coast of Namibia when Texan oilman and entrepreneur Sam
Collins and his company, Marine Diamond Corporation (MDC), recovered its first diamonds in
November 1961.
Source: www.miningweekly.com
POLITICS
“HIGH ALERT” ANNOUNCED AS H1N1 SPREADS, KILLING 6
Mongolia was placed under a high degree of alert for 14 days from November 4 as the H1N1
infection continued to spread. As of 12 noon on Wednesday, there were 859 confirmed cases, 690
of them in Ulaanbaatar. Six deaths have been officially announced, but it is widely believed that
the actual figure is higher. Even with six deaths the fatality percentage is way above the global
norm seen so far.
Meetings and conferences will not be held and all public places of entertainment and goods markets
will remain closed. Supermarkets, restaurants and eateries will close at 9 p.m. Schools and
kindergartens will continue their recess. Television lessons for school students are being planned to
make up for the time lost.
Arrangements are being made to get more vaccines through the World Health Organization (WHO).
This may take some time to organize and there have been suggestions to get it from Russian and
Chinese manufacturers. The argument against that is that these producers are not certified by
WHO.
Source: en.News.mn
BATBOLD SAYS GOVERNMENT SHOULD BE “CLOSE TO PEOPLE”
Just one week into his job as Prime Minister, Mr. S. Batbold has assured the people that the new
Government would maintain continuity of policy and priorities and would give the highest
importance to ensuring social stability and national unity.
Calling Mongolia a “country abundantly endowed by nature”, Mr. Batbold said the Government
would strive to give every Mongolian access to good education, competent health care, and a job.
Every citizen must also see the Government as being “close to it”, he said, adding, “We must, and
indeed can do this.”
Productive development will come only when extensive investment, both foreign and domestic,
supported by the latest technology is complemented by contributions from skilled and educated
Mongolian professionals, he said. “Our goal is to make Mongolia a country with a stable tax regime
and legal framework, a country offering strong investment competitiveness in the region,” the
Prime Minister said.
Source: Frontier Securities
POLICEMEN LIKELY TO BE CHARGED ONLY WITH ABUSE OF POWER ON JULY 1, 2008
The police have concluded their investigation into the role of four senior and 10 other police
officials in the events of July 1 last year which led to four deaths in firing. The investigation began
on February 11 and the findings have been submitted to them for their study.
10. It is believed that the investigation has concluded that the deaths were indeed caused by police
firing as always claimed by the victims‟ families, but also that “it would be almost impossible” to
identify any of those who fired the fatal bullets. Use of firearms is allowed only in unavoidable
situations and the policemen are thus likely to be charged with abusing their power, not murder.
The four senior officials are the former chief of the General Police, Maj. Gen. Ch.Amarbold, the
former director of the Patrol Police, Col. Sh.Batsukh, the former chief of the Metropolitan Police,
Col. O.Zorigt, and his deputy, Vice Col. G.Ganbaatar.
Source: en.News.mn
R.BOLD TIPPED TO BE FOREIGN MINISTER
Prime Minister S.Batbold has suggested the name of Mr. R.Bold, presently Director of General
Intelligence, to succeed him as Minister of Foreign Affairs and Trade. The nomination will be
submitted to the President and the Speaker of Parliament.
Source: Onoodor
ENKHBAYAR GETS A CLEAN CHIT IN BOTH CHARGES AGAINST HIM
The Metropolitan Prosecuting Authority has decided that the two cases concerning former President
N.Enkhbayar forwarded to them by the Anti-Corruption Authority do not involve any criminal act.
The Authority received two complaints in August and after a preliminary probe the inspection
department there transferred the cases to prosecutors for further investigation. Now they have
absolved Mr. Enkhbayar of any wrongdoing.
The first case related to ownership of the TV-9 Channel. The investigators found that the channel
was given to Gandantegchilen Monastery as a present by the Japanese people. The head lama
there, Mr. D.Choijamts, later sold it to Mr. Ts.Enkhbat who is also the Director General of the
channel.
The second complaint charged Mr. Enkhbayar with exempting the Trade and Development Bank
from paying dividends to the Government before its privatization when he was Prime Minister.
Prosecutors said the matter had been investigated earlier and warranted no fresh enquiry.
Source: Ardiin Erkh
PARENTS UNHAPPY THAT INTERNATIONAL SCHOOL IS KEPT OPEN
The International School of Ulaanbaatar continues to remain open in violation of the Government
order to keep all schools closed because of the H1N1 infection. Some parents are unhappy with the
school decision. Children of many political leaders such as the Prime Minister and businessmen
attend the school and the parents have privately expressed their surprise that they accept this
defiance of a decision taken during a time of health scare for children.
Source: Undesnii Shuudan
DP PLEADS FOR ALL CITIZENS TO RECEIVE EASY APARTMENT LOANS
The DP group in Parliament has said the Government‟s decision to help its employees buy
apartments is discriminatory and has demanded that the facilities be extended to all citizens. The
Government plans to sell bonds worth MNT250 billion, and use MNT80 billion of the proceeds to
finance soft loans to employees to buy apartments. The plan is also expected to help builders, stuck
with unfinished and unsold apartments, come out of a very difficult situation.
The Government has chosen its employees for the program as it will have some control over
repayment. The DP group feels this is showing undue favor to a selected few and wants all citizens
to be eligible for the loan. The MNT170 billion that would be left from the bond sale was to go to
the State budget to reduce its deficit but if the DP has its way, an equivalent amount will have to
be raised by some other means. Time, however, is running out as the year nears its end.
Source: www.news.mn
MPRP WANTS THE POOR AND ELDERS TO GET MONEY FIRST
The head of the MPRP group in Parliament, Mr. D.Lundeejantsan, has revealed that of the 463
suggestions submitted by MPs on the general directions to be included in the economic and social
policy of 2010, as many as 300 had come from MPRP MPs. A meeting of the group on Monday
decided that 148 of them should be supported. About 10 proposals had come from the provinces.
The most important of them were about building roads to Oyu Tolgoi and Tavan Tolgoi, as well as
building power plants to supply Zavkhan and Gobi-Altai provinces. Most MPRP MPS favor the
distribution of the USD100 million first to the poor and elders. Some said there was no need to give
the money to everyone as many did not need it and their share could be added to what would be
11. given to those really in need.
Source: en.News.mn
BAYANKHONGOR MPs ASKED TO SPEND THEIR ALLOWANCE ON CREATING JOBS
Two of the three MPs from Bayankhongor province were in for a surprise when they held a
teleconference with people there via the Internet yesterday from Government House. After some
initial pleasantries and routine questions and answers, the Governor of the province asked them to
spend their constituency allowance on programs to create jobs and set up projects. Each MP gets
MNT500 million every year to spend on his area. The MPs did not give any reply but one of them
said this year he had spent MNT250 million on street illumination, MNT100 million for repair works
and more than MNT100 million on destroying a garbage dump as demanded by the people.
Source: www.news.mn
MONGOLIA AHEAD OF USA AND CANADA IN GENDER GAP INDEX
The World Economic Forum‟s latest Global Gender Gap Index offers timely and telling insights into
growth trajectories near and far. Asia is especially fertile ground for tracking gender dynamics, and
dishearteningly so. Far more Asian nations slipped than gained in 2009. It means the global crisis set
back efforts to narrow the male-female gap in economic and political power. There‟s no dumber
economic policy than tying one hand behind your back, and it‟s a key reason Asia underperforms.
Drawing from a smaller -- and weaker -- labor pool stunts any country‟s growth and corporate
management.
Several key Asian nations slipped by three or more places in 2009. While the Philippines is still in
the top 10, it fell three levels. Sri Lanka, the only other Asian country in the top 20, fell four. The
moral of both stories: Shipping women abroad to get better-paying jobs and send money home has
more downsides than usual during a global crisis.
There were notable successes. Japan jumped an impressive 25 places to 75, while Mongolia rose 18
rankings to 22. Yet even here, things aren‟t all they seem. Japan got a big boost from an August 30
election in which a record 54 women won parliamentary seats. Too bad the opposite is true of the
private sector. None of the 225 companies that comprise the Nikkei stock index has a female chief
executive.
Mongolia‟s strides are to be applauded. It‟s rare for a nation to get the importance of this issue at
such an early phase of globalizing its economy. It ranks ahead of the U.S. and Canada. The problem
is a lack of female involvement in politics. It‟s something Mongolia needs to watch if it‟s going to
reach its potential.
Source: Bloomberg.com
MONGOLIA PLANS TO OPEN DUTY-FREE AREA IN CHINESE PORT
The Mongolian Maritime Administration, based in a city located about 1,400 km from the nearest
ocean port, has registered more than 1,600 ships since it opened its doors in 2003. For shipping
companies, using the Mongolian flag of convenience is a good bargain, as registry fees are five to 10
percent lower than the going market rate. For the impoverished Asian country, the office is an
unlikely moneymaker, raking about USD350,000 into state coffers a year.
"This is only the beginning of our business operations. We are going to expand our operations and
focus on offering quality services," said Mr. B. Altan-Od, who studied maritime law for two years in
Sweden before heading the organization.
Shipping companies that fly Mongolia's red, blue and yellow banner enjoy special tax breaks and
reduced tariffs, the registry office says. More than 300 ships from over 40 countries are currently on
the books after others dropped off for various reasons, including failing to meet safety standards or
being scrapped or sunk. Registries are handled by the Singapore-based classification company
Sovereign Ventures.
Mr. Altan-Od says his ultimate goal is to open a duty-free area in the eastern Chinese port of Tianjin
-- 800 km from the Mongolian border. "We are doing business with the Chinese to expand our
maritime methods," he said. "Hopefully this new port will be open by 2012." Such an arrangement
would also allow resource-rich Mongolia to send its own exports -- coal, copper and other minerals -
- to markets around the globe. The port would also allow Mongolia to import oil from overseas.
Read more…
Mongolia‟s biggest shipping client so far is Japan, with 54 ships registered. Other important clients
include Singapore with 42 vessels, Indonesia with 24 and Cambodia with 23. The list includes 23 oil
tankers. Mr. Altan-Od notes that his office earlier this year axed its one and only North Korean ship
over political and commercial concerns. "We want to avoid any political confrontations," he said.
12. It has not been all smooth sailing for the ship registry, with two ships lost in the last few weeks. In
both incidents, one off the coast of India and the other in the Malacca Straits, overloading was
cited as the cause. It also is battling an image problem, with rampant allegations that Mongolia-
flagged ships are involved in trafficking illegal goods, and the seizure of a ship in Malaysia in 2007,
but Mr. Altan-Od refutes the claims. "We are not involved in any illegal acts. All our agreements
specifically state that we do not tolerate smuggling on our crafts," he said.
Source: AFP
POLICE WORRIED ABOUT RISE IN PROSTITUTION
The police are worried about the spread of prostitution in Ulaanbaatar with between 500 and 1000
women working in the trade every night. The Organized Crime Department feels saunas and
massage centers have to be brought under more intense surveillance because many of the women
employed there are actually sex workers who charge MNT10,000-MNT30,000 for sex with Mongolians
while the rate goes up to USD30-50 for foreigners. Similarly many table girls at karaokes double as
sex workers. Applicants for jobs in these establishments are not hired if they refuse to work as
prostitutes. First-time offenders are fined MNT10,000 and a repeat earns 30 days in jail. The
establishment owners usually get away free by saying it was a private decision of their employees.
The police can only fine them.
Source: Onoodor
NO RETAIL SELLING ON STREETS
The Sukhbaatar district Governor in Ulaanbaatar has banned retail sales on streets after police
confiscated from sellers some fruits and other foodstuff that did not meet hygiene standards. They
sold mostly near schools. The Governor has also passed an order prohibiting any incentive sales of
cigarette in small shops.
Source: Udriin Sonin
ANNOUNCEMENT
“MM TODAY” ON MNB-TV
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on “MM Today”. This English news program is aired every Friday for 10 minutes and is
scheduled for 9:15 PM tonight. Tune in to watch this program that reports stories from today‟s BCM
NewsWire.
13. SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended October 30, 2009, trading activity on the Mongolian Stock Exchange (MSE)
totaled 587,300 shares with 39 companies traded. Total market value of transactions was MNT239.1
million. Total market capitalization of the 358 stock companies listed on the MSE was MNT689.2
billion, and decreased by MNT23.5 billion or 3.3% from the previous week.
The Top-20 Index decreased by 232.23 points or 3.1% compared to the previous week, closing at
7,278.53 points. The MSE Composite Index decreased by 107.96 points or 3.1% compared to the
previous week, closing at 3,436.62 points.
Most active stocks traded were: UID (160,200 shares), Khuh gan (150,700 shares), Moningbar
(130,000 shares), Genco tur buro (62,500 shares), and Mongol alt (35,000 shares).
Major share price percentage gainers were: Erdenet khivs (20%), Atar urguu (15%), Mongol alt (15%),
Khurd (14.9%), and UID (14.8%). Major share price percentage losers were: Shivee ovoo (15%), NIC
(14.4%), Bayangol hotel (13%), Talkh chicker (12.1%), and Auto Impex (9.6%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Sept. 30, 2009 *-2.9% [source: NSOM]
*Year-over-year (y-o-y)
14. 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]
CURRENCY RATES – November 5, 2009
Currency name Currency Rate
US dollars USD 1423.74
Euro EUR 2099.73
Japanese yen JPY 15.72
British pound GBP 2345.18
Hong Kong dollar HKD 183.71
Chinese yuan CNY 208.53
Russian ruble RUB 48.62
South Korean won KRW 1.21
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.
