THE OBSTACLES THAT IMPEDE THE DEVELOPMENT OF BRAZIL IN THE CONTEMPORARY ERA A...
08.05.2009, NEWSWIRE, Issue 68
1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 68, May 8, 2009
NEWS HIGHLIGHTS:
Business: OT agreement will be benchmark for future investments, says MP, explaining delay;
Raising royalty rates is a “bizarre” suggestion, says Ivanhoe executive; MP
“frustrated” with progress on agreement; Province business leader wants mining to
begin early; OT is the trump card for Mongolia’s development; Gulfside acquires
Onjuul coal property; Hint of progress at Boroo Gold; Centerra posts Q1 loss; Pre-
feasibility study on Ulaan Ovoo coal project ready; Savings Bank to close down
branches; Terelj Hotel finds place in noted travel magazine; Chinalco against
potential changes in Rio deal; Australia should veto Chinalco deal, says Opposition
Leader; Leading tax paying companies receive awards.
Economy: Mongolia seeks MCC grant diverted to construction sector; Lack of funds holding up
work, Bayar tells MPs; USD300 million Russian loan not just yet; MPs protest opening
up protected areas to mining; Green Group in Parliament favors ban on gold mining
near rivers; MPs worry about new mining licenses in Khuvsgul; Working group set up
on Shivee Ovoo project; 30% in survey say economic crisis has hit them hard; Coal
export to China drops by 51%; Mongolia will be busier this year, says drilling veteran;
Trade in animal products slow and unprofitable; PetroChina to triple Hohhot refinery
capacity; Mongolians hold business meeting in Los Angeles.
Politics: Reprieve for ex-Minister, but case not closed; MPs codify their ethics after ten years of
trying; Parliament accused of changing laws too often; Putin to spend just six hours in
Mongolia; All except band members released from swine flu quarantine; Mongolia to
accept 100 immigrants a year; Mongolian population reaches 2.7 million; NGO report
stresses media rights, regrets censorship; Draft law wants gas engines in public
transportation; Printing of driving licenses resumes.
BUSINESS
OT AGREEMENT WILL BE BENCHMARK FOR FUTURE INVESTMENTS, SAYS MP, EXPLAINING DELAY
Mr. Kh.Badamsuren, head of the MPs’ working group set up by the Standing Committee on the
Economy to recommend revisions to the Oyu Tolgoi agreement in the light of all the suggestions
received, told newsmen after a meeting of the group on Monday that the work was taking long
“because it is so vital for the national interest”. MPs are working hard, he said, reviewing every
suggestion with care and deliberation. The MPRP and the DP groups have sent their comments and
“we are in touch with concerned working groups of Parliament and the Government”. Since there
are many aspects to the issue, several standing committees will discuss them.
“We are aware that Parliament must take a decision without much delay and we have been asked
to submit our report by this week,” he said. MPs also realized that “future investments will depend
on what agreement is signed on Oyu Tolgoi. We are doing what we can to make it a good
agreement, attractive to both sides,” he said. It was important not to repeat earlier mistakes, and
for that some current laws and regulations might have to be amended, Mr. Badamsuren indicated.
Source: Undesnii Shuudan
RAISING ROYALTY RATES IS A “BIZARRE” SUGGESTION, SAYS IVANHOE EXECUTIVE
The Senior Vice President of Ivanhoe Mines Mongolia Inc. (IMMI), Mr. A.Munkhbat, has termed as
“bizarre” the reported suggestion by the Mongolian Confederation of Trade Unions that the
Government should increase the royalty rates for Oyu Tolgoi extractions to up to 15 percent. Even
the existing rate of 5 percent is the highest in the world, as the general international practice is to
2. charge around 2.5 percent as royalty fee, he said. Mr. Munkhbat wondered if Mongolia could expect
any foreign investment in mining if it increased royalty rates, while retaining the 68-percent
windfall profits tax, as well as claiming 34-51 percent of the equity in mines discovered with state
funds. He was also unhappy about recent suggestions that the mining law should be amended
before the draft Oyu Tolgoi agreement is finalized, as “such amendments are not easy work, and
time is money for investors”.
Referring to charges that the minerals resources of Mongolia were being traded on international
stock exchanges, Mr. Munkhbat said that stocks of only 10 companies operating in Mongolia are
listed on the Toronto Stock Exchange, and “in any case, natural resources are not sold there. The
companies raise funds by promoting their prospects. This is the accepted way of channeling
investment funds.”
Source: Undesnii Shudaan
MP “FRUSTRATED” WITH PROGRESS ON AGREEMENT
Mr. Kh.Badamsuren, head of the MPs’ working group on amending the Mineral Law, has said since
both parties in the coalition government promised citizens money from the country’s mineral
resources they will have to fulfill their pledge. However, this cannot be done without progress on
Oyu Tolgoi and Tavan Tolgoi and he is “quite frustrated with the way things are moving”. Around
USD3.5 billion will be needed to distribute the pledged amount and it will “require the state at
least three years” to get hold of it from mining once it begins. He thinks hard work will be needed
to find a way out. Among the ways likely to be explored is collecting advance taxes and fees from
investors in Oyu Tolgoi and Tavan Tolgoi. Only six of 15 strategically important mining projects are
now under exploitation, and Mr. Badamsuren has urged taking up the remaining 9 without delay.
Source: Business-Mongolia.com
PROVINCE BUSINESS LEADER WANTS MINING TO BEGIN EARLY
The Chairwoman of the Chamber of Commerce and Industry in Uvurkhangai aimag, Mrs.
D.Nansalmaa, feels the Oyu Tolgoi issue should be resolved urgently so that mining operations can
begin and the economic gains reach the rural population. The number of unemployed people is
increasing day by day, and the authorities must act with greater sense of purpose.
She does not expect all the pressing problems of the country to disappear with the implementation
of the Oyu Tolgoi project, but is also confident it will have a big impact on the country’s
development, and usher in positive consequences. She hopes lawmakers will act for the sake of the
nation and endorse an agreement without delay. The country’s mineral resources should be utilized
for the country’s good.
Source: Ardiin Erkh
OT IS THE TRUMP CARD FOR MONGOLIA’S DEVELOPMENT
Oyu Tolgoi is the trump card for the development of Mongolia, but political decision makers have
been using the card to develop not the country but their own power base and to win elections. In
the last eight years, draft Oyu Tolgoi investment agreements have gone through three
parliamentary elections, two presidential ones, and five governments. The big debt repayment to
Russia from the investments in Oyu Tolgoi was the beginning of the political show, followed by a
joint assertion by Mr. S.Bayar and Mr. Ts.Elbegdorj that the nation will not own less than 50 percent
of the deposit. They shook hands in front of the people to confirm their commitment. After that,
the two major parties they led used Oyu Tolgoi to pay for their campaign pledges to distribute
benefits to all citizens.
Nothing of course has come of any of these. Many working groups have been set up, but they all
work with the speed of a tortoise. At this rate, there is little hope the spring session of Parliament
will take a decision on the agreement. It will be better for the Government, Parliament and the
two parties to talk among themselves and set out the basic principles that should sustain the
agreement rather than setting up myriad working groups.
Oyu Tolgoi is a giant project and its investors are also ranked among the top three mining
companies in the world. The country should respect their experience and ability. They have
explored the deposit in accordance with the laws of Mongolia and have already invested USD1
billion in the project. Of course, there cannot be an agreement that does not adequately benefit
Mongolia, owner of the resources. But it is most important to act with speed. Oyu Tolgoi is our
3. trump card for development and should be used accordingly, and urgently.
Source: Undeshnii suudan
GULFSIDE ACQUIRES ONJUUL COAL PROPERTY
Gulfside Minerals Ltd., based in Vancouver, BC, Canada, has reported its signing of the final share
purchase agreements with two private Mongolian companies, to acquire 100% interest in three
mining exploration licenses encompassing the Khar-khonkhor (Black Hole) and the Onjuul (Onjuul)
brown coal deposits in the Choir-Nyalga coal basin in Mongolia. The property is about 170km
southwest of Ulaanbaatar and 50km SE of Buren in Tuv province.
The deposit is ideal for a very high capacity open pit mine. The location also lends itself as the fuel
source for a large power generating operation. Another consideration is for coal-to-liquid
production, the "holy grail" of the coal industry. The company will acquire a 100 percent interest in
the licenses by making payments of up to USD19 million over 22 months, plus royalty of 6% and
finders fees. It has elected to drop its two mineral projects, the Erdenet and Khentii, in northern
and eastern Mongolia in favor of concentrating on the potential of the coal project.
Source: www.gulfsideminerals.com
HINT OF PROGRESS AT BOROO GOLD
Mr. Rick Blake, Director of the Human Resource Unit at Boroo Gold, has said that there is no strike
by its Mongolian workers, either at the company’s Ulaanbaatar office or at the mine in Selenge.
Earlier, some workers for some time expressed protest by refusing to eat the meal provided by the
company, calling it a half hunger strike.
The dispute now centers on the quantum of benefits to be provided for employees who have
become redundant after September 1, 2008. The original labor demand would have cost the
company USD9.5 million, but on May 4 the Trade Union reduced this to USD7.6 million as a gesture
of flexibility and to indicate readiness to negotiate. Boroo Gold’s last offer was a package worth
USD1.1 million, but the management is prepared to consider increasing this.
Read more.
The workers want everybody, irrespective of whether they worked for five years or five months, to
be paid USD12,000 plus USD1,000 per year of service. If the principle of equal payment for all is
accepted, the company’s offer of USD1.1 million would mean MNT 2.6 million for each of the 600
workers over and above the redundancy benefits of MNT3.1 million, on average, already provided to
each employee.
Mr. Blake admitted that there are differences between salaries paid to foreign and Mongolian
workers, but asserted that they have different job descriptions. In any case, the present dispute
does not concern the issue of salary. He also denied imputations that their contract with workers in
any way violated Mongolian labor laws or imposed “harsh conditions” on local workers.
Source: www.news.mn
CENTERRA POSTS Q1 LOSS
Hurt by reduced gold production and sales volumes and higher operating expenses, Centerra Gold,
which is controlled by Canadian uranium miner Cameco Corp, posted a loss of USD20.3 million in
the quarter ended March 31. That was down from a profit of USD23.7 million in the year-before
quarter. Revenue fell about 12 percent to USD98.4 million.
The company announced last week it has reached an agreement with the Kyrgyz Government over
an ownership agreement for the Kumtor gold mine, which is Centerra's main asset. Concern that the
country could nationalize the mine has weighed on the company's shares for two years. Under the
agreement, the Kyrgyzstan Government will raise its stake in the company to as much as 33 percent
from 15.66 percent, while Cameco will reduce its to 37.8 percent from 52.66 percent. The
agreement also includes a simplified tax structure for the mine. Cameco plans to completely sell off
its Centerra stake at some point after the agreement is ratified.
Gold output for Centerra, which also operates the smaller Boroo mine in Mongolia, fell to 103,204
ounces from 120,395 ounces a year ago. Cash costs were USD871 per ounce while realized gold
prices were USD915 per ounce in the first quarter. Centerra still expects to produce between
720,000 ounces and 770,000 ounces of gold this year, including between 560,000 ounces and
4. 600,000 ounces from Kumtor. Total cash cost for 2009 is expected to be in the range of USD465 to
USD505 per ounce for both Kumtor and Boroo operations.
Source: Reuters.com
PRE-FEASIBILITY STUDY ON ULAAN OVOO COAL PROJECT READY
Work on a positive, NI 43-101 compliant, pre-feasibility study for Red Hill Energy Ltd's 100%-owned
Ulaan Ovoo coal project in northern Mongolia is now complete. This PFS follows from a scoping
study in November 2006 that reported an NI 43-101 compliant resource estimate of 208 million tons,
of which 174.5 Mt are Measured and 34.3 Mt are Indicated Resources.
The Project involves open cut mining of coal and waste rock using conventional shovel and truck
techniques. Higher quality coal of greater than 5,000 kcal/kg (as-received basis), known as "by-pass
coal," will be crushed and stockpiled while other coal, known as "washed coal", will be beneficiated
in a wash plant prior to stockpiling. Both washed and by-pass coal will be blended on the product
stockpile to derive a consistent product prior to transport from the site by rail to Nadhodka on the
Russian eastern seaboard to be sold in the global thermal market. Infrastructure construction is
proposed for the latter half of 2009, overburden removal commencing in 2010 with mining and sale
of coal proposed to commence in 2011.
Source: Marketwire
SAVINGS BANK TO CLOSE DOWN BRANCHES
The newly appointed board of directors of Savings Bank will continue to lay off staff, and is likely to
close down certain branches, as it feels its expenses are much higher than warranted by its size.
The bank has so far posted losses of MNT4 billion. The Central Bank has begun an audit of the
accounts of Savings Bank. Russian businessman S. Gromov bought the bank when the Mongolian
Government privatized it. He also bought Mongol Daatgal Insurance Company which once held 74%
share of the insurance market in Mongolia.
Source: Mongoliin medee
TERELJ HOTEL FINDS PLACE IN NOTED TRAVEL MAGAZINE
Terelj Hotel in Gorkhi-Terelj National Park has been included in Conde Nast Traveler magazine's
13th annual Hot List, published in its May issue. This is the first time any Mongolian hospitality
center has made it to the prestigious list that is compiled by Conde Nast Traveler editors.
Source: www.cntraveller.com
CHINALCO AGAINST POTENTIAL CHANGES IN RIO DEAL
A senior executive of Chinese metals firm Chinalco has stood by a planned USD5 billion tie-up with
Rio Tinto amid speculation Rio might try to revise part of the deal to win shareholder support, the
Financial Times has reported. In a separate report, citing a source close to the deal, the FT said Rio
Tinto was considering ways to revise the deal, which was designed to help it cut its debt in half, to
appease shareholders and regulators. "This investment is a package. It is a result of two months of
very intensive negotiations. It cannot be viewed separately," Mr. Wang Wenfu, president of
Chinalco Overseas Holdings, was reported as saying in an interview.
As part of the deal, Chinalco agreed to invest USD7.3 billion in convertible bonds that would double
the Chinese group's equity stake in Rio Tinto to 18 percent. Some shareholders have complained
that the deal favors one shareholder and want to be able to take part in the capital raising. The FT
said under one scenario to revise the deal, Rio might offer Chinalco convertible bonds worth 5
percent of the company's equity, with the rest to be offered to other shareholders. Rio Tinto
declined to comment.
Speculation the deal would have to be revised has grown over the past week as Rio's shares have
climbed above the USD45 conversion price for one of the two tranches of bonds, which would make
it a cheap deal for Chinalco.
Source: Reuters.com
AUSTRALIA SHOULD VETO CHINALCO DEAL, SAYS OPPOSITION LEADER
Australia should veto China's planned USD19.5 billion investment in miner Rio Tinto Ltd., the
country's Liberal Party said last week as political opposition to the deal continued to grow. The
Opposition Leader, Mr. Malcolm Turnbull, said the investor, China's state-owned Chinalco, was
5. effectively an arm of the Chinese Government and would have a conflict of interest as both a
customer and influential part-owner of Australian resources. "The Chinalco-Rio transaction should
not be approved by the Treasurer in the form in which it has been presented," Mr. Turnbull said in a
speech in Sydney.
An opinion poll in April found 57 percent believed Australia should resist Chinese investment in
mining companies, while only 25 percent believed Chinese investment should be welcomed because
it helped the domestic economy and provided jobs.
Mr. Turnbull's comments add to the public and political opposition in Australia to Chinese
investment, with the Greens, independent and conservative National Party lawmakers also opposed
to the deal. He said the investment was clearly strategic because it would enable Chinalco to block
other parties from taking over Rio, and would give Chinalco direct influence over some of Rio's key
assets, including Australian iron ore and aluminum assets. "This will give Chinalco, and hence the
Chinese Government, the seat of greatest influence and access to information about production,
costs, pricing and marketing strategies of our second-largest resource company."
Source: Reuters.com
LEADING TAX PAYING COMPANIES RECEIVE AWARDS
Awards were presented to the leading taxpaying companies of the country to mark the annual Day
of Taxpayers on Monday. Earlier, the Ministry of Finance and the National Tax Administration
named MobiCom, Spirt Bal Buram, APU, Mongol Tamhi, NIC, Khan Bank, the Darkhan Metallurgical
Plant, Gem International, Unitel, and Erdmin as this year’s awardees.
A list of “reliable taxpayers” was also released. This includes Golomt Bank, MR Darkhan, Mongolian
Star Melchers, Tsakhiur, Baganuur Suvilal, Khanbogd Cashmere, Bodi Tower, Energy System, Mera,
Blast, Oeg, and Tsoglogkhangai.
Source: Udriin Sonin
ECONOMY
MONGOLIA SEEKS MCC GRANT DIVERTED TO CONSTRUCTION SECTOR
The Minister of Road, Transport, Construction and Urban Development, Kh.Battulga, has revealed
the Government’s intention to ask the U.S. side to consider diverting to the construction sector the
USD188 million Millennium Challenge Corporation grant meant for and recently refused by the
Ulaanbaatar Railway.
Earlier, Prime Minister S.Bayar reported to Parliament last week that about MNT500 billion of
individuals, banks, and construction companies are blocked in incomplete buildings. Approximately
MNT 220 billion is required to finish work on 171 apartment buildings in Ulaanbaatar and in the rural
areas. Banks have provided MNT68.73 billion in mortgage loans to 289 individuals and MNT 268.3
billion to construction companies.
Source: Montsame
LACK OF FUNDS HOLDING UP WORK, BAYAR TELLS MPs
Answering questions in Parliament on issues relating to the Roads, Transport, Construction and
Urban Development sectors, Prime Minister S.Bayar said last week that a working group has been
set up to study the relative merits of building railroads and paved roads to Tavan Tolgoi and Oyu
Tolgoi. Mr. Ts.Bayarsaikhan had asked why no road building tenders have yet been announced for
the region.
Mr. Ts.Sedvaanchig expressed disappointment that no building work has been taken up, even though
the Government’s plan against the crisis called for creation of jobs. Mr. Bayar urged MPs to
understand that there was no money to start many of the planned works. “But we are not sitting
idle, and are trying hard to raise money inside and outside the country,” he said, likening his and
the Government’s situation to that of “an injured athlete who is asked why he is not running fast”.
Source: Business-Mongolia.com
USD300 MILLION RUSSIAN LOAN NOT JUST YET
The USD300 million Russian loan to be used in the farming sector has got stuck. The loan,
6. negotiated when Prime Minister S.Bayar visited Russia in March, is to be provided by the
Agricultural Bank of Russia and routed through commercial banks of Mongolia. The Russian bank
demanded a guarantee from the Mongolian Government before releasing the money. The agreement
with the IMF restricts to USD250 million the limit to which the Mongolian Government can issue such
a guarantee.
Source: Udriin Sonin
MPs PROTEST OPENING UP PROTECTED AREAS TO MINING
Two Members of Parliament, Mr. G.Bayarsaikhan and Mr. Ts.Sedvaanchig, have termed the
Government decision to take out certain places from the list of protected areas from April 1
“patently illegal”. According to them only Parliament can remove the protected area status of any
place, not the Government by an executive order. The order has removed four nature reserves from
the list so that geological exploration can be begun there. The MPs called the Government move an
effort to destroy ecology in the name of protecting the economy. “Our national policy is to have 30
percent of Mongolian territory as specially protected areas. The Government is backing away from
this aim,” they said. Approximately 18 percent of Mongolian territory has protected status. Rare
animals and endangered species inhabit the four regions now opened up. They will have to move if
exploration work is begun. “It is not right to touch these protected areas. If the Government does
not cancel the protocol, we shall ask Parliament to do so. We shall also find out who is behind this
move,” the MPs said.
They confirmed their earlier claim that about 3000 “ninjas” are active near the source of the Khug
River in Khuvsgul province, and said the governor of Ulaan-Uul soum has supported the figure. Ninja
activities are almost out of control, they said, in an area which has 50-60 percent of the total water
reserve of Mongolia.
Source: Ardiin Erkh
GREEN GROUP IN PARLIAMENT FAVORS BAN ON GOLD MINING NEAR RIVERS
Members cutting across party lines have established a Green Group in Parliament to address the
general unconcern about the environment, according to one of its initiators, Mr. Ts.Shinebayar.
“Few seem to realize that the ecological crisis is more dangerous than the economic one. Almost 70
percent of Mongolian territory is turning into desert, many rivers have disappeared. Everybody
knows the state of air pollution in Ulaanbaatar. Related organizations and ministries take sporadic
measures but we haven’t seen any permanent results,” he said, adding that 20 MPs have pledged
support to the group.
The group will first submit a draft law to stop gold mining near any river. Then it will press for
observance of the agreement between Mongolia and the World Wildlife Fund which calls for 30
percent of Mongolian territory to be under special protection. The actual figure now is 13 percent.
Mr. Shinebayar has been elected from Dornod province and knows that mining investors have an eye
on the uranium deposits there. Stressing that “if we do not learn to use our resources prudently,
the result will be catastrophic”. He said exploration can be allowed only after the mining law is
amended. “The original law from 1997 was good, but the changes made in it in 2006 made matters
very bad,” he said.
Source: www.news.mn
MPs WORRY ABOUT NEW MINING LICENSES IN KHUVSGUL
Alarmed by media reports that 13 mining and exploration licenses, over and above the 103 valid at
the end of 2008, have been granted in Khuvsgul, MPs from the province have reminded the Ministry
of Mineral Resources and Energy that such an act poses great danger to the ecology of the area.
Source: Media Relations Department of Parliament
WORKING GROUP SET UP ON SHIVEE OVOO PROJECT
The Government decided on Tuesday to set up a working group to prepare the blueprint for a coal
mine and power plant complex at the Shivee Ovoo coal deposit. The decision followed after a
careful evaluation of the project's effectiveness and impact, the needs for infrastructure
7. development, and the likely legal, social, environmental, economic and royalty issues to crop up.
Source: Montsame
30% IN SURVEY SAY ECONOMIC CRISIS HAS HIT THEM HARD
The Mongolian Marketing Consulting Group recently conducted a survey involving 2,382 people in
five provinces and in Ulaanbaatar to find out how the economic crisis is affecting Mongolians and
their livelihood. The company plans to follow this up with a study of the impact of the crisis on
individual business sectors.
The present survey covered people’s perception of what caused the crisis, how it developed, and
how it can be overcome. It also gives data on several economic indices and suggests measures that
should be adopted. Only 2% of the respondents said the crisis has not affected their livelihood,
while 30% admitted to having been badly hit, and 61.3% stated their income has fallen. Answering
specifics of the impact, 19% said they could no longer save, 14% could no longer buy clothes, 12%
reduced their food intake and 10% could no longer repay their debts.
Source: www.mmcg.mn
COAL EXPORT TO CHINA DROPS BY 51%
According to the Chinese foreign trade statistics, China imported 84,600 tons of coal from Mongolia
in the first three months of the present year. This is 51% less than in the same period of 2008. That
year Mongolia exported a record high 4,043,000 tons of coal worth about USD 243.4 million.
Source: Onoodor
MONGOLIA WILL BE BUSIER THIS YEAR, SAYS DRILLING VETERAN
Mr. Ronald Goguen, Senior Chief Executive of Landdrill International, expects 2009 revenues to be
on par with, or slightly better than, 2008. Despite predictions of a 50 per cent drop in business this
year due to the market turmoil, the drilling veteran reported the downturn “has only slowed
growth”. He said, "The first quarter this year we're equal to last year, but we could have been
twice that much but for the downturn." Mr. Goguen expects business to pick up in the second half
of the year, as “a lot of our clients will have some money raised by then".
Landdrill started in 2004 when it acquired a Mongolian drilling company. Since then it has expanded
to Mexico and Russia. With the majority of mining companies in Mongolia owned by Canadians, Mr.
Goguen has the same forecast for that country. "We think Mongolia will be as busy if not busier than
it was last year," he said. "The price of gold is still up there, the price of most minerals is still very
good, though you have a few that are down," Mr. Goguen said. "As long as gold stays up, you'll see
that our industry should motor along fairly well."
Source: telegraphjournal.canadaeast.com
TRADE IN ANIMAL PRODUCTS SLOW AND UNPROFITABLE
Two years ago farming products were barred from entering Ulaanbaatar and commodity trade
centers were established in Nalaikh and Emeelt, to buy animal products from the eastern and
western provinces respectively. Traders shifted to these centers. Life in Emeelt is hard as it is 20
km from the nearest hospital and schools. Another big problem is drinking water. People buy their
water from the only two households which have private wells.
But it is the slow pace of business that troubles traders at both centers more. Prices of animal-
origin commodities continue to be unremunerative for herders. They and the traders say the
Chinese buyers in the area are “playing games with the prices”, offering less for cashmere when the
yuan fell, but not raising it even after the yuan regained strength. Herders want the Government to
subsidize cashmere prices. They would also prefer to export their products directly to China. The
Chinese who process the cashmere here are not helping the trade but only polluting the Tuul River.
Commodities are not allowed to enter Ulaanbaatar, but the processing plants are all very much in
the city.
The Emeelt market has unsold stocks of about 100,000 cow hides valued at about MNT one billion.
According to a trader, the company which ordered the skins cannot now pay for them because of
financial problems. There is also a huge pile of sheep skin. There is no domestic demand so the
8. hides are most likely to rot in the warm weather, causing a huge loss in trade.
Source: en.News.mn
PETROCHINA TO TRIPLE HOHHOT REFINERY CAPACITY
PetroChina, the country’s top oil firm, has won government approval to triple the capacity of its
small refinery in Hohhot, capital of Inner Mongolia in north China. It plans to invest USD1.22 billion
to expand the 30,000 barrels-per-day refinery to 100,000 bpd while adding other facilities including
a 150,000 tons-per-year polypropylene unit. The expansion will begin this year and be completed
by 2012, the company has said, without elaborating on possible crude oil sources for the project.
PetroChina drills in Mongolia and recently received permission from the Mongolian Government to
employ some 2,500 Chinese workers in their Dornod field this year. The crude output is trucked
across into China to be refined.
Source: Reuters.com
MONGOLIANS HOLD BUSINESS MEETING IN LOS ANGELES
Mongolians residing in the USA held a business meeting in Los Angeles last week with support from
the Embassy of Mongolia. It discussed ways out of the present economic crisis, and several
suggestions were thrown up. The joint organizers, the Mongolian Chamber of Commerce in the USA
and the Mongolian Union in Los Angeles, say the success has persuaded them to make the meeting
an annual event under the name "Mongolian Business Workshop in Los Angeles and Southern
California".
Source: www.news.mn
POLITICS
REPRIEVE FOR EX-MINISTER, BUT CASE NOT CLOSED
There is finally reprieve for the former Health Minister, Mr. L.Gundalai. The subcommittee on
parliamentary immunity that met on Tuesday after four postponements felt there was nothing for
them to decide on the request of the State Prosecutor General to withdraw his own earlier
recommendation to cancel Mr. Gundalai’s membership of Parliament on charges of abuse of power
when he was minister.
After investigating charges of corruption against him, the prosecutor general sent a letter to the
Speaker last December, recommending Parliament unseat Mr. Gundalai. The subcommittee,
enjoined by law to act on the request within two days, never took a decision. This is believed to
have allowed the request to lapse. Four months later the prosecutor general sent another letter
stating he was withdrawing his earlier recommendation “at the request of L.Gundalai”. This time
the four-member subcommittee failed to meet on four occasions as there was no quorum, before
washing its hands of the matter.
Mr. Gundalai has been claiming the latest request vindicated his claim that he never did any wrong
and that the charge against him was politically motivated. He has not explained, however, why he
sent the request to the prosecutor, nor has the prosecutor made it known why and how the request
persuaded him to change his mind. But this may not be the end of the case. The Prosecuting
Authority has appointed an inspector to make a fresh investigation into the case against the former
minister. But until that report is received, Mr. Gundalai remains an MP.
Source: Ardiin Erkh
MPs CODIFY THEIR ETHICS AFTER TEN YEARS OF TRYING
Ten years after its first draft was discussed, Parliament finally adopted the Regulations Governing
the Ethics of Members of Parliament last week. That first draft had included high-level state
officials in its purview, but the one now adopted covers only MPs. Before approving the draft,
members decided to delete a few provisions.
That means that there is no bar on MPs receiving a gift that is valued at more than their monthly
salary, or on an MP using for private purposes the office telephone, fax and copy machine,
computer, furniture and car. A subcommittee will monitor the observance and enforcement of the
9. regulations.
Under the new rules, an MP should withdraw from voting on any issue in which he himself or anyone
of his family is interested, after informing the subcommittee of his decision. An MP should also not
make public any state secret that he comes to know as part of his official duties as a member of
Parliament. An MP should set a high level of propriety and good conduct as long as he is in the State
Palace and Parliament Hall. He should not use his status and position as an MP to secure any
financial gain for himself.
An MP is now forbidden to accept any award or honor from NGOs, private enterprises and local
administration and citizens’ organizations without prior permission of an authority to be designated
for the purpose.
Source: Udriin Sonin
PARLIAMENT ACCUSED OF CHANGING LAWS TOO OFTEN
A Parliament Office team visiting Zavkhan province to hear citizens’ complaints and suggestions to
pass them on to related people and organizations, was told that after being elected to Parliament
MPs lose touch with their constituents, not caring to explain to them the laws that have been
passed. Instead, they appear busy with unimportant matters. People were also annoyed that no
progress has been made towards distributing the promised Motherland Treasure. Another common
complaint was that Parliament frequently changed laws and often passed laws that contradict
Constitutional provisions.
Source: Onoodor
PUTIN TO SPEND JUST SIX HOURS IN MONGOLIA
Russian Prime Minister Vladimir Putin will spend just about six hours in Ulaanbaatar on May 13 on
his way home from a three-day visit to Japan. No details of his program have been made public, nor
has anything been revealed about the purpose of this brief stopover. Observers expect him to press
for a joint Russia-Mongolia venture on Tavan Tolgoi and for the Russian Railway Association to get
the contract to build the railways connecting major mining deposits.
When the Mongolian Prime Minister visited Russia last March, the most important agreement signed
was about a joint venture in exploring and mining uranium. It would be a surprise if the present
brief visit shows no such important outcome.
Source: Ardiin Erkh, Business-Mongolia.com
ALL EXCEPT BAND MEMBERS RELEASED FROM SWINE FLU QUARANTINE
All the 103 passengers and 6 crew members put in quarantine after arriving in Ulaanbaatar on an
Aeroflot flight early on Wednesday morning were released from surveillance on Thursday, except
the five members of the Altan-Urag band who had been in Mexico. Those released include members
of a Russian team led by a Deputy Minister who have come to make final arrangements for Prime
Minister Vladimir Putin’s visit here on May 13.
Of the other non-Mongolians on the flight were 21 Russians, five each from Hungary and the Czech
Republic, three from France, and one each from Austria, Italy, Poland, and the USA.
The band arrived in Moscow on Monday evening after performing at a music festival in Mexico, the
country where the swine flu scare started. Two of its seven members showed symptoms of the flu
and are now in a Moscow hospital. It was then decided to take precautionary measures against all
who traveled from Moscow with the other members of the band.
The Infectious Diseases Hospital was chosen as the quarantine center. The 50 patients there were
transferred to another place. More beds were added during Tuesday night so that all on the flight
could be together.
Source: en.News.mn
MONGOLIA TO ACCEPT 100 IMMIGRANTS A YEAR
The Government will submit a proposal to Parliament limiting to 100 the annual number of
immigrants between 2009 and 2012. The number of Chinese and Russian immigrants will not exceed
10. 30 each and those from other countries will make up the remaining 40. Not more than 50 of the
total will be allowed to live in Ulaanbaatar, not more than four each in Darkhan-Uul, Orkhon,
Selenge and Dornod provinces and not more than two in any of the other provinces.
Immigrants in Mongolia now number 2,405, 0.08 percent of the total population. This is 0.05
percent less than in 2001.
Source: www.news.mn
MONGOLIAN POPULATION REACHES 2.7 MILLION
Improved methods have been in use for about a year to collect census figures. According to latest
calculations, the Mongolian population has reached 2.7 million. A baby is born every 8 minutes and
19 seconds, and there is a death every 35 minutes. The population thus rises by one every 10
minutes and 54 seconds.
Source: Udriin Sonin
NGO REPORT STRESSES MEDIA RIGHTS, REGRETS CENSORSHIP
Globe International has released its Media Freedom Report: Mongolia 2008. The Mongolian NGO was
helped in its work by the Open Society Forum, the Media Network Program of the Open Society
Institute, IFEX and the US Embassy in Ulaanbaatar. The Report details how despite the existence of
laws providing protection for a free media, “violations of freedom of the press and the rights of
journalists continue to occur” in Mongolia, how “censorship exists in open or hidden forms”, and
how politicians, officials and public servants “use provisions of the Criminal Code and Civil Law for
media censorship”. The courts, when making decisions in libel cases, do not take into consideration
“the legitimate right of the public to receive objective information”, and, instead, “generally
support the authorities”. Mongolian journalists are commonly unable to obtain information from
government agencies, officials or employees, or to access government documentation. The “lack of
transparency of media ownership” results in “provision of partisan information that creates societal
distortions and confusion”.
Asserting that society will never “function effectively if the value of investigative journalism is
undermined”, the Report demands that any attack on a journalist, “up to and including threats to
their lives and property, because of their pursuit of the truth”, should be considered a serious
criminal offence. Last year, 59 cases of violation of the rights of the media and journalists were
registered.
Source: Montsame
DRAFT LAW WANTS GAS ENGINES IN PUBLIC TRANSPORTATION
The Standing Committee on the Economy will present to Parliament a draft law that calls for gas
engines to be used in public transportation before the end of 2012. Mr. G.Batkhuu felt the benefits
would outweigh the costs. Gas engines for buses are manufactured in China, and their use would
help reduce air pollution.
Source: www.news.mn
PRINTING OF DRIVING LICENSES RESUMES
The Traffic Police Department has resumed printing driving licenses, some 500 of which are being
produced for the around 20,000 people on the waiting list. License fees are paid into a Government
fund and then transferred to the account of the traffic police. A four-month delay in this transfer
caused the backlog.
Source: Ugluunii Sonin
NEW MONGOLIAN LAWS
The following additional amendments to a current Mongolian law and a new law were published in
the recent weekly Government Bulletin. Unless decided otherwise by Parliament, the laws take
11. effect ten (10) days after publication.
Bulletin Date Law
04.27.2009 Additional amendments to "Amendments to Law on Civil Service"
Law on Ratification of an Agreement
Please visit BCM’s website, Legislative Committee, for a summary of new Mongolian laws.
BCM members who wish complete versions of the laws in Mongolian language are welcome to call or
email the BCM office (11-332-345; info@bcmmongolia.org) to arrange for a convenient pickup.
ANNOUNCEMENT
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on “MM Today", its English news program aired every Friday evening. Tune in tonight from
approximately 10:05-10:15 PM to watch this program that reports items from today’s BCM
NewsWire.
SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended May 1, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled
3,726,400 shares with 34 companies traded. Total market value of transactions was MNT 1.0 billion.
Total market capitalization of the 358 stock companies listed on the MSE was MNT 450.8 billion, and
decreased by MNT 1.5 billion or 0.3% from the previous week.
The Top-20 Index decreased by 49.35 points or 1.0% compared to the previous week, closing at
4,965.47 points. The MSE Composite Index decreased by 5.39 points or 0.2% compared to the
12. previous week, closing at 2,485.60 points.
Most active stocks traded were: Mongol Emimpex (2,447,200 shares), Remicon (595,100 shares),
Tuul Songino Usnii Noots (294,000 shares), Mongol Makh Expo (167,600 shares), and Khuh Gan
(90,400).
Major share price percentage gainers were: APU (16.9%), Teever Darkhan (15.0%), Gan Khiits
(15.0%), Buligaar (14.9%), and Naco Tulsh (14.5%). Major share price percentage losers were:
Mongol Emimpex (31.8%), Sor (10.0%), UID (7.3%), Tavilga (4.8%), and Spirt Bal Buram (4.5%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
April 30, 2009 *13.0% (Estimated) [source: NSOM]
* year over year (yoy)
CURRENCY RATES – May 7, 2009
Currency name Currency Rate
US dollars US 1422.19
Euro EUR 1892.29
Japanese yen JPY 14.44
British pound GBP 2139.19
Hong Kong dollar HKD 183.50
Chinese yuan CNY 208.44
Russian ruble RUB 43.27
South Korean won KRW 1.12
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.