1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
Email: Jim@bcmmongolia.org October 25 2007
BCM NewsWire Issue 3 Oct2507
NEWS HIGHLIGHTS:
Business: Daewoo eyes Mongolia for next power plant venture; Major Japanese company wants to invest
in Mongolia; Preparation for uranium site in triple digit millions; Factory produces coked coal
Economy: World Bank report sees formidable challenges for country’s economic growth; Foreign investors
interest grows in Mongolia’s stock market; Chinese imports of Mongolia’s copper rise; Lifestyle
TV channel launched; Imported grains attract tax free regime
Politics: Bush awards millions in aid; Mongolbank under investigation; Civil servants get salary increase
BUSINESS
The first monthly meeting under the auspices of the newly formed BCM will be held on Monday, October
29, at 5 PM in the Open Society Forum. Featured presentation will be an "Ambassadors Panel”. BCM
and NAMBC members and all Friends are invited.
DAEWOO EYES MONGOLIA FOR NEXT POWER PLANT VENTURE
South Korea’s Daewoo International is hoping to build electric power plants for Mongolia in the
near future on the back of its success in building and operating a power plant in remote Papua
New Guinea.
The Daewoo PNG Power Plant accounts for 40 percent of the total electricity consumed in the
area Papua New Guinea. Company officials stress that the South Korean power plant has also
become an important source of cash for both Daewoo and the country, earning some USD 5 million
annually.
The power plant came on-line in 1999, with two 12MWH-class electric generators producing
460MW of electricity each day for domestic consumption over the past eight years.
Since it retrieved the investment in 2003, the power plant gave a dividend of USD 5.2 million in
2003, USD 5.7 million in 2004, USD 4.3 million in 2005 and USD 4 million in 2006 to Daewoo
International,'' Lee Sang-ha, chief of the plant, told The Korea Times.
Besides targeting Mongolia, Daewoo International hopes to build power plants in Vietnam and
Azerbaijan.
Source: South Korea Times, October 22
MAJOR JAPANESE COMPANY WANTS TO INVEST IN MONGOLIA
Mongolian Stock Exchange (MSE) Executive Director, Mr R. Sodkhuu met Japanese Mitsui Company
Ltd General Manager in charge of the financial market, Hiromichi Takeuchi and General Manager
of the Resident Representative Office in Ulaanbaatar, Novuo Okada, on October 17.
They exchanged views on MSE activities and the current situation of Mongolia's security market.
Mitsui Company representatives expressed an interest in large investments and close cooperation
in the MSE.
The Company is one of Japan’s largest corporations and taps into an expanding global network to
access strategic information and harness business engineering capabilities.
Mitsui Company is also diversifying services, exploring for and developing natural resources,
making commercial investments and developing technologies in new businesses.
Source: Montsame News
PREAPARATION FOR URANIUM SITE IN TRIPLE DIGIT MILLIONS
The company with rights to the Gurvanbulag uranium deposit in Mongolia expects to pay USD 229
million in development costs before mining can begin.
Canadian-based Western Prospector Group Ltd. (TSXV:WNP), which owns 100 percent of the
Gurvanbulag site, says the investment will be needed to create an underground mine and surface
processing mill.
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However, once production begins, company estimates place the daily mill capacity at 1,500 tons
of uranium per day with an annual yield of two million pounds per year.
Western Prospector Group officials hope to begin production at the site in late 2010.
Read more: www.mongolia-web.com
FACTORY PRODUCES COKED COAL
Tavan Tolgoi Mining Company has collaborated with Mongolian Golden Triangle Company to
produce coked coal and reduce Ulaanbaatar’s demand for raw coal.
‘Khar Tolgoi’ factory, which will process the raw coal, was opened last week in Bayan-Ovoo soum
of Omnogobi Aimag with equipment to American and Canadian standards.
The factory will produce 800 tons of coking coal from 1000 tons of raw coal.
Mongolia is the only country in the world to use raw coal.
Source: Ardyn Erkh (Daily News)
ECONOMY
WORLD BANK REPORT SEES FORMIDABLE CHALLENGES FOR COUNTRY’S ECONOMIC
DEVELOPMENT
World Bank Mongolia poverty reduction and economic management unit, lead economist,
Sudarshan Gooptu presented findings of the 2007, ‘Country Economic Memorandum’ (CEM) to a
selected audience, October 23 at the World Bank office in Ulaanbaatar.
The CEM report identifies ‘binding constraints’ on Mongolia’s broad-based sustainable growth as
infrastructure bottlenecks; distortionary taxes; poor internal and international coordination in
laws and regulations and trade and logistics; growing corruption and inadequate contract
reinforcement and the high cost of capital.
The report suggests faster diversification of Mongolia’s economy, in particular in mining and
livestock, to deal with these constraints.
Source: www.wb.org.mn
FOREIGN INVESTORS INTEREST GROWS IN MONGOLIA’S STOCK MARKET
Brokerage houses in Mongolia report increasing interest in Mongolia by overseas investors.
With Mongolia’s economic growth racing at over seven percent annually, and with foreign property
purchases rising, the Mongolian stock exchange is also seeing increased interest by foreign
investors.
Managing Director at Altan San Securities, Guy Mock said, "In the last month alone over ten new
overseas accounts have been opened up by our brokerage firm."
Following the impressive rise of Chinese and Vietnamese stock markets, there is considerable
interest in the Mongolian stock market.
"It's not just overseas investors who are buying shares. We see quite a few up and coming
Mongolian entrepreneurs and businessmen joining in," according to Mr. Mock
Read more: www.mongolia-web.com
CHINESE IMPORTS OF MONGOLIA COPPER ON THE RISE
Mongolian copper will remain in high demand as reports indicate China imported 36 percent more
copper in the first eight months of 2007, than in the previous year.
Total figures show China purchased 3.2 million tons of copper during this period. The value of the
copper was placed at USD 6.1 billion.
The world demand for copper, lead by China, has caused a price increase of 20 percent in the past
year. The demand for copper worldwide has outstripped supply by 130,000 tons.
While Mongolia is a major supplier of copper to China, other countries also export copper to China
including Chile, Peru and Australia.
Copper prices are expected to continue to rise in 2008
Read more: www.mongolia-web.com
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LIFESTYLE TV CHANNEL LAUNCHED
TV9, Mongolia’s first 24-hour television channel launched its affiliated lifestyle TV channel
October 22, 2007. The channel will mostly broadcast domestic and international sport programs
providing commentaries. This new channel intends to broadcast the 2008 Beijing Olympic Games
live and the 2010 World Football Championship.
Source: Montsame National Newsagency
IMPORTED GRAINS ATTRACT TAX FREE REGIME
Government drafted a resolution for discussion in Parliament to reduce customs tax to zero to
improve and maintain flour and wheat supplies and address grain price increases.
The tax exemption period suggested for flour would be from November 1 until April 1, and for
wheat, from November 1 to July 1, 2008.
The Government estimated 103,300 tones of flour and 120,000 tones of wheat would be imported
during these periods
Source: Ardyn Erkh (Daily News)
POLITICS
BUSH AWARDS MILLIONS IN AID
President Bush approved USD 285 million for Mongolia, the latest country to receive US aid in
exchange for committing to democratic reforms, on Monday October 22.
Bush said the funds come from the Millennium Challenge Compact that encourages countries to
make a firm commitment to basic principles that mean the government will listen to their people
and respond to the needs of the people.
President Bush and Mongolian President N. Enkhbayar signed leather-bound copies of the Compact
in the Roosevelt Room ceremony at The White House.
The largest share of the aid package will be used to improve the railroad system in Mongolia.
Other money will go to support health and education.
Mongolia qualified for the Millennium Challenge Account in May 2004.
President Enkhbayar thanked President Bush for having confidence to render such large support to
in Mongolia
The Millennium Challenge, is a Bush initiative to reduce global poverty by trying to encourage
economic freedom and strengthen human rights. So far, about $5 billion is committed for 16
countries; Mongolia became the 15th to sign a compact with the United States.
Read more: The Washington Post, by Ben Feller
MONGOLBANK UNDER INVESTIGATION
Operations at the Mongolbank have raised the ire of members of parliament who have asked the
Speaker to check the bank’s activities before finishing discussions on the 2008 state budget.
MP and Parliamentary working group leader, D. Ganhyag presented the inspection results to the
economic standing committee who discussed them on October 16 and 17. Results say the bank is facing
a risk of sustaining a loss of a serious amount of money and have identified four incidents of irregular
banking practices as evidence.
Among a number of claims, the results accuse the bank of misusing over USD 300 million of state
treasury funds and two MPs say it behaved like a commercial bank, not permitted by law.
MPs B. Batbayar and L. Gundalai have requested the Speaker to delay concluding discussion on
the2008 State budget pending further investigation into the bank’s activities.
Source: The Mongol Messenger
CIVIL SERVANTS GET SALARY INCREASE
State high-level officials, judges, prosecutors, and officers serving in the Anti-Corruption Authority and
assistants to parliament member’s salaries increased from October 1, 2007.
A draft resolution stipulated monthly salaries for the President would be 852,700 MNT; the
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Parliamentary Speaker, 642,700 MNT; and the Prime Minister, 494,800 MNT. Salary for an assistant to
the MP would stand at 192,600 MNT. The Anti Corruption Authority head would receive a basic monthly
salary of 664,400 MNT; the vice chairperson, 615,500 MNT; Department heads, 588,000 MNT, Division
heads, 554,400 MNT, senior officers, 504,000 MNT and ordinary officers, 453,600 MNT. The Government
decided to increase monthly salaries of State employees from October 1, to 250,000 MNT average.
Source: Montsame National Newsagency
MONGOLIA STOCK EXCHANGE WEEKLY REVIEW
For the week ending 19 October, 2007, trading volume on the Mongolian Stock Exchange
(MSE) totaled 429.2 million shares. Total market value of transactions was 1.5 billion MNT.
The ‘Top 20’ index increased by 188.16 points (1.6%) closing at 11,216.68. Of the 87 issues
traded, 31 gained prices, 16 lost, and 40 did not change from the previous week’s closing prices.
Mongolian Telecom, Gobi, Mahimpex, NIC, Eermel companies share prices were down.
Most active stocks traded were: Genko Tour Bureau (168,100 shares), Zoos Bank (53,300 shares),
Tavan Tolgoi (37,000 shares), Baganuur (33,400 shares), Moninjbar (20,400 shares).
Total market capitalization of the 361 companies listed on the MSE was 727.9 billion MNT, 14.8
billion less than the prior week.
ECONOMIC INDICATORS
Metal prices
Copper (www.metalprices.com)
Date
Cash Ask-USD
3m 15m
23/10/2007 7900 7851 7440
Gold (Mongolbank)
Date Price Buy Price Sell Price USD
23/10/2007 28608.90 28646.79 756.200
Silver (Mongolbank)
Date Price Buy Price Sell Price USD
23/10/2007 509.90 510.66 13.480
Currency rates - October 25 2007
Currency name Currency Rate
US dollar USD 1178.84
Euro EUR 1676.13
Japanese yen JPY 10.30
British pound GBP 2413.50
Honkong dollar HKD 152.09
Chinese yuan CNY 157.31
South Korean won KRW 1.28
Canadian dollar CAD 1217.87
Australian dollar AUD 1058.07
Taiwan dollar TWD 36.20
Indonesian rupiah IDR 0.13
Malaysian ringgit MYR 349.42
Singapore dollar SGD 805.71
