1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 233 – August 3, 2012
NEWS HIGHLIGHTS:
Business:
OT getting ready for initial production;
Rio pays USD 935 million to maintain 51 percent stake in Ivanhoe;
Energy Resources opens new wing to UHG processing plant;
U.N. tribunal rules in favor of Khan Resources on Dornod uranium project;
Sharyn Gol ramps up preparations for development of Shaazgait mine;
Draig reports JORC inferred coal resources of 76 million tons;
Sharyn Gol quadruples estimated resources;
Cougar looks to Mongolia for underground coal gasification;
Mongolia Airlines adds Tokyo route;
Cost savings opportunities in Aspire's rail construction ascertained;
Hogan Lovells advises GE on Salkhit wind farm;
Prophecy strengthens team seeking to become energy powerhouse;
Kincora Copper appoints new president and CEO;
Petro Matad’s two non-executive directors buy shares;
Quam gets going in Mongolia while the going is good;
Centerra tumbles to second-quarter loss on abnormal mining costs;
BHP, Rio grapple with falling commodity prices;
Banpu lowers four-year investment plan for Mongolia;
Aspire: Quarterly activities report;
Xanadu: Quarterly activities report;
Voyager: Quarterly activities report;
Haranga: Quarterly activities report;
Cameco reports 52 percent drop in profits due to poor market conditions.
Economy:
18 civil servants to receive scholarships to Japanese universities;
Clock is ticking on land privatization;
Development Bank shoulders debt burden;
Trade grows on MSE with modernization;
Capitalism in city of red hero;
Growing pains in agriculture;
Mongolia draws adventurous lawyers;
Pakistan takes a lesson from Mongolia;
How the sparsely populated land of Chinggis succeeds at the Olympics;
Scheduling change creates snafu for Mongolian fans at Olympics.
Politics:
Enkhbayar sentenced to four years;
Z. Enkhbold vows for a united coalition;
DP head refuses to negotiate MPP grievances;
MPP officials step down;
Government appoints heads at SPC and Bank of Mongolia;
Change at the top;
2. Witness gives testimony in Enkhbayar trial;
Deadline for cash exchange for TT shares passes;
IAAC makes headway in its offense against corruption;
Citizens' petitions halt new construction projects;
DP plans to open new Government Palace wing to public;
Japan’s MOFA to reorganize information distribution to Mongolia;
Putting a lid on anger over resource boom;
A Mongolian lesson for investing hordes;
Religious freedom in Mongolia.
*Click on titles above to link to articles.
SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting
Breakthrough PR Oxford Business Group
BUSINESS
OT GETTING READY FOR INITIAL PRODUCTION
The Oyu Tolgoi copper-gold mine has made its first delivery of ore to the primary crusher from its
open-pit mine as the mine sets to enter initial production.
Initially being developed as an open-pit operation, commercial production is set to begin in the
second quarter of 2013. A copper concentrator, with related facilities and necessary infrastructure
to support an initial concentrator, with related facilities and necessary infrastructure to support an
initial throughput of 100,000 tons a day of ore, has been constructed to process ore scheduled to be
mined from the open pit. Initial production of copper, gold, and silver concentrate is expected in
the third quarter of 2012.
Development also includes an 85,000 ton-per-day underground block-cave mine at the Hugo North
Deposit. The concentrator plant is expected to process 160,000 tons a day of ore when the
underground mine begins first production in 2016.
Source: International Mining
3. RIO PAYS USD 935 MILLION TO MAINTAIN 51 PERCENT STAKE IN IVANHOE
Rio Tinto PLC said it paid about USD 935 million for 133.6 million shares of Ivanhoe Mines Ltd., or 5
percent of the stock the Canadian miner put up in a shareholder rights offering.
The purchase allows Rio Tinto to maintain its 51 percent ownership stake in Ivanhoe Mines, which is
developing the massive Oyu Tolgoi copper-gold project in Mongolia. Rio Tinto paid USD 7 a share in
the fully subscribed rights offering and now holds more than 510 million shares of Ivanhoe Mines.
The offering is part of a financing plan for developing Oyu Tolgoi. The mine is set for first
production later this year and commercial production in 2013.
Source: Reuters
ENERGY RESOURCES OPENS NEW WING TO UHG PROCESSING PLANT
Energy Resources LLC, the Mongolian subsidiary of Hong Kong-listed Mongolian Mining Corp. (MMC),
opened a second wing of its mineral processing plant at the Ukhaa Khudag coal mine.
The first wing of the plant opened last summer, with the second receiving approval from
government last spring. This new wing will produce 850 tons of processed coal an hour, or 5 million
tons a year. The opening of the new wing will increase production to up to 15 million tons of
process coal.
G. Battsengel, Chief Executive Officer, said that the opening of a third wing would allow Energy
Resources to become an exporter of processed coal.
Total expenses for construction and installation came to USD 91 million.
Source: Zuunii Medee
U.N. TRIBUNAL RULES IN FAVOR OF KHAN RESOURCES ON DORNOD URANIUM PROJECT
The United Nations tribunal has ruled in favor of uranium explorer Khan Resources in a USD 200
million arbitration case against the government of Mongolia, the Toronto Stock Exchange-listed
company said.
Khan Resources alleged that the government in concert with a Russian partner during 2009 took
actions that amounted to the illegal expropriation of the company's mining and exploration permits.
It said this took place after the government initially invited and encouraged the company and its
predecessors to invest millions of dollars, expertise, and resources in the Dornod Aimag uranium
project, in northeastern Mongolia.
In Khan Resources' arbitration filings, the company said the uranium deposit had substantial
resources of uranium and a capacity to produce about three-million tons of yellow cake a year, for
15 years. The established net present value is USD 276 million, which would be derived from USD
2.94 billion in revenue over the life of the mine.
Khan Resources said that just as it was preparing to begin construction in October 2009, the
government and Russia in January made a statement that they intended to exploit the resources,
and by August had formed a Dornod Uranium joint venture (JV). On 14 December 2010, Russian
Prime Minister Vladimir Putin and Mongolian Prime Minister S. Batbold signed an agreement
confirming the JV, which also confirmed the expropriations of Khan's Resources project rights, and a
later notice from the Atomic Energy Agency that its Dornod rights have been invalidated,
retroactively to 8 October 2009. Khan Resource initiated the arbitrations suit in January 2011.
―We are pleased that the Tribunal has validated Khan's initiatives to achieve recourse to damages
suffered by our shareholders. Our treasury is well-funded and we will continue to vigorously pursue
this action to its logical end to receive value for our investments in Mongolia,‖ Khan Resources
Chief Executive Officer Grant Edey said. The firm added that it would immediately start preparing
for the upcoming merits-damages phase of the proceedings.
Source: Mining Weekly
SHARYN GOL RAMPS UP PREPARATIONS FOR DEVELOPMENT OF SHAAZGAIT MINE
Sharyn Gol JSC has received approval for its environmental impact assessment report for the new
open-pit mine at the Shaazgait thermal coal deposit. Following the recent approval of its feasibility
study by the Mineral Resources Authority, Sharyn Gold has now received all government approvals
4. necessary to launch operations at Shaazgait.
―We are pleased that the development of the new mining area at Shaazgait remains on schedule
and are excited by the prospect of realizing our vision of launching modern commercial operations
before the year-end,‖ said Chairman B. Batmunkh.
Recent coal washability test work, performed by Stewart Laboratory in Ulaanbaatar, indicated that
a product with 6,500 kilocalories per kilogram heat value, less than 10 percent ash and 0.5 percent
sulfur can be produced with high plant yields. Consequently, Sharyn Gol's management is reviewing
strategic options for washing and exporting coal to maximize potential revenue streams in coming
years. Sharyn Gol is in a strong financial position, with a balance of USD 10 million and no debt.
Source: Sharyn Gol JSC
DRAIG REPORTS JORC INFERRED COAL RESOURCES OF 76 MILLION TONS
Coal explorer Draig Resources Ltd. reported a maiden JORC inferred resource of 76 million tons at
its Teeg coal mine, with an additional exploration target of between 25 million and 100 million
tons.
―Defining a 75 million ton coal resource, plus an exploration target for a potential further 25 million
to 100 million tons is an excellent achievement, particularly after only one exploration drilling
campaign on Teeg, and it confirms our expectations about the highly prospective nature of Teeg
and our surrounding licenses,‖ said Managing Director Mark Earley.
The JORC report added that there is ―compelling evidence for a significant deposit of high-grade
coal with metallurgical potential in a coal seam with a true average coal thickness of 24.12 meters.
The 22.2 square kilometer Teeg license is situated in Bayanteeg Soum, Uvurkhangai Aimag and is
one of eight licenses owned by Draig across Uvurkhangai and Umnugobi Aimags.
The JORC resource estimate was determined by geological mapping, trenching, induced
polarization, resistivity surveys, 6,784 meters of drilling, and coal sample analysis. The JORC
reported identified at least four coal target areas for drilling. Draig plans to further explore the
Teeg and nearby Nariin Teeg properties in the future to increase its coal resource in the area.
However, focus now rests at Umnugobi to present a fuller picture of the company's overall coal
portfolio and take advantage of the better climatic conditions.
Source: Draig Resources Ltd.
SHARYN GOL QUADRUPLES ESTIMATED RESOURCES
Sharyn Gol JSC, a coal extractor operating in northern Mongolia, has commissioned Micromine
Consulting Services (MCS) to complete a technical report compliant with JORC standard reporting
guidelines for the Sharyn Gol mine.
Field work was carried out by Triton Coal with direction from MCS. The JORC-compliant estimate
found quadruple the resource inventory at the Sharyn Gol coal project.
Source: International Mining
COUGAR LOOKS TO MONGOLIA FOR UNDERGROUND COAL GASIFICATION
Cougar Energy Ltd. is considering a potential divestment of non-strategic tenements in Australia to
focus on its underground coal gasification (UCG) strategy in Asia.
The company is continuing negotiations with local partners in China, Mongolia, and Indonesia to
gain access to coal leases identified to have UCG development potential. Cougar is continuing its
discussions with the Mongolian government into the use of UCG to develop local coal resources.
In Indonesia, Cougar and is focused on three prospective project areas, while in the process of
selecting a site to start a pilot UCG burn on a coal deposit.
Source: News.mn
MONGOLIA AIRLINES ADDS TOKYO ROUTE
Private Mongolian carrier Mongolian Airlines Group launched services from Ulaanbaatar to Tokyo
Haneda, making the Japanese capital its second international destination following the launch of
Hong Kong services just over a month ago. Thrice-weekly services are now offered on the 3,000-
5. kilometer route, and will be operated using A319s on a seasonal basis until early September.
Source: Anna Aero
COST SAVINGS OPPORTUNITIES IN ASPIRE'S RAIL CONSTRUCTION ASCERTAINED
An independent review of the rail pre-feasibility study by Northern Railways LLC, Aspire Mining
Ltd.'s Mongolian rail infrastructure subsidiary, shows significant cost savings opportunities.
The review, conducted by Calibre Rail and world leaders in bulk commodity rail design, highlighted
that an alternative direct rail alignment connecting Ovoot to Erdenet (bypassing Murun) could result
in capital expenditure savings of approximately USD 188 million. The review also identified the
potential to significantly reduce operating costs over the life of the project that will be further
explored in a second iteration of the study. Possible changes to some of the operational parameters
originally used in the rail study could lead to an additional availability of approximately 8-million
tons a year for other users to access.
A 57-kilometer spur line from the Ovoot to Erdenet line would be required to connect to Murun if
needed.
Source: Aspire Mining Ltd.
HOGAN LOVELLS ADVISES GE ON SALKHIT WIND FARM
Hogan Lovells has advised General Electric Co. on the financing and equity aspects of a USD 122
million 50-megawatt Salkhit wind farm.
Hogan Lovells' role included drafting and revising Mongolian law-governed transaction documents,
reviewing financing agreements, issuing legal opinions, and advising on applicable legislation and
general matters of Mongolian law.
―We have a long-standing relationship with GE in the USA and across our international network, and
we are pleased to augment this relationship with our capabilities in Mongolia,‖ said the managing
partner of the Ulaanbaatar office, Michael Aldrich. ―We have extensively advised clients on their
energy projects in Asia, establishing a prominent reputation for ourselves as a trusted advisor in the
region.‖
Additionally, Mott MacDonald supported the European Bank for Reconstruction and Development
(EBRD) and FMO as technical advisors to the investors on the scheme under development by
Newcom Group. MacDonald is monitoring construction of the wind farm, which is scheduled to finish
by the end of 2012. The consultancy will continue to provide operations monitoring support for up
to three years following completion.
Newcom, which retains a majority interest in Clean Energy LLC, is developing the wind farm. GE
Pacific Private Limited acquired an equity interest in Clean Energy LLC in March 2012 and debt
financing for the project closed in July 2012.
Source: Hogan Lovells
PROPHECY STRENGTHENS TEAM SEEKING TO BECOME ENERGY POWERHOUSE
Prophecy Coal Corp. has announced the addition of some experienced team members to the
positions of director and advisor, making clear its intent to become a major coal and energy
provider.
Joining Prophecy Coal‘s board is Harald Balista, an entrepreneur with over two decades of
international sales and marketing experience. The firm also announced the appointment of Vice
President Sharma to its advisory board. Sharma has over 40 years of experience in the energy
industry, covering all aspects of power generation.
Maree Roos also joins the advisory board. Roos is an independent energy consultant with an
understanding of the electricity industry gained from involvement in numerous major projects
across Africa, Singapore, Malaysia, Thailand, and now Mongolia. Lynia Lau, a Hong-Kong-based
partner of international law firm Clyde & Co. and its Asian head of energy and resources, has taken
a position as external counsel. Lau specializes in acquisition, development, financing, preparations,
sales and government regulation of large-scale infrastructure projects, including power plant, oil
and gas, refinery, and liquid natural gas.
6. ―Our expert team of staff and advisors has been working to implement the Chandgana mine mouth
power project in Mongolia,‖ said Prophecy Coal's Chairman and Chief Executive Officer, John Lee.
―Chandgana is the most mature and only fully licensed 600 megawatt independent power project in
Mongolia.‖
Lee added that progress has been made to the power purchasing agreement (PPA) and engineering,
procurement, and construction (EPC) as well as development sponsorship and financing. The
company's proposed power plant adjacent to the Chandgana coal deposit has been permitted by the
government and would be the first thermal coal plant in the country in over 20 years.
Prophecy Coal has signed a cooperation agreement with the Energy Authority and plans to have the
plant up and running in four years, when it would provide for about two-thirds of the country's
current energy deficit. The agreement covers the basic rights and obligations of Prophecy Coal as
the seller and National Electricity Transmission Grid Co. (NETG) of Mongolia as the purchaser of
energy.
Source: Proactive Investors
KINCORA COPPER APPOINTS NEW PRESIDENT AND CEO
Kincora Copper Ltd. has appointed John Rickus as president and chief executive officer.
Rickus joins Kincora with over 40 years experience in mining, including 24 years with Rio Tinto PLC.
He has previously served on the board of directors of Palabora Mining and was a member of the
Owners' Council for Minera Escondida in Chile.
Rickus succeeds Igor Kovarsky as president and chief executive, who resigned at the end of July.
The board of directors of the Company wishes to thank Mr. Kovarsky for his contribution to the
Company during his tenure as President, CEO and Director.
Source: Kincora Copper Ltd.
PETRO MATAD’S TWO NON-EXECUTIVE DIRECTORS BUY SHARES
Oil explorer Petro Matad Ltd. revealed that two non-executive directors have bought shares worth
more than EUR 50,000 (USD 61,410) in the company.
Philip Vingoe purchased half a million shares at EUR 0.8 a share for EUR 38,150, while George
Watkins bought 200,000 company shares at the same price for EUR 15,260. In a statement, the
company said that following the transactions, Vingoe is beneficially interested in 500,000 shares of
around 0.2 percent of the firm's capital. Meanwhile Watkins has interest of around 0.11 percent.
Last month the company said it was to review its exploration assets in Mongolia and assess a
technical path forward possibly through partnerships. The company, which recently installed a new
management team, added its plan to revisit the data from last year's troubled drilling campaign at
Davsan Tolgoi to lower the risk for a drilling campaign planned for 2013.
Source: Proactive Investors
QUAM GETS GOING IN MONGOLIA WHILE THE GOING IS GOOD
Simon Potter is a veteran hedge fund seeder who has recently moved to Hong Kong to start a
Mongolia-focused fund and head up Quam Asset Management.
The Mongolia fund is an open-ended vehicle designed to give investors liquid access to longer-term,
very fast commodity driven emerging markets. According to Potter, few investors have taken
Mongolia seriously, but the country has a thriving economy. Quam also provides a variety of services
to investors, including Quamnet, which allows investors to look up locally based securities through a
subscription-based platform.
Potter was drawn to creating the Mongolia fund due to the rapid growth of the Mongolian economy
and vast natural resources within the country itself.
"Really, what we are trying to do is invest conservatively within that market and try and benefit
from the major upswings that you have," said Potter.
He later said trading in Mongolia is a great opportunity to pick up good commodity and local food
and beverage firms as well as pick up some property assets. He compared Mongolia to Dubai 15
years ago, calling it an enormous opportunity.
7. Source: Opalesque
CENTERRA TUMBLES TO SECOND-QUARTER LOSS ON ABNORMAL MINING COSTS
Centerra Gold Inc., the operator of the Boroo gold mine in Mongolia, says it swung to a loss of USD
54.6 million in its second quarter as it took a hit from what it called "abnormal mining costs" at its
Kumtor operation in the Kyrgyz Republic, as revenues fell 63 percent.
The second quarter loss includes USD 13.5 million in abnormal mining costs and an operating
expense of USD 21 million related to a micro-credit financing program in Kyrgyz Republic in April. It
also booked a charge of USD 7.2 million for a gold metal reconciliation adjustment of the stockpiles
at Kumtor.
Kyrgyz parliament recently backed a motion to review the operating license of the Canadian mining
company developing a major gold mine that accounts for 12 percent of the country's economy. A
state commission is to be set up to assess the environmental damage that deputies say served as a
leading motivation for reviewing the licensing agreement. The motion by Kyrgyzstan‘s parliament
calls for an increase in the government's current 33 percent stake in Centerra Gold.
Centerra has said the Kumtor project, which has been operating since 1997, is in full compliance
with Kyrgyz laws and meets or exceeds Kyrgyz and international environmental, safety and health
standards. The company has also said the project has generated USD 1.9 billion in benefits for
Kyrgyzstan including USD 620 million in taxes.
Source: Winnipeg Free Press
BHP, RIO GRAPPLE WITH FALLING COMMODITY PRICES
BHP Billiton has committed to cuts with expected losses in its upcoming quarterly report, while Rio
Tinto PLC, a major employer in Mongolia and whose Oyu Tolgoi project is expected to comprise 30
percent of the country's economy, is making employment cuts in Australia.
"Against a backdrop of increasing costs and falling commodity prices, we continue to focus on
reducing our overheads, operating costs and non-essential expenditures to ensure our assets are
well positioned on their relative cost curves," Fiona Martin, a BHP Billiton spokeswoman, said. "This
includes reviewing our overhead costs and the sequencing of our major projects."
The comments come amid mounting expectations that BHP Billiton will postpone one or more mega-
projects it has proposed until economic outlooks in Europe and China improve. BHP Billiton is tipped
to report on 22 August about a 22 percent decline in underlying earnings for fiscal 2012 to USD
16,990 billion, based on analyst estimates.
Rival miner and Oyu Tolgoi development leader Rio Tinto said that it is cutting staff in Australia and
closing its Sydney office as it too battles falling commodity prices and threats to demand from
Europe's debt crisis.
"It's just making sure we are building in resilience in our business to deal with what is essentially a
difficult time," said Rio Tinto's Australian manager David Peever, speaking on the layoffs there. "We
are seeing downturns in commodity prices, European circumstances are hovering over us, and we
need to make sure we are very measured in terms of our approach to cost control," he said.
Last month, Rio said it was cutting an unspecified number of jobs at its Clermont coal mine in
Australia as it battles sliding thermal coal prices.
Source: Reuters
BANPU LOWERS FOUR-YEAR INVESTMENT PLAN FOR MONGOLIA
Thailand's top coal miner Banpu Public Co. has suspended up to USD 600 million of its four-year
investment plan and lowered its production target by 10 percent due to softening coal prices. The
suspension will effect delays in the operations of Hunnu Coal Ltd. in Mongolia.
Banpu has also revised down this year's growth forecast from 15 percent to flat growth. Production
revenue will fall to 44 million tons from the original 47 million-ton target, said chief executive
Chanin Vongusolkit. Including coal swap gains of USD 3 a ton, Banpu's average price is estimated at
USD 95, he added.
―Altogether, we're likely to delay until the end of 2015 some USD 500 to USD 600 million of our
8. planned USD 1.75 billion capital expenditures,‖ said Chanin.
The budget for Mongolia is down by USD 250 million from USD 400 million and delayed because
there is no urgency to mine coal during unfavorable price conditions. Under the previous plan,
Banpu would have produced up to 1 million tons in Mongolia this year.
Chanin said low shale gas prices and coal exports from the United States have caused coal prices to
plummet. Currently, there is a 10 percent surplus, or 80 million tons of seaborne coal trading, that
will take nearly a month to balance out. In the worst case scenario, the price of coal will drop to
about USD 80 for the rest of the year.
By postponing some projects, Banpu's 2015 production target will possibly be reduced to 55 million
tons from 60 million tons. The company produced 42 million tons last year.
Source: Bangkok Post
ASPIRE: QUARTERLY ACTIVITIES REPORT
Aspire Mining Ltd. reported 185 million tons of coking coal at the Ovoot project, making it the
second largest reserve in Mongolia for coking coal and third for general coal resources, in its report
for the quarter ended 30 June.
―...Aspire continues to push ahead with the development of the Ovoot project,‖ said Managing
Director David Paull. He later added, ―While there is poor equity market sentiment at present, the
company is continuing to add materially to the value of the Ovoot project...‖
Highlights of the report include the 185 million-ton inferred coal resources of Ovoot, with 153
million tons of marketable coking coal and a 15-year mine life.
During the quarter, the company received a report from SRK Consulting which looked at why coking
coal is found at Ovoot and where else within the greater Orkhon-Selenge region, more specifically
the Ovoot Basin, coal could be expected to be found. Currently only 25 percent of the 500-square-
kilometer basin has undergone drill testing. The SRK review has reduced exploration risk and looked
at the merits of gravity surveys for the September quarter, bolstering interest in the Hurimt area of
the Ovoot Basin.
In regards to corporate operations, James Benson was appointed the Mongolian-based Ovoot project
director. Aspire Mining received ministerial approval for the alignment of a sealed road from Ovoot
to the Moron Soum for coal transport as well as review of a rail pre-feasibility study to identify
potential cost savings. The company has also entered a memorandum of understanding (MOU) with
the Mongolian subsidiary of Russian Railways JSC to discuss joint development of an Erdenet-Murun-
Ovoot Rail line.
Source: Aspire Mining Ltd.
XANADU: QUARTERLY ACTIVITIES REPORT
Xanadu Mines Ltd. reported continued drilling at the Sharchuluut Uul porphyry project in its report
for the quarter ended 30 June.
Xanadu Mines' exploration team at Sharchuluut Uul had drilled four holes for a total of 3,198 meters
by the date of the reports publishing with assay results expected next month, despite extended
winter conditions. Drilling had shown that the resource may extend east to west of at a strike
length of at least two kilometers and with thickness of up to 400 meters.
―Whilst current global markets are a challenge for some resource companies seeking to continue
active exploration programs, Xanadu is very well positioned with sufficient funds to maintain its key
projects,‖ said the report.
The Oyu Ulaan project, which lies 275 kilometers north of the Oyu Tolgoi copper-gold mine, has
undergone limited exploration work by Xanadu Mines, following exploration in the 1960s by Russians
and again from 2001 to 2009 by Ivanhoe Mines Ltd. Xanadu Mines has completed resource studies
and maiden metallurgical test work to enable an application for a 30-year mining license.
Additionally, the company received drill tender for a 10,000-meter program at Elgen Zost gold
system in the southeast Gobi region of Mongolia and advancement in the application of the Galshar
thermal project.
As for its joint venture (JV) company with Noble Group, Ekhgoviin Chuluu LLC, Xanadu Mines signed
9. an agreement for 80 percent interest earned in the Khus Coal project and an option agreement for
the Khar Servegen coal project.
Source: Xanadu Mines Ltd.
VOYAGER: QUARTERLY ACTIVITIES REPORT
Voyager Resources Ltd. is now fully funded after releasing an options agreement, said the company
in its report for the quarter ended 30 June.
Voyager resources released 446 million options at an issue price of USD 0.01 each for USD 4.465
million before costs. Additionally, it has begun its application for a mining license at its KM project.
Management changes include the appointment of Joe Burke as Chief Executive Officer.
In regard to exploration activity, its exploration team at the Daltiin Ovor Gold project has
completed a ground magnetic survey and begun a geochemistry program.
Source: Voyager Resources Ltd.
HARANGA: QUARTERLY ACTIVITIES REPORT
Haranga Resources Ltd. called the results from the metallurgical test work from the Selenge Iron
Ore project ―outstanding‖ in its report for the quarter ended 30 June.
Comprehensive testing revealed that the Bayantsogt deposit, and the Dund Bulag and Huiten Gol
prospect, can produce 65 percent iron concentrate on average, with even lower grade ore there
upgradeable to top-quality concentrate that could yield premium pricing. Exploration has thus far
identified four primary exploration targets at Selenge.
The drill program at Selenge for 2012 has begun, which will focus on drilling as much of the area of
known iron mineralization as possible in hopes of boosting resource inventory. The company has
employed seven diamond core rigs, the largest number of drill rigs at a single project in the
country. It is also employing an eight rig on site for drill hole surveying and re-surveying of solder
older holes and a ninth for hydrogeological drilling.
In regard to corporate activity, Marshall Cooper, Chief Operating Officer of Lippo Group, joined the
board of directors. Lippo currently holds 15.3 percent interest in Haranga Resources via its
subsidiary Golden Rain Holdings Ltd.
Source: Haranga Resources Ltd.
CAMECO REPORTS 52 PERCENT DROP IN PROFITS DUE TO POOR MARKET CONDITIONS
Canada's biggest listed uranium producer and an explorer in Mongolia, Cameco, reported sharply
lower earnings during the second quarter ended 30 June, based on lower sales volumes, lower
realized prices and higher costs.
The Toronto-listed company on Friday said net earnings were down by 85 percent to CAD 8 million,
compared with earnings of CAD 55 million or CAD 0.02 a share in the same period a year earlier.
However, on an adjusted basis, which did not include one-off items, the company's profit dropped
by 52 percent to CAD 34 million or CAD 0.09 a share. Revenue fell 8 percent to CAD 391 million.
―Our deliveries in the second quarter were low and we recorded a USD 30 million expense related
to a contract termination, which impacted our results,‖ President and Chief Executive Officer Tim
Gitzel said during an investor telephone conference.
The yellow cake producer was more upbeat about its expected performance during the second half
of the year, and said more than a third of its 2012 deliveries were to take place during the fourth
quarter, and it expected to produce 21.7 million pounds of uranium this year.
He added that growth would come at a time when uranium supply was challenged as a number of
new primary supply projects have been put on hold, and a significant source of secondary supply—
the Russian-U.S. agreement concerning the disposition of highly enriched uranium extracted from
nuclear weapons was coming to an end after 2013.
Source: Mining Weekly
10. ECONOMY
18 CIVIL SERVANTS TO RECEIVE SCHOLARSHIPS TO JAPANESE UNIVERSITIES
The government has made a deal that allows for the distribution of scholarships to Japanese higher
education institutions for the development of the human resources of government agencies.
The International Communications Center (ICC) of Japan will offer scholarships to 18 civil servants
to study in Japan in law, economics, business administration, education, environmental studies,
education, environment, information and communications technology, and development
engineering.
The ICC has struck similar deals for scholarships with 12 other countries. The program has run in
Mongolia since 2001, allowing for 191 individuals to acquire their Masters degrees at Japanese
universities.
Source: Zuunii Medee
CLOCK IS TICKING ON LAND PRIVATIZATION
The government is adding four new areas to the designated areas where people can settle as part of
its campaign to provide every Mongolian citizen with land.
The program to distribute land to each citizen is set to expire this year, but waning available land
near the city is making it nearly impossible for everyone to get his or her fair share. The
government is adding 100 hectares in 21 subdistricts of the Songinkhairkhan district, 80 hectares in
Biocombinat of the Khaan Uul district, 300 hectares in Nalaikh, and 160 hectares in Bagakhangai.
Each year the Office of Land Privatization decides on the location and size of an area it will open
for privatization that is later approved by the City Government of Ulaanbaatar. The government has
encouraged citizens to act quickly to apply for their 0.7 hectares of land in one of the assigned
districts before the program expires.
Source: Unuudur
DEVELOPMENT BANK SHOULDERS DEBT BURDEN
The Development Bank of Mongolia is reportedly paying interest of USD 95,000 a day because of its
debt offering released earlier this year.
This year the Development Bank sold USD 580 million in five-year state-guaranteed bonds bearing
5.75 interest via Deutsche Bank AG, HSBC Holding PLC, and ING Group.
According to Prime Minister N. Altankhuyag, the excessive debt has become a burden the
government cannot bear. The prime minister posted on Twitter account, "The Development Bank of
Mongolia is working at a loss of MNT 120 million a day. The government cannot find a way to hold on
to its precious funds.‖
Source: Zuunii Medee
TRADE GROWS ON MSE WITH MODERNIZATION
With the modernization of the Mongolian Stock Exchange (MSE) now in effect and a new Securities
Law on the way, foreign companies are growing more interested in listing on the domestic
exchange, said its chief executive. Kh. Altai reported that the number of brokers permitted to
trade on the floor has grown to 19.
―Roughly MNT 700 million worth of stocks have traded since the introduction of the new system,‖
said Altai. ―Further, we've approved new rules for trading and payments that meet international
standards.‖
July's introduction of the Millennium Exchange software, a comprehensive system for stock trading,
payment, accounting, savings, and security, has ushered in a new era of finance in Mongolia, said
Altai. The transition was not without some road bumps, however, as many brokers were suspended
from trading before they could attain the prerequisites for trading on the new system.
Source: Unuudur
11. CAPITALISM IN CITY OF RED HERO
While government is responsible for directing policies that stimulate investment and fair business
practices, it is up to Mongolia's small business owners, such as those operating throughout the city
center's business district, to realize prosperous futures for themselves.
The largest business can perhaps be found at the offices of Oyu Tolgoi LLC, located in Monnis
Tower. Initial production is set to begin this month with commercial production to begin in 2013,
when the mining operations are set to comprise a third of the country's economy. Revenue from
copper production there will reportedly bring Mongolia USD 720 million a day.
Not far off is the Mongolian Stock Exchange (MSE) where turnover has grown five-fold from USD 400
million to USD 2 billion in ten years. Two weeks ago at the stock exchange was the sale of 67 million
shares to 11 companies, the largest volume of trade since the London Stock Exchange (LSE) Group
installed its Millennium Exchange software in July.
Throughout the area, private taxi drivers work from 9 p.m. to 7 a.m. for MNT 800,000 a month.
Minus costs for spare parts, vehicle maintenance and gasoline, a driver can take home USD 400,000
a month. Meanwhile, street children sell various goods such as gum and books near the new Urgoo
Cinema-2 near the Chinese Embassy.
Up to 6,000 moviegoers visit Urgoo each day to catch the latest foreign or domestic film. Nayra's
coffee house serves between 100 and 150 cups a coffee a day to patrons for MNT 2,500 to MNT
4,500 each. Meanwhile luxury stores such as Louis Vuitton and Burberry operate at Central Tower,
and growing affluence has the fast food icon McDonald's, whose opening is largely seen as a symbol
that a country has climbed up the ladder of development and societal wealth, once again
considering opening in the capital.
Forbes magazine called Mongolia one of the best countries to do business. At the same time, it
reports that 80 percent of the wealth lies in the hands of the country's top government officials.
Many have yet to see the benefit of Mongolia's economic growth and will not wait for government to
hand it over. Instead everyone from the street vendor, the young venture investor, will have to
create their own fortunes in the boomtown.
Source: Unuudur
GROWING PAINS IN AGRICULTURE
Although Mongolia's agriculture sector is feeling the benefits of new management approaches and
seeing intensified production thanks to technological advances, it is still struggling to overcome
issues created by under-investment and a transition from a planned to market economy.
In mid-June T. Badamjunai, the Minister of Food, Agriculture and Light Industry, told the Cabinet
that the livestock industry expects 15 million births this year, a record high, and that the spring
planting of most crops was almost complete. Animal herding provides almost two-thirds of
agricultural production, while the main crops grown are wheat, potatoes, and vegetables. These
saw rise in output of 25 percent (433,400 tons), 14 percent (191,500 tons), and 18 percent (97,200
tons), respectively, in 2011 thanks in part to a crop rehabilitation program from 2008 to 2010.
Measures such as 40 to 50 percent loans for fuels, wheat seeds and fertilizers, along with customs
remittances and tax incentives for small-and medium-sized enterprises (SMEs), aim to produce even
higher yields in 2012, with targets of 490,000 tons of wheat, 200,000 tons of potatoes, and 110,000
tons of other vegetables from 330,000 hectares of arable land.
However, concerns over depleting reserves, inflation, and speculation caused the government to
restrict meat exports from March to July. Other concerns over livestock exports include a fear that
over-dependence on animal husbandry for meat and the nation's cashmere industry are both
contributing toward desertification. The phenomenon has likely worsened due to the move to a
market economy in the early 1990s, which led to larger herd sizes.
The country has launched its first nationwide agricultural census in May, meant to cover all
households, entities, and organizations. This follows a law passed in June 2011 establishing a state-
run commodities exchange to help determine fair market pricing. Technological innovations have
lifted yields to new levels and the next step will be to create viable agriculture industries that
invite foreign investment.
12. With no shortage of arable land—if grazing is well managed—and a host of other high quality raw
materials at its disposal, Mongolia's agriculture industry should post improved performance.
However, it will need improved organization and regulations to attract investment.
Source: Oxford Business Group
MONGOLIA DRAWS ADVENTUROUS LAWYERS
After the initial fear of making the big move to a location as remote and exotic as Ulaanbaatar
passed, Elisabeth Ellis of Minter Ellison is now reveling in the assignment she began in February—
launching an office here for her Australia-based firm.
"I'd gone to Mongolia in December 2010 and was pretty stunned by all the development," recalled
Ellis. "I got incredibly excited, but it took about a year for me to convince my 175 partners to open
an office here.‖
Ellis is not the only Western lawyer setting up shop in Ulaanbaatar. David Wegner, a Hong Kong-
based partner, has opened an office for Australia's Allens Arthur Robinson. But Michael Alderich, an
American partner at Hogan Lovells, a self proclaimed "regular since 1993", has bragging rights as the
first lawyer to establish a Mongolian outpost on behalf of a major Western firm.
Mongolia is not yet a first-world country, and while Aldrich and Wenger rave about Mongolian
summers, the winters take some getting used to. Aldrich compares Mongolia, as far as development
is concerned, to China in the 1980s, but it differs in a critical way: "Mongolia is the unsung success
story in Asian human rights. I was in Hong Kong in 1989 hearing the depressing news coming out of
Beijing before the 4 June incident in Tiananmen Square. Nine months later, the same situation
arose here in Mongolia. Instead of maintaining their political monopoly on power, the dictators let
go and the country has evolved away from a Soviet-style dictatorship into a democracy.‖
Though its homeland is massive, Ulaanbaatar's business community is more mini. Mining is a huge
industry in both Australia and Mongolia, so it is no surprise to find a sizable group of Australians--
about 300, Ellis estimates--in Ulaanbaatar. That doesn't count the 200 Mongolians who studied in
Australia, she added.
Source: ABA Journal
PAKISTAN TAKES A LESSON FROM MONGOLIA
Pakistan is looking to Mongolia as a model of a country that has mastered the strategy of mining-led
growth.
In Pakistan there has been growing talk regarding its massive and largely untapped mineral
potential. More specifically, Imran Khan, chairman of the Pakistan Tehreek-e-insaf, has hinted at
various rallies and forums that the country's future economic growth could be fueled by a natural
resources boom supported by foreign direct investment (FDI). Pakistan boasts the fifth largest
reserve of coal along with substantial reserves of copper, zinc, lead and aluminum.
The country acknowledges that Mongolia has taken its own vast reserves to transform itself into the
country with the fastest growing economy in the world. While mining in Pakistan accounted for a
meager 2.4 percent of its gross domestic product (GDP) in 2011, in Mongolia mining is almost 16
percent of its GDP. Mongolia, too, has vast deposits of coal, and copper, as well as gold, which has
led an investment boom in mining, driving economic growth to an unprecedented 17 percent last
year.
While China and India are suffering from growth in fatigue and economic overheating, Mongolia
could see the size of its economy double every three or four years.
Source: Dawn Urdu
HOW THE SPARSELY POPULATED LAND OF CHINGGIS SUCCEEDS AT THE OLYMPICS
In London, 29 Mongolians are competing in the 2012 Olympic Games, and the team expects to at
least equal its Beijing four-medal haul of two gold (judo and boxing) and two silver (shooting and
boxing).
Like Jamaica and Australia, Mongolia punches well above its weight at the Olympics. The reasons
for its success are simple. Mongolia is a country where one-third of citizens still roam the steppe
13. and semi-desert as nomads. It is a harsh life that develops muscle and fortitude.
―When you get up at dawn to milk the camels or grab the cattle by their horns, it builds natural
fitness,‖ said Secretary General J. Otgontsagaan. ―Mongolians, I think we're tougher than anybody
else.‖
The country's athleticism has been further honed by the legacy of a Soviet-style system that
provides ample state funding for promising young athletes. Each summer, Mongolia celebrates
Naadam, a sporting festival of epic proportions. Three so-called ―manly sports‖ are contested
nationwide: wrestling, horse racing, and archery. The whole country stops for days to watch the
games.
Mongolia's Olympic success contrasts with countries like India and Indonesia, which fare poorly when
populations figures are factored into medal counts. A nation of more than 1 billion people, India
only won its first individual Olympic gold in 2008. Even China, when its 51 gold medals in 2008 were
divided by its 1 billion-plus population, ended up ranking 47th out of 55 nations in a tally compiled
by Australian researcher Simon Forsyth. That put the People's Republic between Uzbekistan and
Argentina, not nearly as impressive as the absolute figure in which China topped the gold-medal
charts ahead of the United States.
According to Forsyth's calculations, Mongolia ranks sixth when its gold medal haul is factored
together with its population. Further brightening the country's prospects is the fact that Mongolian
gold, provided by Rio Tinto PLC from the Oyu Tolgoi copper-gold project it operates, has been used
to make the medals for the 2012 Olympics.
Source: Time
SCHEDULING CHANGE CREATES SNAFU FOR MONGOLIAN FANS AT OLYMPICS
Unhappiness with the ticket resale system for the London Games reached the boiling point Monday
afternoon after hundreds of Mongolians, some who had traveled to London from Mongolia, learned
that a schedule change meant they could not see the match of boxer and national hero U. Munkh-
Erdene.
―All these people have bought tickets for no reason,‖ said A. Tuya, a Londoner of Mongolian descent
who had a shouting match with a ticket manager. Officials are telling us to go watch [anyway].
Why? We're here to support a particular athlete from our own country.
A half-hour later, the ticketing manager returned to tell a crowd of 30 angry Mongolians that they
would get their ticket changed after all. A cheer went up from the throng. But that was no
consolation for the 200 or so Mongolians who had taken the advice to enter the arena and watch
some other country's athletes compete.
Source: USA Today
POLITICS
ENKHBAYAR SENTENCED TO FOUR YEARS
Mongolia's third president, N. Enkhbayar, has been sentenced to four years in prison on charges of
graft.
The sentencing was reduced from an original decision by the judge to give the president seven and
a half years in prison. The Sukhbaatar District Court found Enkhbayar guilty of charges that include
the illegal privatization of a hotel and newspaper and the misuse of donated television equipment
to broadcast his own television station.
The three-day trial experienced a number of delays on requests for added time for Enkhbayar's
lawyers to brief themselves on the case and changes to his legal counsel. The trial finally began on
July 31 with a verdict reached yesterday at 22:30.
In addition to his four-year prison sentence, ownership of TV9 television station will be transferred
to the state and he will have to pay 54 million tugiks ($39,987) in damages to the Gandan
monastery, to whom the court said the studio equipment was originally intended. The court,
however dismissed charges regarding 30 million tugriks for unpaid luggage transport fees to MIAT
14. Mongolian Airlines and a deal regarding steel manufacturing with state-owned Erdenet Mining
Corporation.
The former president's lawyers told press they intend to appeal the decision.
The conviction could spell trouble within the coalition government between the Democratic Party
and Justice Coalition, which Enkhbayar leads himself. While some semblance of a government has
been formed it has yet to be officially installed. Luvsandendev Sumati, director of the Sant Maral
Foundation, a polling agency, reminds that the partnership is a fragile one that could come apart.
―This is a test for the assumed coalition's stance on corruption for this country,‖ said Sumati. ―It's a
test to see if they can come to an agreement.‖
Source: BCM
Z. ENKHBOLD VOWS FOR A UNITED COALITION
Mongolia's newly elected Speaker of the Parliament, Z. Enkhbold, promised to command a strong
coalition amongst Mongolia's opposition parties and would not allow the Mongolian People's Party
(MPP) to hijack control of Parliament.
In response to the MPP's protest over not appointing the MPP‘s General Secretary G. Zandanshatar,
he assured journalists that the appointment process was in line with the law. Enkhbold went further
to say that the Constitutional Court, if drawn to make a decision, would have to approve the
appointment as it followed guidelines for appointment.
―A large controlling government should not allow a minority to dictate the will of Parliament,‖ said
Enkhbold. ―We will have to adjust the current situation.‖
He reminded reporters that in 2004 too, no political party won a majority, and that it would be his
responsibility to organize a united government. The new Speaker promised to maintain a united
government while combating corruption within the ranks of Parliament.
Source: Udriin Sonin
DP HEAD REFUSES TO NEGOTIATE MPP GRIEVANCES
D. Erdenbat, the head of the Democratic Party (DP), has refused to negotiate with the Mongolian
People's Party (MPP) on its grievances.
MPP head O. Enkhtuvshin met with coalition representatives to discuss its three grievances of
appointing a MPP representative as Parliament speaker, resolving the electoral dispute between the
two candidates for the seat to represent Uvurkhangai Aimag, and a hand recount of ballots to
elections for representation of some electoral districts.
Erdenbat said there would be not any discussion on these matters and would only meet as the head
of the grand coalition. The party leader said that only the General Election Committee could order
a hand recount to any election, and the same applies to the Uvurkhangai electoral dispute.
In light of the numerous disputes brought up by the MPP, the DP has established a working group led
by Kh. Temuujin, N. Batbayar, and D. Gankhuyag to act as a medium. Negotiations on the
establishment of a joint government are under way, and the structure of government has already
been decided and will be presented soon, said Erdenbat.
Source: Zuunii Medee
MPP OFFICIALS STEP DOWN
The governing committee of the Mongolian People's Party (MPP) has officially resigned from its post
with the incoming of the new grand coalition between the Democratic Party (DP), Civil Will-Green
Party (CWGP) and Justice Coalition (JC).
The general session of Parliament was suspended due to excessive absence of MPs from the MPP
who abstained due to uncertainty over the winners of the Uvurkhangai electoral district. There is
also debate within the MPP over the party's new general secretary. The three possible candidates
are Minister of Environment and Tourism Tsogtbaatar, former MP Sukhbaatar, who lost his election
campaign at Darkhan-Uul, and former MP and Minister of Foreign Affairs Zandanshatar, who lost his
election at Bayankhongor Aimag.
Source: Business Mongolia
15. GOVERNMENT APPOINTS HEADS AT SPC AND BANK OF MONGOLIA
Two appointments were made to the heads of government agencies at a government meeting.
Government appointed Ts. Nanzaddorj as head of the State Property Committee (SPC) and J.
Ganbat as Chairman of the Bank of Mongolia's Board of Directors. Nanzaddorj has worked as head of
the Privatization Department of the SPC and Ganbat as head of the Income Department of the
Ministry of Finance (MOF).
Source: News.mn
CHANGE AT THE TOP
The month-long wrangle over the make-up of the new governing coalition is almost over. It was
announced that the Democratic Party (DP) will rule in coalition with two smaller parties that have a
total of 13 seats to replace the Mongolian People's Party (MPP).
Notable among the challenges facing the coalition is how to deal with the rise of resource
nationalism. According to Dale Choi of Origo Partners, a private-equity company, 25 members of
Parliament can be classed as ―resource nationalists,‖ such as former President N. Enkhbayar. The
ex-president, who is on trial for alleged graft and leads the Mongolian People's Revolutionary Party
(MPRP), has not ruled out running for the presidency again in the future, and has been vocal about
changing the country's stake in mining contracts.
According to L. Sumati of the Sant Maral Foundation, a polling agency, Enkhbayar is not a danger to
sitting president, Ts. Elbegdorj in next year's election, ―since the coalition agreement states that
they will have a single candidate representing all three parties—and that is likely to be the
incumbent. He could, however, be a danger to relations with Ivanhoe Mines Ltd. and its largest
stakeholder, Rio Tinto PLC, if his stance on natural resources turns out to be anything other than
political posturing.
The new coalition will also need to find a better way to distribute Mongolia's mining wealth. Many
voters, especially those in the ger districts, believe too much goes to line the pockets of the
powerful at the expense of the population at large. Sumati said this election was one that ―people
actually tried to change the political establishment,‖ fed up with what they saw as parties only
helping those with influence.
The losses of the MPP might be temporary, however, since Mongolian voters could well elect an MPP
candidate in next year's presidential election in order to balance out the influence of the two main
parties. Consequently, the new coalition will be doing all it can in the months ahead to make a case
for retaining the new status quo.
Source: The Economist
WITNESS GIVES TESTIMONY IN ENKHBAYAR TRIAL
A local court heard testimony from a key witness in the trial for former President N. Enkhbayar on
corruption charges this week. The first hearing had been delayed many times before finally
beginning this week on 31 July.
State prosecutors read testimony to Sukhbaatar district court from D. Choijamts, abbot of Gandan
monastery, about the donation of television equipment at the center of one of the charges.
Enkhbayar is charged with illegally using the equipment to set up his own television station, TV9.
The abbot, who did not attend the hearing because he is attending the London Olympics with
President Ts. Elbegdorj, said in his statement he visited Japan at the invitation of Japanese
Buddhist organization Agon Shu, based in Japan's Kyoto, with Enkhbayar in 2000.
"Before the trip, there was discussion with Agon Shu about setting up a TV station under the
monastery. It was my understanding that the TV equipment donated by the Agon Shu was for
Gandan monastery for Mongolian Buddhists," the statement said. "I don't know what Enkhbayar
talked about with the Japanese. Our monastery later received some money for ownership of the TV
station set up by Enkhbayar and the money was spent on building the Mongolian Buddhist temple in
India," he said.
However, S. Narangerel, one of Enkhbayar's defense lawyers, said the donations was a personal one
made to Enkhbayar and Choijamts and that a prominent Mongolian businessman had to pay the
16. custom taxes and help set up the television station since the monastery could not.
Source: English CRI
DEADLINE FOR CASH EXCHANGE FOR TT SHARES PASSES
This week marked the expiration for citizens to apply for cash in-lieu of 1,024 of their 1,072 shares
of Erdenes-Tavan Tolgoi JSC.
The Labor and Welfare Service Agency announced that it would no longer accept requests for cash
payments for shares beginning on 1 August. Citizens who would still like to exchange their shares
for cash will have to appeal to the human development officer from the Department of Labor and
Welfare Services.
Source: Undesnii Medee
IAAC MAKES HEADWAY IN ITS OFFENSE AGAINST CORRUPTION
The Investigation Division of the Independent Authority Against Corruption (IAAC) reported on its
activities in 2012 in a press conference which closed with an appeal to make 2013 the "Year Against
Corruption".
In the first half of 2012, the IAAC reported on the assets and incomes of 3,116 civil servants and 225
officials. Regulations dictate that anyone nominated for a position in government must release a
preliminary personal interest report that will be reviewed by the IAAC. Of the 564 reports from
officials from 100 organizations, the agency made evaluations to 534 civil servants.
Also this year, the IAAC conducted investigations into 109 criminal cases regarding 434 incidents, a
23 percent increase compared with the same period last year. Bribery, comprising 80 percent of all
incidents, experienced a 12 percent increase from the year before.
The IAAC said it had convicted parties in 22 of its cases, or 20 percent all its investigations, while 15
percent were transferred, 17 percent were combined with other criminal cases and the
investigation into one case was suspended.
E. Amarbat, the head of the Investigation Division of the IAAC, noted that during investigations
lawyers colluded with certain organizations to create complications.
Source: Info Mongolia
CITIZENS' PETITIONS HALT NEW CONSTRUCTION PROJECTS
Chairman of the Ulaanbaatar City Council D. Battulga has ordered the Specialized Inspection Agency
to suspend any new permits for construction. He explained that the suspension is necessary because
the city administration has received numerous claims of illegal construction projects. City
government has made exception, however, for projects it is funding.
Source: Udriin Sonin
DP PLANS TO OPEN NEW GOVERNMENT PALACE WING TO THE PUBLIC
Democratic Party (DP) head and Prime Minister N. Altankhuyag announced in a press conference
that one of the party's first objectives is to open an extension of the Government Palace that would
be open to the public.
The act would be a gesture to demonstrate a new era of transparency from government. Visitors
would be able to pay homage to the nine ceremonial flags and visit a museum of the history of
Mongolia's government.
The project would also include the release of a special phone number citizens could contact and
express their opinions and suggestions.
The estimated sum for renovations is some MNT 370 million.
Source: Zuunii Medee
JAPAN’S MOFA TO REORGANIZE INFORMATION DISTRIBUTION TO MONGOLIA
Japan's Ministry of Foreign Affairs (MOFA) will carry out an organizational overhaul next Wednesday
to strengthen its ability to distribute information to countries such as Mongolia about itself abroad,
Minister Koichiro Gemba said.
17. The ministry will integrate the department that handles news and information supplied to the
media with another in charge of activities to disseminate information about Japanese culture to
other countries and regions, Gemba said. Separately, the ministry will set up the Second China and
Mongolia Division under the Asian and Oceanic Affairs Bureau. The division will take charge of
economic issues related to China, which has a rapidly growing economy.
Source: News.mn, Yomicuro
PUTTING A LID ON ANGER OVER RESOURCE BOOM
Although Mongolia has the fastest growing economy in the world, anger amongst the populace is
growing nearly just as fast.
The poverty rate increased between 35 to 40 percent from 2008 to 2010. And although Ulaanbaatar
has become a typical Asian boom city, one only has to look to the hills that surround the city to the
ger districts that go without roads or running water and rely on coal-burning stoves for warmth in
winter. These city slums house more than half the population of the capital
Voters warily turned to the business-friendly Democratic Party (DP) in last month's parliamentary
elections. But falling short of a majority, it was forced to join forces with the Justice Coalition. But
there's a catch: The Justice Coalition ran on the platform of reversing policies it believes are too
generous to foreign mining investors.
About a decade ago, when Chinese demand for minerals exploded, Ulaabaatar sought to attract
Western expertise rather than relying on its two giant neighbors. But attracting private foreign
investment into a country with little infrastructure and poor rule of law, Mongolia had to give
Western firms sweetheart deals. Many criticize the terms of the Oyu Tolgoi investment agreement,
which granted Ivanhoe Mines Ltd. 66 percent interest in the project. Critics also charge that foreign
mining companies are paying effectively no taxes.
Before the election, the MPP-led Parliament tried to capitalize on popular anger by passing a bill
that would increase government revenues by restricting foreign ownership of strategic industries to
49 percent, unless Parliament granted exemption. The rest would have gone to state-owned
enterprises.
The DP argued that abrogating already signed contracts would damage Mongolia's international
reputation and risk driving out Western investors, essentially leaving Mongolia at the mercy of the
Chinese. Ultimately, a watered down version passed, but investors‘ anxiety has not been soothed.
The DP hopes the reaction of foreign investors will be mitigated by the knowledge that their plight
would be much worse under another government. It helps that, given the anticipated returns on
investment in the country, even restructured deals will remain lucrative.
Source: World Politics Review
A MONGOLIAN LESSON FOR INVESTING HORDES
Frontier investing in countries such as Mongolia promises growth opportunities that developed world
economics just can't offer. The flip side is that investors often have to stomach the messy politics of
emerging nations.
Mongolia has drawn plaudits, investors and the attention of bankers in the past couple of years.
Global mining giant Rio Tinto PLC is heavily invested there and this week spent another USD 1
billion to fund the Oyu Tolgoi copper and gold project. In February, Goldman Sachs took a 4.8
percent stake in one of the country's top three banks. Hillary Clinton, during a visit last month,
lauded the country's burgeoning democracy.
But too much optimism ignores political risk. The canary in Mongolia's coal mine is SouthGobi
Resources Ltd. a Hong Kong-and Toronto-listed coal miner spun out of Canada-based Ivanhoe Mines'
remaining 60 percent stake in the company for USDS 926 million. With an upcoming election to
posture for, the government introduced new foreign ownership legislation that effectively blocked
the Aluminum Corp. of China Ltd.'s (Chalco's) plans.
Landlocked Mongolia needs China for trade, but Chinese power looms too large. State-owned Chalco
extended the deadline for its offer by 30 days last month, and on Thursday said it would extend the
agreement another 30 days. In the meantime, operations at SouthGobi Resources' main mine have
18. ceased as Mongolia's government stalls on handing out necessary permits and approvals. Its shares
have since fallen by about 50 percent from before the Chalco offer.
Source: Wall Street Journal
RELIGIOUS FREEDOM IN MONGOLIA
While the constitution and other laws and policies protect religious freedom, in practice the
government has enforced these protections selectively.
The government does not demonstrate a trend either improved or deteriorated in the respect and
protection of religious freedom rights, which varied between provinces. The law limits proselytizing
and some religious groups, particularly foreign-run religious organizations, faced bureaucratic
harassment from local governments or were denied registration.
Buddhism is closely linked with the country's cultural traditions, with local scholars claiming that
more than 90 percent of citizens subscribe to some form of the religion, although practices vary
widely. Lamaist Buddhism of the Tibetan variety is the traditional and dominant religion. Ethnic
Kazakhs, most of whom are Muslim, are the largest ethnic minority, constituting approximately 5
percent of the population nationwide and 80 percent of the population of the western province of
Bayan-Ulgii. The Muslim Association estimates there are 120,000 Kazakh Muslims and 30,000 Khoton
Muslims, largely in the province of Uvs. Muslims operate more than 40 mosques and ten Islamic
student centers, and there are an estimated 3,000 students of Islam.
There are reports of societal abuses and discrimination based on religious affiliation, belief, or
practice. The growing influence of Christian religious groups has worried some and in certain cases
has led to the harassment of Christians. Muslim institutions generally fared better as a result of
their deeper historical roots in society.
There is a small but growing number of Christians, with estimates of Christian practitioners to be
more than 4 percent of the population. Of that, an estimated 90 percent are Protestant, and 9
percent are members of the Jesus Christ Church of Latter-Day Saints. Roman Catholics and
members of the Russian Orthodox Church together account for the remaining 1 percent.
Read more…
Some citizens practice shamanism, often in tandem with other religions, but there are no reliable
statistics on their number.
The constitution and laws protect religious freedom and the constitution explicitly recognizes
separation of church and state. Religious groups and non-government organizations (NGOs) must
register with local and provincial authorities, as well as the General Authority of State Registration
to legally operate.
Source: U.S. Department of State
ANNOUNCEMENTS
MINExpo INTERNATIONAL 2012 - Registration is Open and Housing is Filling Up Fast!
MINExpo INTERNATIONAL® is the world's premier mining event. From September 24-26, find every
mining-related product, service and technology at the Las Vegas Convention Center.
If you are in coal, industrial/nonmetallic minerals, precious metals, ferrous/nonferrous metals,
sand, gravel or stone, your company should not miss this once-every-four-years opportunity to be at
MINExpo® 2012.
More than 1600 exhibitors will display all facets of mining — from exploration and surveying, mine
site development, excavating, materials handling and haulage, processing and preparation, drilling
and safety equipment to computer technologies, replacement parts and engineering, construction,
and reclamation services —under one roof.
In addition, there will be 20 education sessions covering safety, bulk materials handling,
exploration, underground and surface mining, maintenance, processing, new mining projects,
markets, environmental issues, coal, and more.
Registration deadline is 5PM Friday, August 3, 2012.
19. Contact BCM at 70114442 or tugi@bcmongolia.org for registration and more information about the
event.
___________________________________________
DISCOVER MONGOLIA-2012, AUGUST 30-31
The Discover Mongolia conference will be held on August 30-31 in Ulaanbaatar. The conference
venue will again be the Children's Palace. BCM is a supporting organization of Discover Mongolia
2012, and its members will have the opportunity for an early-bird rate for attendance.
Oyu Tolgoi LLC, Mongolia's largest copper and gold mining firm, will be the event's premier sponsor,
in addition to the forum's ―gold sponsors‖: Monnis International Inc., Xanadu Mines Ltd., Aspire
Mining Ltd., Micromine Mongolia LLC, and Mongolian Mining Corp. The conference agenda will
concentrate on recent developments that have taken place in Mongolia's mining and foreign
investment landscape.
For more information, call +976 7014 9762 or email info@discovermongoliaforum.com.
___________________________________________
MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, OCTOBER 30-31
The Mongolia Investment Summit 2012 will be held from 29 to 30 October at the Four Seasons Hotel
in Hong Kong to once again bring the best of Mongolia's investment opportunities to Asia's leading
investment hub.
Now in its third year, the summit has strongly cemented its position as the largest Mongolian
investment event outside of Ulaanbaatar, providing foreign investors with the most comprehensive
overview of Mongolia's key economic growth sectors all under one roof.
Speakers at the event include Altai Khangai, Chief Executive Officer of the Mongolian Stock
Exchange (MSE), Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi LLC, and
James Passin, Co-founder and Manager of Firebird Mongolia Fund.
BCM is a Supporting Association of the event again this year. For more information, find a brochure
of the event by logging onto the website: mongoliainvestmentsummit.com.
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REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.
BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
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REGISTER FOR BCM’S MINING SUPPLY CHAIN DATABASE AT NO COST
The new version of BCM‘s Mining Supply Chain Database is ready for use. Following the initiative of
Oyu Tolgoi LLC, the BCM has maintained the Mining supply chain database since March 2009. It is
honor to introduce you to the new version of the database which is totally upgraded as to its
content and use of information technology opportunities.
We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain
Database. Please visit here for registration.
If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org
or 317027.
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20. POSTINGS ON MONGOLIAN WEBSITE ‘PRESENTATIONS’ AND ‘NEWS’ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via link to
bcm.mn/itgeluud. Several presentations already posted include World Bank‘s Mongolia Quarterly
Economic Update–June 2012; 11 speeches from the 2nd Coaltrans on May 23-24 in UB.
As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
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POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND ‘MONGOLIAN
BUSINESS NEWS’
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations
from BCM‘s June 25 monthly meeting; 12 presentations from the 2nd Coaltrans on May 23-24 in UB;
3 speeches from ―Corporate Governance Training for Directors‖ on April 27-28; 12 presentations on
Mongolian entities at Mines and Money Hong Kong 2012 on March 21-23; 11 presentations from Coal
Mongolia 2012 on February 9-10; and speeches from all BCM‘s monthly meetings in 2011-12.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit
Barometer, June 2012, and the Polit Barometer, April 2012 by Sant Maral Foundation (Mongolian
and English versions); Risk Report for Mongolia 2012 by Mongolia Economic Forum; ―Preliminary
estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant
to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire
survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive
Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; 2011 Mongolia
Investment Climate Statement by Economic and Commercial Section of U.S. Embassy, Ulaanbaatar,
Mongolia; and Transition Report 2011 (Mongolia data) by EBRD and the Economic Research Institute.
We are now posting some news stories and analyses relevant to Mongolia to BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all
together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,
and will incorporate items that are already on the home page, so that it presents a consolidated
account of the week‘s events.
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SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
Of course for news information, interviews, and announcements regarding our organization, visit
the official BCM website at www.bcmongolia.org and www.bcm.mn.
22. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
June 30, 2012 *14.7% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 15.1% y-o-y, Ulaanbaatar city, June 30, 2012
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
23. CURRENCY RATES – August 2, 2012
Currency Name Currency Rate
U.S. dollar USD 1,341.16
Euro EUR 1,676.25
Japanese yen JPY 16.84
British pound GBP 2,095.43
Hong Kong dollar HKD 172.85
Chinese yuan CNY 210.72
South Korean won KRW 1.16
Russian ruble RUB 40.76
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.
