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BCM Mongolia NewsWire Highlights Business, Economic and Political News
1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 47, November 21, 2008
NEWS HIGHLIGHTS:
Business: MPs’ group favors 51% share in Tavan Tolgoi, 34% in Oyu Tolgoi; Ivanhoe “well-
positioned” to pursue “focus” on Oyu Tolgoi; Erdene “opportunistic in this period of
uncertainty”; Drop in Cameco’s adjusted earnings; Work on computerized mining
registry system to begin; Bayar consults with Chilean Minister on mining copper;
Goldman Sachs team calls on President; Khan Bank wins secure ratings from Moody’s;
Proposal to put Development Fund money in banks; Western Prospector moves into
court against Tinpo; Some Aero Mongolia staff threaten to go on strike; Spa opens in
Terelj Hotel and Resort.
Economy: GDP expected to rise 28.2% over 2007; Central Bank cuts interest rate; Inflation the
main target of Monetary Policy 2009; New measures showing results, claims Central
Bank chief; Tax boss hopeful of meeting this year’s goals; Budget deficit increases;
Mongolians abroad send home USD1 million every two days; Money supply, foreign
currency deposits fall; Dollar price rise was manipulated, says Bank official.
Politics: Government tightens belt; MPs criticize wasteful expenditures; New vice ministers
unlikely before next month; MCC to fund only after UB Railway submits audit report; US
supplied radiation scanners at Mongolian border posts; 20% of petrol reserve to be sold;
Erdenet anniversary in Moscow; Projects identified for using Chinese loan; Fall in
authorized spirits plants; Training planned for provincial staff at all levels; Inspecting
teams find child labor is common.
BCM’S D1G1TAL M0NG0L1A – Technology Symposium
We would like to remind BCM Members and Friends to have your colleagues register for BCM’s first
D1G1TAL M0NG0L1A-Technology Symposium on Tuesday, November 25 from 2 PM to 5:45 PM in
the Chinggis Khan Hotel.
To assure seats and free flash disks with all presentations at the Symposium, please register now by
calling or Emailing the BCM office – 11-332345 or info@bcmmongolia.org.
This bi-lingual technology symposium is designed for “non-IT” individuals. The Symposium is
offered free to BCM members and for MNT 5,000 to non-members. A reception for all attendees
will immediately follow the conclusion of the Symposium, also in the Chinggis Khan Hotel. Link to
www.news.mn for more information.
BUSINESS
MPs’ GROUP FAVORS 51% SHARE IN TAVAN TOLGOI, 34% IN OYU TOLGOI
The Government of Mongolia is likely to try to pin down a deal that will give it 34 percent
ownership of the country's giant Oyu Tolgoi copper deposit as falling commodity prices push it to
back away from seeking majority control. A parliamentary working group studying revisions to the
country's minerals law has proposed that agreements for Oyu Tolgoi -- which is being developed by
Ivanhoe Mines and Rio Tinto -- as well as for the big Tavan Tolgoi coal project be negotiated before
the law is finalized.
"We had expected that first there would be a minerals law and then an investment agreement. But
the new proposal is to proceed on an investment agreement before the new law," said Sodontogos,
2. an advisor to the Mongolian National Mining Association. Parliament may consider that suggestion as
early as December1, she said.
The proposal would include a recommendation for the state to hold 34 percent in Oyu Tolgoi and 51
percent in Tavan Tolgoi, Mongolian media have said and sources close to the working group have
confirmed. The group was scheduled to release its recommendations on November 15, but has not
done so, due to splits within the group over the proper role of the state and the best way for
Mongolia to realize wealth from its mineral deposits.
The Government is unlikely to invest any money on developing either project. Its proportionate
share of such expenses will be adjusted against taxes, royalty and other fees, dividends and
advances. An emphasis in both projects will be on processing the raw extraction. Development of
infrastructure, water and energy supply, and urban planning will be a formal part of the
agreements. Facilities for training workers will also have to be installed.
Source: Reuters.com, en.News.mn
IVANHOE “WELL-POSITIONED” TO PURSUE “FOCUS” ON OYU TOLGOI
Ivanhoe Mines remains focused on opportunities to advance the company's flagship Oyu Tolgoi
copper-gold project. In a statement accompanying the release of its results for the third quarter
ending September 30, President and Chief Executive Officer John Macken said that despite a net
loss of USD88 million in third-quarter 2008(or USD0.23 per share), largely a result of USD59.7 million
in exploration expenses, and of forex losses and other expenses amounting to USD20 million, the
company is well positioned with quality assets and a significant cash position of approximately
USD460.8 million, to fund its minimum obligations for at least the next 12 months.
"We believe that shares in soundly established companies that have strong working capital
positions, excellent project portfolios, experienced partners and proven management teams, such
as Ivanhoe Mines, will hold very attractive upside appeal for investors in coming months,” Mr.
Macken says. "We expect that the world's key economic drivers - including major infrastructure
investments, industrialization and urbanization in China and India, for example - will resume higher
rates of growth and help to underpin strengthening demand for many commodities, including
copper and coal."
Mr. Macken said that Ivanhoe Mines, like its peers, is evaluating the developments in capital
markets that have added new conditions and restraints on access to debt and equity financing. "We
are reviewing our 2009 capital investment program in light of the current and anticipated global
economic environment. We are prepared to reconsider our projected pre-construction spending on
the Oyu Tolgoi Project and, if necessary, act decisively to further curtail spending if sufficient
progress is not made toward the timely conclusion of an Investment Agreement with the Mongolian
Government," he said.
Source : www.ivanhoemines.com
ERDENE “OPPORTUNISTIC IN THIS PERIOD OF UNCERTAINTY”
Erdene Resource Development Corp. released its third quarter financial results on Monday and
provided an update on the company's principal projects that include the Zuun Mod molybdenum
project and coal exploration in Mongolia. Erdene lost USD887,425 or USD0.01 per share for the
three-month period, and had approximately USD20.6 million of cash and cash equivalents on hand
compared with USD8.7 million as of December 31, 2007. Mr. Peter Akerley, President and CEO, said,
"Erdene is reducing or postponing early-stage or grassroots programs, (but) remains focused on
creating value by prudently advancing its core commodity projects. Our strong cash position will
enable the company to fully fund its projects through 2011 and, guided by a strong management
team, (we) remain opportunistic in this period of uncertainty."
Calling Zuun Mod the most significant new metals discovery in Mongolia since Oyu Tolgoi and
perhaps one of the largest new primary molybdenum discoveries globally in the past two decades,
the report says, “Zuun Mod continues to provide tremendous potential for additional expansion and
discovery, and situated on the doorstep of the world's largest steel producing and fastest growing
molybdenum consuming region, is uniquely positioned to take advantage of future growth.”
Erdene is involved in a comprehensive coal generative and acquisition program throughout
3. Mongolia, and with estimates suggesting that over the next 25 years China will need approximately
6 million tons per month in new coal production, the Erdene-Xstrata coal alliance is positioning
itself to become a major participant in the industry.
Source: Marketwire
DROP IN CAMECO’S ADJUSTED EARNINGS
Lower uranium prices and higher operating costs contributed to a 46% drop in Cameco Corp.'s third-
quarter adjusted earnings. Cameco holds a 53 percent stake in Centerra Gold which has the rights
to mine Mongolia’s Boroo site. Cameco, the world's largest uranium producer, has presented its
adjusted earnings in the quarter CAD142 million or 41 Canadian cents a share from CAD263 million
or 70 Canadian cents per share a year earlier.
Source: www.mongolia-web.com
WORK ON COMPUTERIZED MINING REGISTRY SYSTEM TO BEGIN
GAF AG, based in Germany and belonging to the Telespazio group of companies, begins work this
month on a Euro 0.5 million contract to install a new computerized mining registry system for
Mongolia, a big step towards creating a transparent system to grant, manage and cancel mining
permits. Professional management of mining titles is considered a prerequisite to increase
investment and growth in the mining sector of Mongolia.
The project’s objective is to strengthen the property rights and enforcement of agreements and
contracts within Mongolia’s mining industry, improve the transparency of the mineral licensing
process and the Government’s regulatory capacity through information and management. Existing
computerized and non-computerized systems will be brought together within the new system.
GAF will be working for the Mineral Resources and Petroleum Authority of Mongolia. The project is
expected to be completed in 24 months and will be funded by the World Bank, and the
International Development Association.
Source: Mongolia-web.com
BAYAR CONSULTS WITH CHILEAN MINISTER ON MINING COPPER
Prime Minister S.Bayar recently met with Santiago Gonzales, Minister of Mining in Chile, one of the
world’s biggest copper producing countries. They discussed ways of cooperation in the mining
sector. Mr. Bayar expressed interest in details of the legal environment in Chile’s mining sector,
how it attracts and decides on investment, its export regulations, norms followed in copper
exploitation, and the processing industry. Mr. Gonzales referred to similarities between conditions
in Chile and Mongolia and favored setting up a consultative committee to expedite cooperation and
enlarge its areas.
Source: www.news.mn
GOLDMAN SACHS TEAM CALLS ON PRESIDENT
President N.Enkhbayar received on Monday a team from Goldman Sachs, led by Mr. Bach Ruchford,
Executive Director of the global investment banking, securities and investment management firm.
They mainly exchanged opinions about investment in major mining projects in Mongolia and the
principles that govern State policy in this matter. The visitors wanted to get a clear idea of the
Mongolian position, especially in the present financial crisis. The President heard the visitors’
proposals and asked questions about these.
Source: Business-Mongolia.com
KHAN BANK WINS SECURE RATINGS FROM MOODY’S
Moody's Investors Service has awarded Khan Bank secure credit ratings following its annual
assessment exercise. "The ratings reflect Khan Bank's leading position in consumer, micro- and
small business finance, its dominant market shares in loans and deposits, stable and experienced
management team, strong profitability, and improving asset quality," says Cherry Huang, Vice
President at Moody's.
4. The bank is rated Baa3/P-3 for its long-term/short-term local currency deposits and B2/NP for its
long-term/short-term foreign currency deposits. The outlook for all these ratings is stable.
Khan Bank reported assets of approximately USD687 million as of June 30, 2008. Its shareholders
are Sawada Holdings Co. Ltd, Tavan Bogd Trade Co, Ltd, the International Finance Corporation
(IFC), Development Alternatives, Inc. (DAI), and the Morrow Family Trust. The Board of Directors
consists of Mr. Hideo Sawada, President and CEO of Sawada Holdings, Mr. Yoshiaki Mishima, a
director there, Ms. D.Hulan, Executive Vice President of Tavan Bogd Trade, Mr. Hiroshi Arichi,
Director of the IFC's Tokyo office, and Mr. J. Peter Morrow, the Bank's CEO.
Source: Montsame
PROPOSAL TO PUT DEVELOPMENT FUND MONEY IN BANKS
The Government has approved a proposal to transfer half of the money in the Mongolia
Development Fund account with the Central Bank to commercial banks. If Parliament now agrees, it
will also have to identify the banks where the money would be kept. At present the fund has
MNT455 billion, mainly proceeds from the windfall profits tax. The Central Bank pays 0.5 percent
interest on this. Keeping half of this money in commercial banks will ensure higher returns for the
Government and also help expand the credit market, leading to increased economic benefits to the
country.
Asked about the proposal, the Central Bank head, Mr. A. Batsukh said he found nothing wrong with
the idea if it was to be a short-term measure. The Bank of Mongolia would be happy to cooperate
with the Government in this regard.
Source: Ardiin Erkh, Onoodor
WESTERN PROSPECTOR MOVES INTO COURT AGAINST TINPO
Western Prospector announced on Tuesday that it has commenced legal proceedings against Tinpo
Holdings and others in connection with the failure of Tinpo to perform its obligations under the
Support Agreement dated July 15, 2008 and the associated Tinpo offer to acquire all common
shares of Western for cash. The offer was withdrawn by Tinpo on September 30, 2008.
Western has filed a Notice of Application with the Ontario Superior Court of Justice seeking certain
remedies from Tinpo, 0829984 B.C. Ltd. (a wholly-owned subsidiary of Tinpo), Yunfei Chen, Howard
Balloch and The Balloch Group in connection with the withdrawal of the offer. Western will provide
its shareholders with additional information as it becomes available.
Source: Marketwire
SOME AERO MONGOLIA STAFF THREATEN TO GO ON STRIKE
After waiting since June for a reply from the management to their letter asking for a wage
increase, 20 workers of Aero Mongolia LLC, mainly engineers and technicians, have now decided to
go on strike from November 24 to press for their demand. They have formed a union to protect
their rights. The workers want a 30 percent raise over their present monthly salary of MNT 800,000
to cope with the price rise all around. This salary compares well with the general wage levels in the
country. Aero Mongolia employs 200 workers.
Source: Undesnii shuudan
SPA OPENS IN TERELJ HOTEL AND RESORT
The Terelj Hotel and Resort in the Terelj National Park, a one-hour drive from Ulaanbaatar, has
opened a luxury spa. Called the Tereljmaa Spa, it occupies an entire wing of the hotel and covers
two floors. Facilities include six treatment rooms – including two double treatment rooms – a large
relaxation room, a manicure and pedicure area and saunas. There is also a large swimming pool and
a gym area. Treatments offered combine Mongolian influences and western philosophies.
Source: www. leisureopportunities.com
ECONOMY
GDP EXPECTED TO RISE 28.2% OVER 2007
5. The National Statistical Office has estimated that GDP in 2008 would reach MNT5,895.5 billion at
current prices, equivalent to MNT3,650.6 billion at 2005 constant prices. This will be an increase of
28.2 percent at current prices and by 9.8 percent at 2005 constant prices over 2007. GDP per capita
then works out to MNT2,218,400 at current prices or MNT1,373,700 at 2005 constant prices. The
major contribution to the rise comes from livestock, whose number will reach 43.1 million, an
increase of 7 percent over 2007 figures. Crop production has gone up 21.0 percent, mining and
quarrying 1.4 percent, manufacturing 8.7 percent, and services 13.9 percent.
Source: www.nso.mn
CENTRAL BANK CUTS INTEREST RATE
The Central Bank of Mongolia has cut its interest rate by 0.5 percent to bring it back to 9.75
percent, as at the beginning of 2008. After that, the Bank raised the interest rate on two occasions
in an effort to control high inflation. Interests on inter-bank loans are now expected to fall. With
inflation falling to 27.9 percent (yoy) and likely to fall further, the Central Bank feels it is now safe
to allow more liquidity in the financial market.
Source: The Bank of Mongolia
INFLATION THE MAIN TARGET OF MONETARY POLICY 2009
Parliament last week approved the draft resolution on general guidelines for the state monetary
policy for 2009 after just one reading. The unusual haste had become necessary as without this
policy in place the discussion on the government budget and the guidelines for socio-economic
development could not be started. The monetary policy enjoins the Central Bank to keep inflation
rates, measured in relation to the consumer price index, at an average 9.5 percent between 2009
and 2011. The expectation is that it will stand at 12 percent at the end of 2009, 10 percent in 2010,
and 6.5 percent in 2011. In 2009, monetary and fiscal policies will be coordinated more effectively
to help control inflation and raise the living standards of the population.
During the debate several MPs blamed the Central Bank for letting inflation reach 34 percent (yoy)
this year. Others faulted the previous Parliament for increasing Government expenditures in the
mistaken certainty that mineral prices would forever be high.
Source: Montsame
NEW MEASURES SHOWING RESULTS, CLAIMS CENTRAL BANK CHIEF
After Parliament had approved the 2009 monetary policy, A. Batsukh, head of the Central Bank,
told media that the monetary policy prepared in August and September had to be revised when
declining copper prices made it clear that state revenues would decreased by a large amount. “Our
new measures are aimed at decreasing inflation and boosting economic growth. Results are already
being felt,” he said.
Asked if banks had been forced by monetary policy not to give loans, Batsukh denied that lending
had stopped but admitted that there was a credit squeeze. This was fully intended as the economy
needed to be cooled to a level the system could handle. Also, he said, a message was being sent to
construction companies who were building at a cost of USD2,000 per sq. meter. There was another
reason to halt the construction boom. If so many buildings were to come up just before the winter,
there would certainly have been a problem with heating.
Source: Ardiin Erkh, www.business.mongolia
TAX BOSS HOPEFUL OF MEETING THIS YEAR’S GOALS
The newly appointed Head of the National Tax Administration (NTA), Ts. Oyunbaatar, has said it is a
tough challenge for him and the 1,500 tax inspectors employed in 31 departments and sections to
collect at least MNT250 billion before the end of the year to meet the revenue expectations of the
government and regional budgets, but he was hopeful this goal would be attained.
Registration of tax sources has been improved, now this wider tax base has to be covered, and the
shadow economy shrunk. Conditions have to be created where everybody follows the law, and
proper tax service procedures have to be developed. As it is, lower prices of major export products
6. make it difficult to fulfill revenue goals but several measures are being worked out to ease the
position. Mongolia cut income and consumption taxes in 2007 to boost economic growth with the
result that it has the fifth lowest VAT rates among 88 countries, the second lowest personal income
tax rate, and the third lowest business entity income tax rate.
Even with al this, Mr. Oyunbaatar pinned his hopes for increased collection on the gradual
implementation of a tax management improvement project funded by the World Bank, wider use of
information technology, and foreign assistance and support. The NTA will foster cooperation with
tax services in selected foreign countries to help it focus on foreign-invested and joint-venture
companies.
Source: Montsame
BUDGET DEFICIT INCREASES
With total revenue and grants amounting to MNT1,774.9 billion and total expenditure and net
lending of MNT1,845.7 billion the general government budget showed an overall deficit of MNT70.8
billion in the first 10 months of 2008, an increase of MNT67.7 billion over the previous month’s
balance. Revenue and grants fell short of estimates by MNT146.9 billion or 7.6 percent, while
expenditure and net lending also was 9.8 percent or MNT200 billion less than planned. The budget
current balance however posted a surplus of MNT371.3 billion, an increase by MNT10.9 billion from
the previous month.
Compared with the same period in 2007, total tax revenue increased by 38.3 percent, with taxes
from foreign trade increasing by 50.1 percent and excise taxes by 36.5 percent.
Source: National Statistical Office
MONGOLIANS ABROAD SEND HOME USD1 MILLION EVERY TWO DAYS
Officially their number is put at 130,000 but actually some 430,000 Mongolians live, work, or study
in a foreign country. This means 1 in every 15 of its citizens is outside Mongolia. A Mongol Bank
study has revealed that these expatriates annually remit USD195million into the country. This is
more than USD one million every two days. This qualifies them to be treated as the largest sector
in the Mongolian economy.
Source: www.business.mongolia
MONEY SUPPLY, FOREIGN CURRENCY DEPOSITS FALL
The Bank of Mongolia reports that money supply (broad money or M2) at the end of October was 6.6
percent or MNT167.3 billion less than in September of 2008. At MNT2,357.7 billion this was an
increase of 4.1 percent over the figures for September, 2007. Currency in circulation decreased by
8.8 percent at the end of October from September, while showing an increase of 1.9 percent over
October, 2007. Time saving deposits decreased by 3.6 percent from September, 2008. Foreign
currency deposits decreased by 12.2 percent from September, even as they increased by 9.3
percent over October, 2007.
The amount of loans outstanding at the end of October increased by 39.5 percent. A break-up
shows outstanding personal loans increased by 38.4 percent, private sector loans 41.6 percent, in
other sectors by 2.4 times, and in other financial corporations by 2.1 times, while outstanding loans
in the public sector decreased by 9.8 percent. Principal amounts in arrears increased by 16.9
percent, and substandard and doubtful loans by 25.3 percent. Non-performing loans accounted for
3.1 percent of the total loans outstanding.
The nominal rate of the togrog against USD was 2.8 percent stronger at the end of October than it
was 12 months ago. This also showed a gain of 0.2 percent since September. Against the Euro the
nominal rate of the togrog was 10.9 percent stronger at the end of October than it was a year ago.
The gain in the past one month was 8.0 percent. Against the CNY however, the nominal rate of the
togrog weakened by 6.2 percent in a year, even as it rose by 0.1 percent in the last one month.
Source: Montsame
7. DOLLAR PRICE RISE WAS MANIPULATED, SAYS BANK OFFICIAL
Dollar rates skyrocketed to almost MNT1,200 from MNT1,145 for a few days last week. A Central
Bank official said there was no economic reason behind the sudden fall in the Togrog price.
Speculators manipulated the rate during the weekend when official corrective action could not be
taken. The Central Bank has started taking measures and prices have now begun easing again.
The Togrog also lost ground to the Korean won and the Chinese yuan before beginning to climb
again. A trader said the price was increased when demand for dollars rose sharply during the
weekend, and there was a dollar shortage.
Source: www.news.mn
POLITICS
GOVERNMENT TIGHTENS BELT
Faced with the need to cut MNT157 billion from the draft budgetary expenses to cope with the
anticipated fall in revenue resulting from the drop in global commodity prices, the Government
decided at a special meeting on Tuesday to:
- restrict official travel, both within and outside the country, to save Tg1 billion 82 million;
- reduce petroluem consumption to the tune of Tg650.6 million;
- impose a uniform bonus payment system in state organizations, thus saving Tg648.2 million;
- stop dispensing grants worth Tg465.4 million to political parties represented in local
assemblies;
- cut down on cell phone allowances to staff, thereby saving Tg285.7 million;
- reduce expenses on stationery by Tg242.2 million; and
- save Tg35.1 million by cancelling newspaper subscriptions of ministries and agencies.
Source: en.News.mn
MPs CRITICIZE WASTEFUL EXPENDITURES
N.Ganbyamba of the MPRP, who is spearheading attempts in Parliament to curb wasteful expenses
in government, has said it is not his plan or intention to chop productive allocations in the budget.
He wants to concentrate on bloated administration expenses. “Our bureaucratic apparatus has
grown to be like a child with a big head on a weak body. We have to reduce its size and costs. The
money that can be saved should be used in setting up industries and thus creating employment
opportunities,” he says.
Reminded that even as he talked of reducing costs, MPs themselves have increased the numbers of
their assistants to four, Ganbyamba told media the decision had been taken by the previous
Parliament. The present MPs would like to reduce the salary bill of the aides from the approved
MNT1.5 billion to MNT500 million. “We must also reduce the MNT500 million each MP gets to spend
on his electoral district,” he said.
In Parliament, MPs expressed surprise that 240 cars in the capital and another 500 in the provinces
were kept for the use of officials of the various agencies. They also wanted to know why it took so
long to bring the 100,000 tons of wheat from Russia when there would have been no Russian export
tax to pay if the import had been finished before July 1. Minister for Food T.Badamjunai explained
that the delay had been caused by both the Presidential election in Russia and the Parliamentary
election in Mongolia.
Source: Ardiin Erkh
NEW VICE MINISTERS UNLIKELY BEFORE NEXT MONTH
Almost 100 days have passed since the Government took office, but new vice ministers are still to
be appointed. Sources close to the Prime Minister say he is unlikely to look into the issue before
next month. All his time now is taken up by discussions on the budget, the monetary policy, and
other economic and social issues.
Source. www.news.mn
8. MCC TO FUND ONLY AFTER UB RAILWAY SUBMITS AUDIT REPORT
Mr. Robert Reid, Resident Representative of the Millennium Challenge Corporation, told Transport
Minister Kh. Battulga on Tuesday that some requirements have to be met before the MCC funds are
released. The Minister had met with Mr. Reid to learn why no part of the USS188 million earmarked
for Ulaanbaatar Railway was available as yet.
The MCC official clarified that the Railway, a joint venture between Mongolia and Russia, has not
yet submitted its audited financial report, which was a must before the grant could be released.
Sources in the Ministry of Transport say the delay or the failure is because the Mongolian
Government cannot reveal the audit report without the agreement of the Russian side, and this has
not yet been forthcoming.
Source: Onoodor
US SUPPLIED RADIATION SCANNERS AT MONGOLIAN BORDER POSTS
The USA and Mongolia last week commissioned radiation detection equipment at five Mongolian
border posts, the U.S. National Nuclear Security Administration announced. The installation of the
radiation scanners was part of the U.S. Second Line of Defense program, which has installed similar
equipment at more than 160 global sites, according to an NNSA release.
"Mongolia and the United States are working closely together to stop the smuggling of nuclear and
radiological materials. This partnership plays a critical role in the global fight against illicit
trafficking and proliferation of weapons of mass destruction," said NNSA Assistant Deputy
Administrator David Huizenga in a press release. "NNSA and the Mongolian State Specialized
Inspection Agency will work together to upgrade additional sites over the next few years and
collaborate on response and maintenance training."
Source: Global Security Newswire
20% OF PETROL RESERVE TO BE SOLD
The Ministry of Minerals and Energy proposes to release 20% of the government petroleum reserve in
the market. It also proposes to sell this for MNT50 lower than the market price. The government
reserves store petroleum for two weeks of estimated national demand.
Source: www.olloo.mn
ERDENET ANNIVERSARY IN MOSCOW
A recent glittering ceremony kicked off the 30th anniversary celebration of the Mongolian-Russian
Erdenet mining corporation in Moscow. The Mongolian delegation included the corporation's present
Director-General, Ch. Ganzorig, Chairman of the State Property Committee D.Sugar, and
Ambassador to Russia L.Khangai. The celebrations will now move to Ulaanbaatar at the end of
November and then to Erdenet on December 14. Russian Prime Minister Putin is expected to attend
one of these.
Source: Montsame
PROJECTS IDENTIFIED FOR USING CHINESE LOAN
A US$300 million low-interest loan from China, initially meant to construct a hydro-electric plant on
the Eg River, was diverted in January to other projects as the power station would have been
environmentally unsound. It has now been decided to use the money for the following projects.
China has agreed to all the decisions taken by the Mongolian Government in this regard.
US$100 million will be spent on engineering infrastructure and construction materials in apartment
regions in Ulaanbaatar, US$50 million on building a road in western Mongolia, US$60 million on
developing railway facilities in Ulaanbaatar, US$50 million on developing infrastructure in Zamiin-
Uud, and the remaining US$40 million to update the Mongolian IT network. Parliament will have to
approve the proposals.
Source: Ardiin Erkh
9. FALL IN AUTHORIZED SPIRITS PLANTS
With no new licenses issued in recent years and 169 licenses revoked in the past 4 years, the
number of authorized plants producing spirits has fallen by 60 percent since 2004. At present there
are 15 alcohol factories and 94 companies producing vodka. Of the latter, 60 are in the countryside
and 34 in Ulaanbaatar. Seven of the alcohol factories are in the provinces and eight in Ulaanbaatar.
Source: en.News.mn
TRAINING PLANNED FOR PROVINCIAL STAFF AT ALL LEVELS
The Government will soon finalize plans to provide training and hold workshops in Ulaanbaatar for
provincial and city officials, staff at different governors’ offices, and also employees at other State
organizations. Next year’s program will be prepared in December and an agency will decide on the
work schedule for all employees and supervise the training and workshops. Workers will be
expected to follow the schedule strictly and not indulge in activities outside it. Selected trainees
will have to attend the workshops at their own expense.
Anybody intending to go abroad for any training will first have to inform the Government’s
designated agency and take its permission. On his return such a person will have to submit a report
on his experience. Soum officials will have to get their plans approved by the governor.
Source: www.news.mn
INSPECTING TEAMS FIND CHILD LABOR IS COMMON
Teams from the Metropolitan Governor’s Office have found it is quite common to employ children
at cheap rates in several Ulaanbaatar districts. They visited more than 200 work places such as
hotels, car washing centers, restaurants, bars, and saunas, as well as 12 big markets, 22 mines, two
brick factories and 114 other organizations. In most places children were made to work in harsh
conditions and also without any proper time schedule. There was no overtime payment and no
vacation salary. Six underage children were found using alcohol and handed over to the police.
Underage girls worked as prostitutes, and Police are investigating if the trade is controlled by an
organized ring.
The teams found 146 children working in hard conditions in the Narantuul bazaar, commonly called
the “Black” Market. In Tsaiz bazaar, 14/15-year-old children told the inspecting teams that they
work on various jobs after school hours.
Source: Ardiin Erkh
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SPONSORS
10. ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended November 14, 2008, trading activity on the Mongolian Stock Exchange (MSE)
totaled 1,817,000 shares with 45 companies traded. Total market value of transactions was MNT
399.2 million. Total market capitalization of the 358 stock companies listed on the MSE was MNT
600.5 billion, and increased by MNT 15.3 billion or 2.5% from the previous week.
The Top-20 Index increased by 482.73 points or 7.8% compared to the previous week closing at
6,671.92 points. The MSE Composite Index increased by 135.98 points or 4.3% compared to the
previous week, closing at 3,273.58 points.
Most active stocks traded were: Remicon (897,900 shares), Hermes Center (464,700 shares), Anod
Bank (152,200 shares), Khuh Gan (65,000 shares), and Genco Tur Buro (57,300 shares).
Major share price percentage gainers were: APU (73.7%), UID (31.6%), Undurkhaan (30.6%),
Baganuur (22.0%), and Talkh Chicker (17.8%). Major share price percentage losers were: Olloo
(29.4%), Anod Bank (16.4%), Buunii Khudaldaa (14.9%), Spirt Bal Buram (14.6%), and Darkhan Makh-
Expo (14.6%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 Avg. 9.0% [source: NSOM]
Year 2007 *15.1% [source: NSOM]
October 31, 2008 *27.9% [source: NSOM]
*year over year (yoy)
CURRENCY RATES – November 20, 2008
Currency name Currency Rate
US dollars US 1157.82
Euro EUR 1462.67
Japanese yen JPY 11.97
British pound GBP 1733.55
Hong Kong dollar HKD 149.39
Chinese yuan CNY 169.54
Russian ruble RUB 42.17
South Korean won KRW 0.80
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.