1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
Email: Jim@bcmmongolia.org Issue 43, October 24, 2008
NEWS HIGHLIGHTS:
Business: Rio Tinto “encouraged” by Government steps; Korean consortium proposes
transporting Tavan Tolgoi coal by sea; EBRD finalizes financing for projects; Western
Prospector to appeal judgment favoring Adamas; 388 minerals licenses issued to
foreign investors in August; India eyeing Mongolia’s uranium; Businesses to pay more
for water; Rio may defer sale of assets.
Economy: Slowdown may not be all bad, feels World Bank chief in Mongolia; MPs see 2009 budget
as critically important; Have faith in monetary policy, Central Bank chief urges MPs;
Social welfare payments rise; 44% more mobile telephone users in a year; Number of
“big” employers goes up; Central Bank and Customs Office to watch over movement
of foreign currency; Global crisis impacting Mongolia, fears financier; Mongolia’s
inflation rate second highest in Asia.
Politics: Working Group aims at drafting "a perfect law"; MPRP continues winning run; Korean
President pleads consortium's case; New airports planned; USD20,000 for Cuba; Money
for milk testing equipment; Silk Road forum discusses Asia-Europe links; New British
ambassador named; Making the rivers flow again; Managing mineral-rich Mongolia.
_____________________________________________________________________________________
NOTICE TO BCM MEMBERS
The next BCM monthly meeting for Members will be Monday, October 27, at 5 PM at the Open
Society Forum.
Featured will be a presentation on plans for the new Ministry of Foreign Affairs and Trade (MFAT) by
its State Secretary, Mr. D.Tsogtbaatar as well as a presentation on the legal environment and trends
for businesses in Mongolia by Mr. L.Nyamsambuu, President of Mongolian Employer’s Federation
(MONEF).
Specific business issues at BCM member entities will be reviewed by Mr. B.Enkhbat, Vice President-
Commercial & Government Affairs at Eznis Airways, and by Mrs. D.Enkhchimeg, CEO, Petrovis.
Embassy updates will be presented by Mrs. Anna Biolik, Ambassador of Canada to Mongolia and by
Mr. Jin-ho Park, Ambassador of the Republic of Korea to Mongolia.
Teleconferencing will again be available for Members not able to attend in person. Call number is
(1-218) 486-1600, access code 760845 to be connected. Cost will be solely that of the long distance
call to the above US number.
Members who plan to attend the meeting in person or via teleconferencing with questions on these
presentations should Email them in advance to info@bcmmongolia.org.
BUSINESS
RIO TINTO “ENCOURAGED” BY GOVERNMENT STEPS
Ivanhoe Mines Ltd. said in a statement on October 17 that it was necessary to update Mongolia’s
Minerals Law before talks on the Oyu Tolgoi project could be resumed, and that Mongolian
Government officials shared the company's “high priority” that an agreement be concluded.
Parliament has established an all-party committee that will propose changes to the law by
2. November 15. “We’re encouraged by the initial steps that have been taken by the new Mongolian
Government and by the communications that we have had with government representatives,” Mr.
Bret Clayton, head of London-based Rio Tinto's copper and diamonds unit, said in the statement.
The Rio Tinto Group, Ivanhoe's partner in the project, has called Oyu Tolgoi the world's largest
undeveloped copper and gold resource. Ivanhoe has waited more than four years for the
government to agree to conditions that will allow it to press ahead with a USD3 billion investment.
Even with stocks plunging 62 percent in the past month, Ivanhoe remains in a “strong financial
position” with USD450 million in cash and a controlling stake in Vancouver-based SouthGobi Energy
Resources Ltd., which is selling coal from its Mongolian operation to Chinese buyers, the company
has said.
Oyu Tolgoi is expected to produce an average of 440,000 tons of copper and 320,000 ounces of gold
a year over a 35-year life.
Source: Bloomberg.com, Reuters.com
KOREAN CONSORTIUM PROPOSES TRANSPORTING TAVAN TOLGOI COAL BY SEA
The Korean investment consortium that met Prime Minister Bayar during his recent visit to South
Korea to express their interest in investing in the Tavan Tolgoi deposits came prepared with a
detailed and carefully planned project proposal. The consortium is ready to make a huge amount of
investment to develop the high-quality coal reserves to meet the energy needs of the South Korean
economy. Anticipating that the amount of coal will be too large to be transported by train through
China, the Korean investors have made other plans. They will build a railway from Tavan Tolgoi to
the Altanbulag border to help carry the coal to Vladivostok, and then take it by sea. The Russian
port of Vanina will be the hub of this movement, and thus Russian cooperation should be
forthcoming.
The consortium includes Korea Resources, Samtan, Daewoo, Keangnam, Samsung, Hanhwa, and LG
Corp.
Source: Onoodor
EBRD FINALIZES FINANCING FOR PROJECTS
EBRD First Vice President Varel Freeman is in Mongolia, leading a team of Bank officials. They have
met members of the government, held talks with existing and potential business partners and
finalized important investments in the country. In his talks, Mr. Freeman reinforced the EBRD’s
commitment to supporting the economic development of Mongolia and emphasized the Bank’s focus
on private sector development, including promotion of micro, SME and large local enterprises,
strengthening of the financial sector and sustainable development of the country’s crucial natural
resources sector.
Mr. Freeman signed a major project providing financing of up to USD47.5 million to the petrol
distribution company Magnai Trade. The EBRD team also finalized a USD6 million credit to
Mongolian Star Melchers Ltd, a leading distribution network company which is building a major new
facility on the outskirts of Ulaanbaatar.
Also on the team’s agenda was a review of progress of the EBRD’s support for Government efforts to
reduce air pollution in Ulaanbaatar. Using donor funding, the EBRD has been spearheading a project
to help some of the poorest households in Ulaanbaatar switch away from using raw coal. Policy
dialogue with the Mongolian authorities has been a major plank of the EBRD’s strategy for the
country, helping promote good governance and better coordination between investors, foreign and
domestic, and the government. A Consultative Council on Investment Climate and Private Sector
Development was set up with the aim of driving forward such initiatives.
The EBRD team’s visit also highlighted the activities of the Bank’s TurnAround Management and
Business Advisory Services (TAM/BAS) ahead of the formal opening of a new Business Advisory
Services office in Ulaanbaatar by Luxembourg Prime Minister Jean-Claude Juncker on October 27.
The TAM and BAS Programs help enterprises adapt to the demands of a market economy and twin
well with the EBRD’s support for small businesses.
Source: www.ebrd.com
3. WESTERN PROSPECTOR TO APPEAL JUDGEMENT FAVORING ADAMAS
Responding to a Mongolian district court's ruling in favor of Adamas Mining regarding its claim for
release of the joint venture exploration license from escrow to Adamas, Western Prospector Group
said on Wednesday, “We do not believe there is any merit in this ruling and we will continue with
all courses of action to constructively bring about the final joint venture agreement with Adamas so
that the project can be advanced to a production decision.”
The Western-Adamas joint venture involves exploration license 3367X in Mongolia covering the
Mardiagol and Nemer deposits, and a portion of the Dors deposit. The joint venture dispute does
not impact Western's NI 43-101 classified resources or the Feasibility Study for Gurvanbulag, which
is scheduled for completion in the fourth quarter of 2008.
In 2007 and 2008, the courts in Mongolia rejected Western's claim to compel Adamas to honor its
commitments. On October 20, 2008, a Mongolian district court found in favor of an Adamas claim to
release the joint venture license from escrow to Adamas based on the judge's interpretation that
the joint venture is null and void. Western intends to appeal the judgment once it receives the
written text of it from the trial judge.
Western has complied with all its obligations set out in the agreement, which include a cash
payment to Adamas of C$750,000, a four-year exploration work program of at least C$1.35 million
and payments of yearly license fees. The agreement states that on or before December 31, 2007,
Western would have earned its 70% ownership in the joint venture and the right to be sole operator
once these payments were made. However, Adamas has refused to sign the final joint venture
agreement and to cooperate with Western to advance the project into production.
In July 2007, Mr. Koyanagi, President of Adamas, sent a letter to Western stating that due to the
increase in uranium prices, Western should increase its cash payment to Adamas from C$750,000 to
C$2.5 million. Given that the joint venture terms had already been agreed upon, and that Western
had already made cash payments to Adamas, Western believes that this demand was in violation of
the Letter of Agreement.
Source: www.westernprospector.com
388 MINERALS LICENSES ISSUED TO FOREIGN INVESTORS IN AUGUST
The Open Society Forum has been keeping track of mining licenses this year and reports that
despite the weeks of relative inactivity following the election to Parliament, investors continue to
be interested in Mongolia. In August foreign investors obtained 388 minerals licenses, including
Centerra Gold’s 4 in Mandal soum of Selenge province. However, the size of the territory under the
licenses shrank by 1.6%. The number of exploration and exploitation licenses now stands at 4,781.
The Mineral Resources and Petroleum Authority also canceled 21 licenses in August.
Source: Ardiin Erkh
INDIA EYEING MONGOLIA’S URANIUM
India is planning to scout for uranium supplies from countries such as Niger, Kazakhstan and
Uzbekistan to fuel existing domestic nuclear power plants, and “(we are) already thinking of a
mining and exploration agreement with Mongolia” to secure long-term uranium sourcing
arrangements, the Prime Minister’s Special Envoy, Mr. Shyam Saran, said on Wednesday. Mr. Saran
also said that the current global financial turmoil could lead to a slowdown in the global nuclear
power market and, thereby, bringing down reactor and fuel prices.
Indian planners argue that the current global situation would force many advanced countries to
scale down plans to expand their civilian nuclear sector, creating favorable conditions for India to
source uranium from the international market. “There should be a softening of the uranium market
but that window will close once this crisis is over,” Mr. Saran said.
Source: www.thehindubusinessline.com, The Economic Times
BUSINESSES TO PAY MORE FOR WATER
Office buildings and companies will have to pay almost 50 percent more for water from November.
Organizations now pay Tg 323.25 for one cubic meter of clean water, and Tg 170 for toilet water.
These will now cost Tg 550 and Tg 300 respectively. Big users like alcohol plants, cashmere
processors, and auto wash companies will have to pay more. The rates will depend on consumption,
4. and may go up to Tg 1,000 per cmt. It is not yet clear whether households will also be included in
the price rise.
Source: en.News.mn
RIO MAY DEFER SALE OF ASSETS
Rio Tinto Group may delay the planned sale this year of USD10 billion of assets because of the
global financial crisis. The company is also reviewing its near-term spending timetable and project
costs “against the backdrop of the current markets”, according to a statement from the London-
based company last week. It wants to sell the assets to help pay for its USD38.1 billion purchase last
year of aluminum producer, Alcan Inc.
Rio has flagged development plans for new mines, including the USD3 billion Oyu Tolgoi mine in
Mongolia, the USD6 billion Simandou iron ore mine in Guinea and a USD1.5 billion nickel project in
Sulawesi, Indonesia.
Rio last week posted a 30 percent fall in refined copper production, to 68,900 tons from 98,700 tons
a year earlier, because of declining grades at the Escondida mine in Chile. Mined copper output
slipped 7 percent to 160,000 tons.
Source: Bloomberg.com
ECONOMY
SLOWDOWN MAY NOT BE ALL BAD, FEELS WORLD BANK CHIEF IN MONGOLIA
Talking to journalists in a run-up to the October 28 Mongolia Economic Conference jointly organized
by the World Bank office in Mongolia and the Mongolian Government, Arshad Sayed, resident
representative of the Bank, said he hoped the present turmoil in global finances would have a
beneficial effect on the Mongolian economy by slowing it down. “The economy has been heating up,
and a slowdown might actually work to its advantage by tempering down inflation,” he said.
With economies contracting in the developed countries, Mongolian exports are likely to fall, and “in
the medium term Mongolia will have to tighten its belt if the growth goes down significantly”. The
volume of foreign investments is likely to drop, and so will remittances from Mongolians working
abroad, which now amount to USD200 million a year. The fall in copper prices will erode state
revenues. Mr. Sayed was positive that “spending on items that do not increase productivity” has to
be curbed, and hoped that “the temptation to raise salaries, wages, etc. would be resisted by all
means”. Commending the work of the Bank of Mongolia so far, Mr. Sayed said its role now becomes
“even more important” as it has to ensure a balance between “preventing inflation and providing
enough liquidity for businesses to keep running”.
Explaining that food and fuel price rises “affect the poor disproportionately”, and that a lower
growth rate might force the Government “to cut down on social programs and on other recurrent
spending such as social transfers”, Mr. Sayed said the Government has to “get the mining sector up
and running quickly”. Since mining is a long-term operation, “it makes little sense to worry about
whether you have missed the peak or prices will rise again”.
He expected the economists from many countries attending the upcoming forum to debate “how
best to navigate these tough times” so that “development is sustainable” and its fruits bring
“prosperity and growth” to not “just a few, but to the majority of the country’s people”.
Source: Onoodor, The Mongol Messenger
MPs SEE 2009 BUDGET AS CRITICALLY IMPORTANT
Parliament will soon begin discussions on draft budget proposals for 2009. Some MPs say what the
most important issues are.
L.Gantumur: We have to reduce the recurrent expenses as well as think twice about the economic
benefits of every item of expenditure. Expanding the apparatus of the government has no
permanent economic justification. The last four years saw enough of this. Non-government
organizations should be encouraged to help in government programs. We have to support small and
medium enterprises. We have so far used the income from copper export to develop infrastructure.
Now that the copper price is falling, this has to be reduced or totally stopped.
5. R.Amarjargal: We need to finalize the budget without any delay but somewhere someone is not
taking the work seriously. The budget proposals were ready on October 1, but even after 20 days
they have not been distributed to MPs. We should have begun discussing them by now. My idea
about next year's budget proposals is that there is no policy thrust, and the government does not
know what its program will be.
No matter when the discussions begin they will have to be over before December 1. To me this is
not enough time to discuss them with proper attention and in detail. There will be so many things
to consider. For example, will the global economic uncertainty leave us with money to finance
large projects? Second, what will be the source of our investment capital? Thirdly, even if we are
powerless against international factors, like the fall in commodity prices, what shall we do to
control internal economic factors? How do we tame inflation? How do we boost business?
Gankhuyag: We must seek the opinion of professionals and academics before we finalize the
national economic and budget policies. Recurrent expenses were 77 percent of all State expenses in
2008. This cannot continue.
Jekei: Our decision on the budget proposals will determine what the Government program will
contain next year. The finally adopted program must reflect both political parties' election
promises.
J.Sukhbaatar: We have not yet received the budget proposals. We have not been told how the
Government is calculating its estimated revenue and expenditure. This may be why the Government
has not yet been able to decide on its program. The main social and economic directions are not
yet ready. The proposals are expected to be refined with inputs from MPs during discussion in
Parliament. We have time only until December 1. With all our other preoccupations, is this enough
time for a serious and detailed discussion of something as important and as complex as the national
annual budget?
Source: en.News.mn
HAVE FAITH IN MONETARY POLICY, CENTRAL BANK CHIEF URGES MPs
The Standing Committee on Economics recently met to discuss the monetary policy for 2009. Some
members blamed the Central Bank for allowing inflation to rise to 34 percent while the
government’s target had been to keep it under six percent. Others wondered if inflation would rise
to 70-80 percent next year.
The President of the Mongol Bank, A.Batsukh, pleaded for less public revelation of inflation figures
as this causes panic and uncertainty and “might bring negative effects”. He also asked MPs not to
demand changes in the monetary policy and instead to have faith that it would work. Asked why the
inflation figure was not decreasing even when the oil price has fallen, Batsukh said this takes time
and inflation will be steady around 12 percent in 2009.
Source: Ardiin Erkh
SOCIAL WELFARE PAYMENTS RISE
Altogether MNT87.0 billion in social welfare subsidies went to 1.3 million people in the first 9
months of 2008. The number of beneficiaries rose 1.6 percent or by 20,700 people, and the volume
of payment by 12.6 percent or MNT9.7 billion over the same period last year. Some 946,900
children claimed benefits from the "Child money" program, an increase of 2 percent or 18,500. The
amount distributed was MNT24.9 billion, a rise of 1.3 percent or MNT311.4 million over the
corresponding period.
MNT64.7 billion was spent from the Mongolia Development Fund to provide allowances to 957,500
children.
Source: The National Statistics
Office
44% MORE MOBILE TELEPHONE USERS IN A YEAR
The number of mobile telephones continues to rise fast even as those of both landline and wireless
telephones keep falling. At the end of September the number of landline telephones stood at
151,400, a fall of 800 in 12 months, while 1,561,500 mobile telephone users were registered, an
6. increase of 44.3 percent. Wireless telephones sets were fewer by 25.2 percent.
Altogether 106,100 households have cable television, registering an annual increase of 18.2
percent. The postal services delivered 484,900 letters, 45,700 parcels, and 1,618,700 periodicals in
the first 9 months of 2008.
Source: The National Statistics Office
NUMBER OF “BIG” EMPLOYERS GOES UP
Of the 61,200 enterprises on the Business Register Database at the end of September 2008, around
36,000 or 58.9 percent were in active operation. Of these, 80.9 percent had 1-9 employees, 9.1
percent 10-19, 6.5 percent 20-49, while 3.5 percent employed more than 50 people. The number of
registered enterprises has increased by 6,700 or 12.3 percent in the past 12 months, and the
number of those actively operating by 4,700 or 15.1 percent. The biggest increase (4,300 or 17.1
percent) was shown by establishments with 1-9 employees, closely followed by those with 10-19
employees (500 or 16.8 percent). The number of those employing more than 50 people was up by 19
or 1.5 percent but those with 20-49 employees dropped by 7 or 0.3 percent.
In the past year the number of enterprises in wholesale and retail trade, and repair shops for
household goods increased by 21.9 percent or 2,500, while that of those in the health and social
work sectors increased by 0.7 percent or 16.
Source: Montsame
CENTRAL BANK AND CUSTOMS OFFICE TO WATCH OVER MOVEMENT OF FOREIGN CURRENCY
The Bank of Mongolia and the General Customs Office have agreed to exchange information on
several areas, a development that will help in determining the fate of valuable historical and
cultural works confiscated at the Mongolian border, and in fighting money laundering and terrorism
financing. The agreement also stipulates that details of external trade in all sectors will henceforth
be expressed not only in USD but in the foreign currency involved in each transaction. The flow of
foreign currency in cash across the border will also be recorded, helping better understand external
trade conditions, and calculate foreign payment balance in real terms. This will in turn help in the
formulation of a more effective currency exchange policy.
Source: Montsame
GLOBAL CRISIS IMPACTING MONGOLIA, FEARS FINANCIER
In Mongolia on a brief visit, B.Bold, Executive Director in JP Morgan’s London office, fears the
global financial crisis has already adversely affected potential investments in Mongolia. Worldwide,
investors interested in buying mining stocks are having second thoughts. This will lead to less
investment in the Mongolian mining sector. “We should work on how to attract investors to the Oyu
Tolgoi and Tavan Tolgoi deposits,” he said.
Bold feels the comparative smallness of the Mongolian economy will help it cope with the financial
crisis without too many bruises.
Source: Onoodor
MONGOLIA’S INFLATION RATE SECOND HIGHEST IN ASIA
Mongolia has missed the dubious honor of being the Asian country with the highest inflation rate,
ceding that spot to Nepal where inflation is now 40 percent, while Brunei is at the bottom of the
list, with 0.75 percent. The high inflation rate, however, has not affected Mongolia’s GDP growth.
International Monetary Fund experts have predicted that the country’s inflation rate will be around
27 percent by the end of 2008, if global commodity and gas prices remain stable.
Source: Onoodor
7. POLITICS
WORKING GROUP AIMS AT DRAFTING “A PERFECT LAW”
Kh.Narankhuu, a member of the newly established MPs' Working Group to draft amendments to the
Minerals Law, has said all his fellow members appreciate the urgency of their work. To save time,
they have decided to use the old draft as the base and starting point of their work. "We also need
to hear the views of other MPs," he said. Calling the 2006 Minerals Law "a liberal piece of
legislation", he said their present job is to draft "a perfect law" that fits the present economic
situation.
Mongolia needs to attract companies that have state of the art technology, skilled professional
employees, and the capacity to make natural restoration according to international standards. That
means it has to look for big, or at least medium-sized companies. Referring to the extent of state
ownership of the strategic deposits, Narankhuu said there could be "several options". According to
the election platform of the parties, the state will own more than 51%. However, "we could be
more flexible". For example, "the state can control 51% of the shares to start with, and gradually
increase this as investors recoup their outlay".
Source: www.olloo.mn
MPRP CONTINUES WINNING RUN
Following its success in the parliamentary election, the MPRP has outdone the DP in the local
election in Ulaanbaatar. The Metropolitan Election Committee (MEC) has so far announced the
results of five constituencies in Ulaanbaatar city and the MPRP has won handsomely in four of them.
In Bayangol district 23 seats were won by the MPRP, while 12 went to the DP. Baganuur and Nalaikh
both had 25 seats. In the former, the MPRP won 18 and the DP seven seats, while in the latter, 15
went to the MPRP and nine to the DP, and the last to an Independent candidate. In Bagakhangai the
MPRP won all but one of the 21 seats, which went to the DP. The results from Khan-Uul have a twist
to the tale. The secretary of the constituency election committee has refused to sign the document
that awards 26 of the 35 seats to the DP. An MEC member decided to declare them to the media
even without the signature.
The results from Sukhbaatar district are yet to come. Chingeltei, Songinokhairkhan and Bayanzurkh
will have to go for re-election but the date has not yet been decided.
Source: en.News.mn
KOREAN PRESIDENT PLEADS CONSORTIUM’S CASE
At their meeting in Seoul earlier this month President Lee Myung-bak asked Prime Minister S. Bayar
to favorably consider a South Korean consortium's offer to develop Mongolia's coal mines and
infrastructure expansion projects. This was before the consortium representatives called on Bayar
with their plans for investing in Mongolian mineral resources and energy fields. Without committing
himself in any way, Bayar told President Lee he would try to expand economic ties between the two
nations.
On his part Bayar pleaded for South Korean help to the Mongolian Government in its efforts to
reduce air pollution in Ulaanbaatar city, and solving public transportation problems. He also wanted
more training facilities in Korea for Mongolian technical professionals.
Source: Montsame
NEW AIRPORTS PLANNED
Mongolia will have two new international airports in the next few years, besides the present
Chinggis Khaan Airport. A few domestic airports will also be built or upgraded. Work on the
international airport in Khoshigt valley of Tuv province is expected to begin in 2010. The project is
likely to cost USD285 million and should be finished by 2014. The present airport at Dornod is being
upgraded to be able to handle international traffic. New airports are also planned for Uvs and Gobi-
Altai provinces.
Source: www.news.mn
8. USD20,000 FOR CUBA
The Government of Mongolia has decided to render aid worth USD20,000 to the Cuban people, hit
between October 1 and 8 by hurricanes Gustav and Ike.
Source: Montsame
MONEY FOR MILK TESTING EQUIPMENT
Mongolian imports of Chinese milk and milk products used to be substantial and their total stop has
led to shortage and price rise. The State Professional Inspection Agency here could not do anything
about the scandal as it broke in China because Mongolia lacks the necessary testing equipment.
MNT113.7 million has now been allotted from the Government Reserve Fund for the purchase of
such equipment to pre-empt any recurrence of the scare and inconvenience.
Source: Odriin sonin
SILK ROAD FORUM DISCUSSES ASIA-EUROPE LINKS
The first Silk Road business forum held between October 16 and 19 in Trabzon, Turkey brought
together representatives of 23 Asian and European countries, among them Mongolia. On the agenda
were matters such as building railways and roads to link the countries on the Silk Road, and laying
gas and oil pipelines connecting Asia and Europe. Business and tourism networks involving the
countries along the famed old trade path were also proposed. Another international conference and
exhibition on improving transportation links between Asia and Europe was organized between
October 14 and 17 in Mersin, Turkey.
Source: Montsame
NEW BRITISH AMBASSADOR NAMED
Ms. Thorhilda Mary Vivia Abbott-Watt has been appointed Ambassador of the United Kingdom to
Mongolia. She will take up her appointment with immediate effect. Ms. Abbott-Watt became British
Ambassador to Armenia in 2003. Before, she acted as Charge d’Affaires in Dushanbe where she
established the first British Embassy in Tajikistan. Ms. Abbott-Watt started her diplomatic career in
1974, and has served in her overseas appointments in Belgrade, Kiev, Bonn, and Paris. She also
worked in the UK Representation in the European Union, as well as in the European Union
Department and the Western European Department of the Foreign and Commonwealth Office.
She is a member of the Institute of Contemporary Arts and a life member of the National Art
Collections Fund.
Source: Montsame
MAKING THE RIVERS FLOW AGAIN
A mining boom in Mongolia is threatening to devastate the country's rivers and is forcing nomadic
herders to abandon their land and traditional way of life, local activists warn. Extraction methods,
such as dredging, river diversion, and the use of high-pressure water cannon to dismantle hillsides,
have damaged rural landscapes along rivers such as the Onggi, which supports 60,000 nomadic
herders and one million head of livestock. Rivers now run dry in some areas, making it more
difficult to find water for thirsty animals. Nomadic herders say using the alternative water source-
groundwater potentially contaminated by mercury and other mining pollution-is alarming as well.
The Onggi River Movement has pushed for mining companies to conduct environmental conservation
work, including restoring soils and vegetation to sites that they have mined.
Mining industry experts say the mineral extraction business in Mongolia is at a nascent stage.
"Mining to date has been relatively small-scale," said Layton Croft, an executive with Ivanhoe Mines,
a Canadian company with a massive copper and gold mine development project in southern
Mongolia. "The boom really hasn't yet started. The prospect of mining is what's on everyone's mind."
Mongolia's federal government is now busy drafting revised mining laws that will compensate
Mongolians and assist displaced locals. Little has been said about the environment. While
environmentalists welcome new laws, it is enforcement that is the issue, they say. According to
existing Mongolian law, mining operations cannot take place within 200 meters of a river's flood
9. line. However, just a few miles south of Zaamar, the Tuul River has been completely altered from
years of dredging by a Russian-Mongolian joint mining venture called Shizhir.
Environmentalists face an uphill battle given the government's overall pro-mining stance, industry
observers say. If peaceful campaigning fails, one of the activists warned, he is not afraid to resort
to violent methods, including attacking mining sites that violate the laws. But there is hope for the
rivers and nomads. Farther up from the township of Saihan-Ovoo a once-dried up section of the
Onggi River is flowing again-though it is far from being as full as it once was.
Source: National Geographic News
MANAGING MINERAL RICH IN MONGOLIA
The World Bank and the Mongolian Government are jointly hosting a Mongolia Economic Policy
Conference on October 28. Several well known policymakers from abroad will publicly exchange
views with their Mongolian counterparts in finding ways to address Mongolia's development
challenges. Among them are Justin Lin, Chief Economist, World Bank, and Egor Gaydar, a former
Prime Minister of Russia. Mongolia will be represented by, among others, O. Chuluunbat, MP, D.
Zorigt, Minister of Minerals and Energy, Z. Enkhbold, MP, S. Bayartsogt, Minister of Finance, Ch.
Khurelbaatar, MP and Chairman of the Standing Committee on Budget, A. Batsukh, Governor, Bank
of Mongolia, and B. Batbayar (Baabar), columnist. Among other participants and speakers will be
President N. Enkhbayar, Prime Minister S. Bayar, David Dollar, Country Director for China and
Mongolia, WB, Byung Jang, Resident Representative, IMF, and Mandar Jayawant, Deputy Country
Director, ADB.
The main topics of discussion will be “Mongolia's vision for development", “Sparse, mineral rich and
remote: What options for Mongolia?", "Managing resource rents: lessons from near and far", "Russia's
experience: A critical view, and what are the lessons for Mongolia's development?" and a roundtable
discussion on managing inflation and growth.
Source: The World Bank
_______________________________________________________________________________________________
SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
10. For the week ended October 17, 2008, trading activity on the Mongolian Stock Exchange (MSE)
totaled 461,800 shares with 37 companies traded. Total market value of transactions was MNT
143.5 million. Total market capitalization of the 358 stock companies listed on the MSE was MNT
642.1 billion, and decreased by MNT 10.2 billion or 1.6% from the previous week.
The Top-20 Index decreased by 175.16 points or 2.2% compared to the previous week closing at
7,788.06 points. The MSE Composite Index decreased by 61.66 points or 1.6% compared to the
previous week, closing at 3,693.68 points.
Most active stocks traded were: Remicon (143,700 shares), Khuh gan (109,500 shares), Genco Tur
buro (50,100 shares), Anod Bank (38,200 shares), and Hermes Center (37,300 shares).
Major share price percentage gainers were: Khuvsgul Khuns (15.0%), Monnab (14.0%), Genco Tur
buro (10.5%), UB Hotel (3.2%), and Baganuur (2.5%). Major share price percentage losers were:
Mongol Securities (15.0%), Anod Bank (10.8%), Bayangol Hotel (8.9%), Gobi (8.8%), and Moningbar
(8.3%).
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]
September 30, 2008 *32.2% [source: NSOM]
* year over year (yoy)
CURRENCY RATES – October 23, 2008
Currency name Currency Rate
US dollars US 1143.95
Euro EUR 1470.89
Japanese yen JPY 11.52
British pound GBP 1861.31
Hong Kong dollar HKD 147.48
Chinese yuan CNY 167.3
Russian ruble RUB 42.48
South Korean won KRW 0.84
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.