Mongolia whittles down coal mine bidders to form group sources

RIO DE JANEIRO -(Dow Jones)- Mongolia's government has whittled down the number of companies in the running to gain rights to the country's giant Tavan Tolgoi metallurgical coal deposit and is attempting to persuade those bidders to work together to develop the mine, coal industry sources said Wednesday.

"Of the six original bidders, they're now down to three or four," said Louisa Pratt, conference producer at Coaltrans, who organized a coal congress in Mongolia last week.

Luiz Sarcinelli, director of Brazil-based coal consultancy Sage Consultoria Tecnica Ltda., said he was "reliably informed" that four companies or groups are still in the running, namely the consortium involving Russian interests, the consortium involving Chinese interests, Brazilian miner Vale SA (VALE, VALE5.BR) and steelmaker ArcelorMittal (MT).

The Mongolian government is working out a proposal for the shortlisted companies to work together "to get the project going more quickly," according to the consultant.

Investments required to develop Tavan Tolgoi's western block -- which is to be put out to private sector operation -- have been estimated at $7.3 billion. A Mongolian state-owned company has been slated to develop the eastern block at the deposit in the Gobi desert, which has estimated reserves of 5 billion metric tons and is expected to produce as much as 10 million tons a year of metallurgical coal for global steelmakers hungry for new sources of the raw material.

However, industry observers attending a Coaltrans event in Rio de Janeiro this week said that while the Mongolia government is seeking a "multi-company solution," companies may find managerial decision-making trickier in a bigger group.

"Can we really see Vale and ArcelorMittal working together on this kind of project?" one observer said.

Representatives of Mitsubishi Corp., which isn't involved in the shortlist for Tavan Tolgoi, said they foresee further slight delays in the announcement of the winners of the bid, which should be known during July rather than this week as was recently expected.

Marcelo Matos, Vale's general manager of coal marketing and sales, said on the sidelines of the Rio event that Vale has a group of people in Mongolia "involved in the Tavan Tolgoi tender," declining to give further details.

Vale already has an existing "large" coal exploration project in the country, he said.

Source:Dow Jones Newswires


The Luxury Frontier


What happens when a country previously hindered by vastness and foreign rule awakens to wealth on its doorstep? With Louis Vuitton on one corner and one of the world's largest gold deposits down the road, the previously nomadic society of Mongolia is putting down some rich roots.

There he stands alone on his horse, a fierce giant shimmering out of nowhere rising 131 feet against the vast Mongolian sky. Eight hundred years after he declared the Great Mongolian State in 1206, Genghis Khan rides again, all 250 stainless-steel tons of him. As I bump along on one of the few paved roads 20 miles outside the capital, Ulan Bator, this kitschy monument to the new mineral-rich and independent Mongolia seems more like a huge middle finger raised to its powerful neighbors, China and Russia. July marks the 21st anniversary of Mongolia's robust democracy after more than 200 years of despised Chinese rule followed by 70 years as a satellite of the Soviets, during which time the proud history of Genghis Khan, who spawned the largest contiguous empire in world history, was banned from public view and utterance. Today, owing to deposits of 80 different minerals, including immense reserves of coal, copper, gold and uranium, as well as ongoing exploration of oil, this sparsely populated country, twice the size of Texas, is undergoing a dizzying transition. No other nation today so squarely faces the choice that Mongolia does. Will it become Nigeria or Chile? Venezuela or Australia?

"Mongolia really is the land of opportunity," says Howard Lambert, head of corporate banking for ING in Mongolia. "Everything can be done here. The financial infrastructure doesn't exist, so you can be a part of building it. Instead of sitting in an office in London turning a wheel, you can build the machine. Every day I see new buildings, developments going up—people buying sports cars in a country that doesn't have roads. The social divide is getting wider."

Nothing illustrates the topsy-turvy nature of Mongolia today more than the capital city's main Sukhbaatar Square, where a bronze statue of Lenin once presided. Now a gleaming Louis Vuitton store, opened in October 2009, offers clients champagne in a circular VIP room outfitted with a lavish ceremonial Mongolian saddle and antique caviar case. Outside the store, however, several hundred yards away, a group of dissident poor have pitched their round felt and wood yurts (gers in Mongolian) to protest the government's cozying up to foreigners and not doing enough for them. "We want jobs. The poor need to have a better quality of life," 52-year-old I. Baganuur tells me. "The government is implementing policies for themselves, not for its citizens."

Sharing the same luxury mall with Vuitton are Burberry, Zegna, Emporio Armani and Hugo Boss. Burberry is planning a second store in a Shangri-La hotel currently under construction. Ferragamo and Dunhill are also looking for space. At the same time, the capital, which boasts the most vibrant democracy in Central Asia, does not have street addresses and has just begun to introduce zip codes. "The irony for Mongolia," says American ambassador to Mongolia Jonathan S. Addleton, "is the more successful they are, the more challenging it becomes."

How could it be that luxury retailers have come to Mongolia? The country has only 2.8 million people, almost half of them living in a capital built for 500,000, including 700,000 destitute former nomads whose gers crowd the surrounding hills and who burn coal and even plastic bottles in the harsh winters, choking the city with extreme pollution. I wanted to understand how a luxury brand could turn a profit in this antiquated land where the livestock outnumbers the people 16 to 1.

My first interview with a Mongolian official is the tieless, 38-year-old vice minister of finance, C. Ganhuyag, whose office sports a putting machine with a strip of artificial turf. "I decided to install casual Fridays," Ganhuyag proffers. (In Mongolia, last names go first, often indicated only by an initial, and people are routinely referred to by first names.) After recounting his latest stay at Davos and directing me to his website, which promotes the new Mongolian "Wolf Economy," because wolves can survive in Mongolia's minus-40-degree winters (Ulan Bator has the lowest average temperature of any world capital), Ganhuyag explains how Mongolia is trying to cope with its two largest mining treasures.

First, in October 2009, a $4 billion deal with Ivanhoe Mines of Canada and Australia's Rio Tinto for Oyu Tolgoi, the world's largest undeveloped copper-and-gold deposit, was finally signed by the government. Currently under construction, the mine is estimated to contain a staggering 40 million tons of copper and 46 million ounces of gold and should start operating in 2012. Next, six competing companies are waiting to hear which of them will win an even bigger deal to develop what will perhaps become the world's largest coal mine, Tavan Tolgoi. Both of these behemoths are situated in the southern part of the Gobi Desert not far from the northern border of the voracious, commodity-hungry China. The area today contains mostly nothing except a few nomads, rare animals and priceless scenery. To manage the coal mine, a city of 60,000 is being planned.

"Mongolia has always been here," Ganhuyag says. "With all our riches, with all our hearts, we were trying to reach out to the West. The West noticed us too late, fortunately for us. If we were Czechoslovakia, they would have grabbed us in the first five years and everything would have been snatched. We suffered through 200 years of Chinese rule, 70 years of Soviet rule and 20 years of being ignored by the West. In retrospect, we had time to educate ourselves. We learned all the tricks of privatization."

It took six years to hammer out the gold and copper deal of which the Mongolian government owns 34 percent and will get a healthy 59 percent of pretax profit without having to advance any money. Along the way there have been some bumps, however. At one point Mongolia instituted a 68 percent windfall profits tax on mining, since revoked, which scared all the banks away. During the last election, in 2008, politicians promised the populace cash handouts that amount to about $17 a month to everyone, rich or poor, taken from the down payments made to the government for the gold and copper deal. Today that cash is moving into the deficit zone and the handouts have been widely criticized for taking funds away from desperately needed infrastructure projects, as well as creating a welfare dependency.

Even so, Ganhuyag says Mongolia's current GDP of $7 billion a year is set to grow at least 20 percent a year for the next decade. "We are going to double our economy every three to five years—even the IMF agrees on that. That's why luxury retailers get a good smell from us. It all depends on the global markets. If China is trying to equip every man with a car, then the demand for copper, coal, iron, gold, gas, uranium, which we also have, will be endless."

Louis Vuitton, which first created its trunks for African explorers, is indeed pleased with its entry into the Mongolian market and the demand does not even have to be endless. Rather, LV CEO Yves Carcelle thought it was a special sign when he learned that "How are you?" in Mongolian is asked, "How did you travel?" I tell Carcelle that Burberry says their Mongolian customer base is little more than a thousand people and they are happy. He agrees. "One to two thousand people is all you need. You can't judge by average income—average doesn't mean anything. The question is, do you have a few thousand people who can afford luxury? What you need is a stable political environment and the necessary environment to put your store where you are the place."
What I observe in Louis Vuitton is a clientele of women ages 30 to 40 already sporting LV bags and men shopping for gifts. LV's interest, of course, was sparked after going into Russia and China. "In 20 years China has become our biggest client," Carcelle says. "Apart from that, our expansion is quite well spread around the world. Because of media today, luxury and fashion have become the universal language." Mongolia follows global trends too. "People look at fashion and TV online here. We get Russian Vogue, and Cosmo Mongolia just came out," B. Delgermaa, a fashionable Mongolian woman, tells me. "You have to subscribe to American Vogue and it's very expensive."

It is traditional for Mongolians to display their wealth on themselves. "Nomads move around the country four times a year," Ts. Ariunaa, executive director of the Mongolian Arts Council, says. "All your wealth goes to jewelry and costume, your horse and saddle." Adds Delgermaa, "Culturally, Mongolians like to show off. Mongolians are very proud of themselves—there is only one me. They think they deserve exclusivity."

A rich nomad today is known for having a satellite dish and a solar panel for his ger and a motorbike for himself. But his primary relationship has always been with nature. According to Ariunaa, "First you sing about the land, your horse, your mother, and then you sing about your loves and relationships. Mongolians are better at communing with nature than with each other. You live on the steppes in a ger. You don't need to know what your neighbor is thinking." Nomads are also used to "singing outside, so you need to listen in a big space."

Thanks to its years under Soviet rule, Mongolia has a literacy rate of 98 percent, as well as 151 universities where 70 percent of the students are female. A less fortunate hangover from Soviet rule is the rate of alcoholism, especially among Mongolian men, up to 25 percent of whom are classified as alcohol-dependent. I traveled to an orphanage in Mongolia's second-largest city, Darkhan, about a three-hour drive from Ulan Bator, where some of the 40 or so orphans had ended up because of the alcohol problems of their parents. "You can buy a bottle of vodka for 75 cents, less than a cup of coffee," says Meloney C. Lindberg, country representative for Mongolia of the U.S. NGO the Asia Foundation. I was told that if you collapsed on the street in the capital from a heart attack, no one would help you because they would probably think you were drunk. "We never before used hard drink like vodka," B. Baabar, one of Mongolia's leading intellectuals, tells me. "Our alcohol came from milk like sake [from rice]."
Baabar is one of the best-loved figures in Mongolia. He gave up his job as a biochemist to become a historian, writer, publisher and activist. He led the project to translate the Encyclopedia Britannica into Mongolian and was jailed by the Russians, whom he clearly does not like. He believes that the Mongolian government today is still too reflexively Socialist and the central-planning Russian model of state paternalism too often prevails. "The people here who are running the system still think like Communists or Socialists," he says. "Every five years the Soviet Union gave Mongolia $5 billion. This supplied Mongolian industry, agriculture and military. On the other side, it made Mongolia fully dependent."

He is angry that the Mongolian government started giving cash handouts that he calls "economic infantilism," a product of those educated under the Soviets. "Members of Parliament must go through elections and make many promises to the people. If the people are fed like children from this guy who acts like the father and promises cash money, free education and everything free because the state is getting richer and richer—that is the bad side of this sudden wealth."
The inner sanctum of the cash cow that everyone hopes the Oyu Tolgoi copper-and-gold project becomes is the Ulan Bator office of Cameron McRae, the redheaded, 52-year-old Australian CEO and president in charge of the site construction. The "first step" investment of Ivanhoe and Rio Tinto is $7 billion, he says, and they are currently spending $7 million a day to dig the mine.

His computer contains numerous animated models of the construction site, where a tiny Eiffel Tower is used for scale, towered over by the vast project. "We are building at a scale never tackled in this country," McRae says. "We are facing a shortage of artisans and technologists and people with large-scale construction experience." At its peak, the construction site will require 17,000 people and when completed, the mine is expected to produce 50 to 55 million tons of ore annually.

The government has already received about a half billion dollars in fees and taxes and has not had to put up a penny. Yet because of a lack of technically trained Mongolians, two of the mine's major contractors are Chinese—the mine is located only 28 miles from the Chinese border and up to 80 trucks a day from China carry in necessary building supplies. "We made a commitment to the Mongolian government to train up to 5,000 Mongolians," McRae says. Once the mine is built, "a minimum" of 90 percent of the workers will be Mongolian.

The mine's remote South Gobi location requires considerable amounts of power and water, not to mention an airport. "We'll help bring power to Gobi and upgrade roads. We'll build a powerline to China and tap into the Chinese grid," McRae says. But the amount of water required, especially in a desert, is unprecedented. "We're exploring for water. We found a very large ancient aquifer in a gravelly area not related to anything else." I ask McRae where he thinks they will be in five years. "We'll be the second-largest copper mine in the world with a very inexperienced workforce with a big training program."
efore World War II, Mongolia served as a buffer state between Japan and the Soviet Union, and after, between the USSR and China. Beijing is just 340 miles from the southern Mongolian border and the Great Wall was constructed mainly to keep out the Mongols; 70,000 Russian troops were once stationed in Mongolia. Those old enmities are hard to overcome. For example, the Trans-Mongolian Railway conforms to the gauge of the Russian railroad, not the Chinese one, so each train to China from Mongolia must go through a tedious re-fitting process. Under the guise of "national security concerns" there is now a major debate going on in Mongolian business and political circles over how to export the coal from Tavan Tolgoi—by rail to Russia or by truck to China? It would require hundreds of miles of new rail to be constructed to ship out through Russia, or the coal could simply be trucked 150 miles to the Chinese border.

National security concerns is code for concern about the possible use of the railway for military intervention," says Graeme Hancock, who until recently was the senior mining specialist for the World Bank in Mongolia. "These Cold War concerns are still being played out all over Mongolia. They consider the Russians their Big Brothers, their friends, and for 70 years they've been told there's a big yellow evil to the south." He adds, "From our perspective, Mongolia places too much [emphasis] on national security interests and not enough on economic interests. Instead of basing decisions on what's good for the economy of Mongolia, decisions are based on geopolitical considerations." I actually came across the lingering reverence for Russia in, of all places, Mongolia's only five-star hotel resort, the lavishly appointed Terelj. I was startled to find the deposed statue of Lenin ousted from the main square of Ulan Bator in 1993 stuck behind the building in one of its gardens.
Changes in Mongolia are happening so fast that L. Sumati, the country's leading pollster, says it is impossible to group people into social classes—mobility is too rapid. At the same time the situation is made more complicated by the fact that almost all of the poor have accumulated in the ger areas of the capital city, many forced there after the horrendous winter of 2009–2010 caused nearly six million of their livestock to die. "An army of the poor is besieging UB. Any political party standing for election has a tough time negotiating with these people," Sumati says. "They are very volatile and just asking for survival. In some ways they are angry. They see a widening gap between the rich and the poor and they see no way out." I ask him why he can't classify who is wealthy. "We have a group of very rich people supported by their access to power," he says, referring to the crossover between business ownership and government. "The rich are not a class yet because there is still very high mobility both up and down." Although Mongolia has strict laws requiring top officials to publish their assets and a lively media that includes 22 daily papers in Ulan Bator plus 21 TV news channels, there is no freedom of information act and cross-ownership of media and business interests abound. I'm told editorial control is nearly always held by owners and there are ways to pay to get a story on the news.

Corruption here is endemic. The Asia Foundation pays Sumati to poll a thousand households quarterly to benchmark attitudes toward corruption and how many bribes they have paid in the previous three months—usually to doctors, teachers, administrators and police. The last poll showed that Mongolians consider corruption to be the government's third most serious problem after unemployment and poverty, and that while the number of bribes decreased from 16 percent of households in March 2010, to 13 percent in September 2010, the amounts of the bribes more than doubled. Of course, these surveys do not address the big guys and government officials who somehow may be secretly attached to these lucrative concessions, a lot of which are done on an all-cash basis, the preferred method of the Chinese. "The Chinese come in with a suitcase full of cash," says banker Lambert. "A Chinese guy buys a bottle of vodka and he will buy your mine for $7 million with no due diligence. Even though the Mongolians don't like the Chinese, they have a healthy respect for them."
The transition from Communism is still being felt. The alphabet is Cyrillic and there are many parts of the capital that look a lot like old Moscow. The era after the Soviet Union collapsed is still recalled painfully. Those who made out like bandits were similar to the apparatchik of Russia—people who had had contact with the West. One such person is national rich guy Kh. Battulga, one of the most controversial figures in political and business life today. He is a former national judo champion, a man who drives a Bentley and paid $10 million out of his own pocket to build the gargantuan statue of Genghis Khan on Mongolia's steppes. Battulga is a developer—he is turning the land around the statue into a resort—and also happens to be the minister of road, transportation, construction and urban development and a powerful leader of Parliament. He traveled the exterior as an athlete, started trading by selling electronic appliances from China, graduated to computers and now owns a large meat-processing plant that supplies the country. In 2004, "my own needs were met," he says, so he decided to run for Parliament.

Today, his grand vision is to build a $10 billion industrial complex the Mongolians call a "production city" named Sainshand, also in the middle of nowhere in the Gobi, 300 miles from the Russian border, 125 miles from China and about 200 miles northeast from the proposed Tavan Tolgoi coal mine. It would be connected by highway and rail to the capital and by rail only to Russia. Instead of selling unrefined ore and coal to the Chinese, who collect it in trucks, Sainshand would process the minerals and refine the oil. Mongolia could then sell its commodities at an increased profit of at least 30 percent, according to estimates, and create hundreds of thousands of new jobs. But first the city has to be created from scratch. Then the coal will have to travel 3,000 miles from the mine, including a connection to the Russian railroad, before reaching the port of Vladivostok. Battulga told me he got the Sainshand idea because a Buddhist thinker in the 19th century predicted that one day a great metropolis would grow there.

All over Ulan Bator I hear naysayers on Sainshand. The local gossip is that Battulga is in cahoots with the Russians. "The Russians quite naively believe if they monopolize the railroad around the minerals they'll have control of the mineral wealth," says J. Od, who with his brother is one of Mongolia's biggest businessmen and taxpayers, doing a lot of business with the Chinese. He dismisses it all as politics, declaring that's the way "the clowns" in government mix politics with business. "Sainshand," he continues, "is some so-called geopolitical policy of Russia. It cannot be implemented in Mongolia today—it's too late." Battulga counters: "For Mongolia it's not profitable to sell raw materials to China. It's not geopolitical, it's business. We want minerals sold to the world market."

The fragile coalition government that is up for reelection next year is literally besieged on all sides. To hedge against inflation and to share the wealth, Parliament has passed a law creating a Sustainability Fund with money set aside from mining industry revenue including the Tavan Tolgoi coal profits; sometime in the future, all citizens will also be issued 10 percent of the shares of an IPO the government will offer on the Hong Kong and London stock exchanges. (The government has also established a more general Development Bank.) They know they cannot count on the fluctuating prices of commodities to sustain their long-term growth. When I spoke to Z. Gombojav, minister for foreign affairs and trade, he chose to spin the country's many immediate needs as "vast opportunities and room for investment in infrastructure, including roads and railways, energy, urban construction, light industry and food production."

The reality on the ground is more challenging. For example, Mongolia has the best cashmere in the world, but domestic producers who refine the wool say they are in danger of being put out of business because the government does not collect the 30 percent export tax from the Chinese, enabling them to buy vast amounts of raw wool from the herders at higher prices while domestic producers are fully taxed. According to D. Erdene-Ochir, head of sales for Goyo Cashmere, the government is sacrificing them to the herders. "It's terrible politics to treat herders badly. So there are no taxes and the Chinese manipulate the market. They are supposed to pay the government, but the government doesn't collect. Mongolian companies have to pay income and VAT taxes. . . . If I want to be elected, I cheat the producers not the nomads." He also accuses the Chinese of mixing the cashmere with wool, silk and cotton. "They mix it and call it anything they want. We will be extinct very soon."

There is no doubt that Mongolia is white-hot in multinational-investment circles. One night I attended GE's welcome reception celebrating Mongolia as the 130th country where it does business. GE will begin by selling MRI machines to the country's underequipped and overburdened hospitals. Caterpillar already has a $100 million business going there. "Mongolia is like baking a cake," says business consultant Jackson Cox. "All the ingredients are on the table. You've got everything you need in Mongolia to build a modern, prosperous economy. The only thing that's missing is the political leadership to make the tough decisions. You have to envision the Mongolia you want 25 years from now and then take on the decisions to plan the education, infrastructure and health care to get there."

Nevertheless, most of the Mongolian hands I dealt with seemed to believe things would somehow work out in the end, even though environmentalists rightly fear precious grasslands and watersheds could be destroyed in a country that so far has only been 25 percent geologically explored. As Graeme Hancock says, "There is a very, very active civil society. Companies don't get away with making a mess very long."

The looming question is what Mongolia will do once its finite treasures have run out. "Twenty years from now, if all this mineral wealth—which is not renewable—is not turned into renewable wealth, which is knowledge, then we will have missed the point," says newspaper columnist D. Jargalsaikhan. "This underground wealth needs to stay aboveground to suit our will and aspirations."

"Money without policy does more harm than good," says J. Od, who believes "we are only at the tip of the iceberg" in knowing how rich Mongolia really is.

Source:Wall Street Journal


Mongolia coal exports to hit 25 mln T this year -official

* Total exports seen reaching 50 mln T by 2015
* Infrastructure costs seen at minimum $3.5 billion -official (Adds production forecasts, details)
By Fayen Wong
ULAN BATOR, June 21 (Reuters) - Mongolia's coal exports are expected to keep posting exponential gains and reach some 50 million tonnes by 2015, a government official said on Tuesday, though infrastructure constraints are seen remaining a hurdle for the country's booming mining sector.
Total coal exports are expected to jump 50 percent from a year ago to 25 million tonnes this year and rise further to between 30-35 million tonnes in 2012, A. Erdenepurev, general-director of the fuel policy department at Mongolian's Ministry of Mineral Resources and Energy, told Reuters on the sidelines of an industry conference.
Mongolia's coal exports are expected to reach 50 million tonnes as the eastern section of the huge Tavan Tolgoi mine comes onstream by 2014 to 2015, he said.
"Looking at our production growth over the past few years, these short-term forecasts can be quite conservative," Erdenepurev said.
Mongolia's coal sector, which accounts for a third of the country's earnings, has grown rapidly in the past few years to become an important coking coal supplier to China.
However, a severe lack of roads, rail lines, electricity, water and skilled workers in the impoverished nation of 2.7 million people pose formidable challenges to Mongolia's mining boom
"There are 5,000 trucks per day on the road linking the southern Gobi region to the Chinese border right now and that number is going to grow and cause congestion," Erdenepurev said.
"There is a serious need for new infrastructure but it also demands huge investments."
Estimated costs to build proposed railways, road, water and power stations were at least $3.5 billion -- accounting for more than half of the country's gross domestic product, Erdenepurev said.

Separately, Erdenepurev said bid results for developing the the western section of the Tavan Tolgoi deposit are expected to be released by July 1, before the spring session of the parliament ends.
The government has already shortlisted six bidders out of a list of 15 to develop the mine, including ArcelorMittal , Vale , Xstrata , U.S. Peabody and a consortium of Chinese energy firm Shenhua and Japan's Mitsui & Co.
Another consortium, led by South Korean state body Korea Resources and including POSCO , utility KEPCO , trading firm LG Corp, Daewoo International, Russian Railways, and Japanese trading houses Itochu Corp, Sumitomo Corp, Marubeni Corp and Sojitz Corp, is also in the running.
The government had said in April it would select more than one winner, possibly three to four bidders, to develop Tavan Tolgoi. (Editing by Jacqueline Wong and Jonathan Hopfner)

Mongolia, China upgrade ties to strategic partnership

Mongolia and China have decided to upgrade their bilateral ties from a good-neighbor partnership of mutual trust to a strategic partnership, according to a joint statement from the two nations.
“To further advance the good-neighbor friendship and mutually-beneficial cooperation between China and Mongolia, the two sides have decided to upgrade the strategic partnership,” according to a joint statement signed on Thursday and released on Friday.

The statement was signed by Chinese Premier Wen Jiabao and his Mongolian counterpart Batbold Sukhbaatar.

At the invitation of Wen, Batbold mate his first official visit to China since taking office in 2009 from Wednesday to Friday.

The two sides are satisfied with the development of the bilateral ties over the past years.

“As China and Mongolia are friendly neighbors sharing a long border, to consolidate and deepen continuously the friendly relations conforms to the common interests of the two states and their people, as well as helps to promote peace, stability and development in the region,”.

In the statement, China and Mongolia pledged to increase their political communication and boost mutual trust between the two countries in order to build a more solid political foundation for the strategic partnership.

“The two sides believe that high-level interaction is significant for the development of bilateral ties,” the statement said, adding that the two countries will keep the momentum of exchanges between their leaders to “boost strategic communication” as well as step up cooperation between their parliaments, governments and political parties.

The two neighbors also vowed to work together to fight against terrorism, drug trafficking and other cross-border organized crime, as well as cooperation on dealing with natural disasters and infectious diseases.

China and Mongolia will expand their economic cooperation with a view to common prosperity, which will provide a long-lasting driving force for the development of the strategic partnership.

The two sides reiterated that priority will be given to natural resources and infrastructure in their economic cooperation.
China and Mongolia are also committed to people-to-people exchanges between the two countries, which act as essential grassroots support for the bilateral strategic partnership.

In the statement, the two countries also pledged to coordinate their stances and support each other in regional and international affairs to safeguard their common interests as well as enrich the strategic partnership.

“The two sides hold that they improve mutual trust and coordination in international and regional affairs, resolve disputes through dialogue and consultation, and make joint efforts to forge a more just, democratic and rational international political and economic order”.
source: The UB Post

Mongolia passes law on right to information

The Mongolian parliament has passed a right to information law after a five-year debate, local media reported Friday.

According to the resolution, any citizen or legal body has the right to seek information from government organizations. Those operating on money from the government budget also have an obligation to reveal information to the public.

The law covers the work of goods and services purchased with money from state and provincial budgets, selection of tenders, and the budget, financial accounts and so on.

The law comes at a time when the Mongolians are demanding detailed information over the tender selection process of development of the Tavan Tolgoi coal mine in southern Mongolia.

Some provisions of the law will come into force from Dec. 1, local media reported.



B. Gangaamaa’s perilous climb up Mt. Everest

In 2005, the first Mongolian in history stood on the top of Mount Everest. The second conquest occurred six years later by a female climber, B. Gangaamaa. B. Gangaamaa first attempted to climb the Everest in 2007 as a member of a team led by Mongolia’s honored mountaineer G. Osokhbayar. However, she stopped climbing at 7,680 meters and returned due to health factors. Early this spring, she was involved with a Russian team called ‘Seven Summit’ and achieved her goal. A certificate was presented to her by the Mountain Climbing Union of the Tibet Autonomous Region of China that reads: “This is to certify that B. Gangaamaa has climbed to Jomolungma summit of the Himalayas and reached 8,848 meters above sea level at 6.30 am on May 22, 2011”. B. Gangaamaa was briefly interviewed during a press conference on June 2 at the Central Sports Palace in Ulaanbaatar.
-Every mountaineer has a dream to stand on the top of Mount Everest. You have become the first Mongolian woman that reached the peak of the Mount.
Every sportsperson wants to takepart in Olympic Games and become an Olympic winner. Likewise, every mountaineers dream and sincere wish is to climb Mount Everest.
I have studied and made preparations for the past decade. Previously, I was part of the team to climb this Mountain; but had no way to return when only I needed to climb 168 meter further.
It gave me an important lesson. As a result of persistent effort, I was able to reach the peak. I am very excited.
-How does the earth look from the summit?
-For two months, I climbed. I started the most important climb at 9pm on May 21, and continuously climbed during the night and reached the peak when it was dawn. I felt there was only one way to go down from Mount Everest when I saw it from the summit. The summit has very little space. When I looked down from the summit, there were clouds below and it was just dawning in the east. Also, I saw thunder in dark clouds in the west. It looked completely dark covering the world from the highest peak of the world. My guide followed me up. We spent about 10 minutes on the peak and it was impossible to stay longer because it has negative effects on human health. On the peak, I was photographed holding the State Flag of Mongolia. The Physical Culture and Sports Department gave me this State Flag that was raised when Mongolian athletes brought number of medals won during the Beijing Olympic Games. I raised it on the peak of highest mountain. I believe that I could invigorate the spirit of Mongolian sportspeople who will take part in 2012 London Olympic Games.

-Was your long travel full of adventures?
-Weather and your own physical condition are very important. This year, the weather was not so good. Therefore, the specific path for climbing stretched above 8,300 meters late in May. I climbed up carrying a total weight of 10 kg, including two 4-liter hydrogen balloons, three state flags and a hot pot of tea. Our team was comprised of one each from 7 countries such as Mongolia, Russia and Canada and two from the USA. I and one of two US sportspeople could stand on the peak and the others could not. I cannot express in words what I felt at the summit after so much effort. It was also difficult to go down safely from the summit. It was vital to go down fast because my hydrogen reserve was nearly depleted. During my climb up and going down, I saw many dead people who could not reach the peak. A mountaineer from UK, a member of our team, died. It was so sad seeing own team’s member die. Also, another mountaineer became blind. This year, 20 expeditions, comprising about 30 countries participated in the climbing.
During the press conference, Physical Culture and Sports Department and National Olympic Committee of Mongolia awarded B Gangaama with its top prize ‘Altan Od’ and Mongolia’s Mountain Sport Union awarded her with a medal for its 40th anniversary

source:'The Mongol Messenger'


China, mineral-rich Mongolia ink partnership deal

China and Mongolia have signed a strategic partnership deal while Beijing has agreed to provide a $500 million loan to the landlocked but mineral-rich central Asian country.

Chinese Premier Wen Jiabao met Thursday with Mongolian Prime Minister Sukhbataar Batbold in Beijing. They signed the partnership agreement and oversaw the signing of eight other deals on economic and technology cooperation, vehicle trade and other areas.

Mongolia has been looking to sell its minerals. While visiting Hong Kong on Tuesday, Batbold said a huge copper and gold mining complex in southern Mongolia is on track to be completed next year.

Batbold also said the government is aiming to choose a bidder for the giant Tavan Tolgoi coal mine this year.


China pledges aid to Mongolia

Chinese Prime Minister Wen Jiabao (right) and Mongolian Prime Minister Sukhbaatar Batbold (left) drink a toast during a signing ceremony at the Great Hall of the People in Beijing. China pledged to help resource-rich Mongolia develop its economy, offering visiting Batbold a $500 million loan and support for the key mining and energy sectors
BEIJING (AFP) – China pledged on Thursday to help resource-rich Mongolia develop its economy, offering visiting Prime Minister Sukhbaatar Batbold a $500 million loan and support for the key mining and energy sectors.

On a three-day visit to Beijing, Batbold met with Premier Wen Jiabao and also discussed joint infrastructure projects while overseeing the signing of a raft of agreements, including the loan.

"China is willing to unify planning and coordination with Mongolia on pushing forward mining, energy, infrastructure and other big projects," China Central Television quoted Wen as telling Batbold in talks.

"China is willing to provide assistance within its means to help Mongolia raise its energy and environmental protection capacity and push forward the development of its national industry."

Wen further urged Batbold to work with China to fight terrorism, separatism and cross-border crime and that the two nations should jointly cooperate to maintain stability along their long common border.

It was unclear if the two leaders discussed recent unrest in Chinese-ruled Inner Mongolia -- which lies south of Mongolia -- where thousands of ethnic Mongols protested over alleged encroachment by Chinese mining concerns in the region's traditional grasslands.

"I believe that your visit this time can take the bilateral relationship to a new high," Wen said.

On Wednesday, Batbold met with Chinese parliamentary chief Wu Bangguo and he will hold talks with Vice President Xi Jinping on Friday.

Batbold earlier told reporters that Mongolia and China should pay more attention to their bilateral trade structure, noting Mongolia's exports to China mainly consist of heavy raw materials, which have environmental costs.

He also said Mongolian companies had started to invest in China, and that Ulan Bator hoped Beijing would support these firms, Dow Jones Newswires said.

Mongolia is opening up its resources to foreign investors in the hope the nascent mining industry -- and the deep-pocketed firms interested in it -- can help pull thousands of people out of poverty.

Ulan Bator has shortlisted several major foreign firms to develop part of the Tavan Tolgoi mine, one of the world's largest coal fields with 6.4 billion tonnes of reserves located 270 kilometres (165 miles) from the Chinese border.

US coal miner Peabody Energy, Brazil's Vale and steel giant ArcelorMittal are among six preferred bidders to develop the western portion of the mine's Tsenkhi block, which contains mostly coking coal -- a key ingredient for steel production.

The others in contention are Anglo-Swiss group Xstrata, a joint venture between China's Shenhua and Japan's Mitsui, and a consortium of Russian, South Korean and Japanese companies.

The results of the bidding are expected to be announced later this year.

source: AFP


Mining Mongolia: Ivanhoe, T-shirts, NGOs, and Wikileaks

In 2005, Robert Friedland, chairman of the Vancouver-based Ivanhoe Mines Ltd., famously regaled potential investors in Florida with his Mongolian mega-project, the “cash machine we really intend to build,” – a massive copper-gold and coal project in the southern Gobi desert called Oyu Tolgoi or Turquoise Hill.
Friedland talked about the size of his claim: “Mongolia is three times the size of France, twice the size of Texas, 2.6 million people, and our lands...are about the same size as Japan...about 135,000 square kilometres, the largest land position in the mining industry.”[1]
Friedland talked about his good relations with the government and low anticipated tax rates: “Now Mongolian political leaders have helped us a lot, the president of Mongolia came to Canada. We met with Paul Martin and we’ve signed a free trade agreement between Canada and Mongolia to avoid double taxation. We have virtually no taxation contemplated on the remittance of dividends and we are in the final stages of a very important long-term agreement with the Mongolian government that will protect our stakeholders on everything we are going to do.... if our tax rate was say 5% or 6%, we only have to be half as good as Grasberg to make as much money for our shareholders.”
Friedland talked a lot about how much money would be made:
• Block caving was described as a cash cow – “The amount of money that this block cave can draw off is terrifying...typical operating cost for a block cave would be a dollar or two a tonne. And about 3 or 4 dollars a tonne to mill it say 5 or 6 bucks a tonne, all in. What’s amazing is this 3%, 4% copper is 100-dollar rock. So you’re in the T-shirt business, you’re making T-shirts for 5 bucks and selling them for 100 dollars. That is a robust margin.”
• Labour costs would be low – “Now you can see how these trucks are just going to come in here and pull money out of the bank. The mining is automatic. It’s just like a rock factory. There’s no moving parts, it can be totally automated. Kids with joysticks can be running these things from the surface. You don’t need any people underground, it’s all done by gravity drainage.”
• The associated coal was another money maker – “These old coals are really the Beluga caviar of coals.... And you can make more money digging that stuff up, and hauling it south, than you can screwing around with sort of a marginal gold mine anywhere in the world.... You can mine this coal for a buck a ton. If it’s worth 100 bucks a ton, it’s a quarter of an ounce gold equivalent. If it’s 50 dollars steam coal, it’s still several grams per ton gold equivalent, and you don’t have to mill it, you don’t have to wash it, you don’t have to clean it, you don’t have to process it. All you do is do what the Chinese are doing in these pictures. You load it into trucks and they go across the Gobi Desert, see that dust, heading for China. And you trade it for money. This is what mining is supposed to be.”
Finally, Friedland talked about the lack of social hassles in the desert – “And the nice thing about the Gobi is, there’s no railroad tracks in the way, there are no people in the way, there are no houses in the way...there’s no NGOs...You’ve got lots of room for waste dumps without disrupting the populations...”
If Friedland “underestimated” anything in his typically hyperbolic speech it was likely the social landscape. When Friedland’s speech – especially the analogy to making 95% profit on T-shirts – hit Mongolia and was translated it caused enough anger to lead to the burning of his effigy (in a top hat) in a protest in the capital Ulaanbaatar in April of 2006. And the “Toxic Bob” moniker Friedland has carried with him since long before his disastrous Summitville mine in Colorado is now commonly used in Mongolia. By 2008, Ivanhoe had found a partner in Rio Tinto but the agreement Friedland had talked up between Ivanhoe and the Mongolian government had failed to materialize.
Friedland also failed to anticipate approvals by the Mongolian parliament for windfall taxes on gold and copper exports and for the government to take up to 50% stakes in certain mining assets.[2] Amidst global outcry by mining moguls a call went out for political intervention. According to a cable from the U.S. Embassy in Ulaanbataar dated January 11, 2008, recently released by Wikileaks, that intervention was certainly forthcoming.[3] In January 2008, then-trade minister David Emerson flew into Ulaanbaatar. While there he expressed concern that Mongolian President “Enkhbayar’s approach to mining was too statist for Canadian tastes, saying that Enkhbayar was behind many of the efforts to re-nationalize Mongolia’s natural resources.”“The Canadian minister, however, praised Mongolia’s prime minister, foreign minister, and minister of the interior, saying they agreed nationalization was not the preferred choice, but that “severe political pressures” and a fear that the country would not benefit from its natural resources were at play.... Emerson also met with mining companies that “want and need foreign governments to project a united front to the [Government of Mongolia] to cover their political flank,” the cable reads. “In short, the mining companies told Canada to join US, British, Japanese, Australian and German efforts to encourage (cajole, harangue, etc.) the [Mongolian government] into staying out of the mining business...” During Emerson’s visit, Canada and Mongolia announced they would begin negotiating a Foreign Investment Promotion and Protection Agreement to provide protection for foreign investors. Later in 2008, Canada opened an Embassy in Ulanbaatur.
In October 2009 Ivanhoe signed a long-term investment agreement with the Government of Mongolia, and on March 31, 2010, the Government approved the investment agreement with Ivanhoe and Rio Tinto for the development of Oyu Tolgoi.
In spite of these developments, NGOs, whose existence Friedland has somehow failed to recognize in 2005, have been increasingly vocal in raising social, environmental as well as political concerns associated with the Oyu Tolgoi project. “The Mongolian Government approved the Oyu Tolgoi Investment Agreement on 31st March 2010 without obtaining the prior consent of Mongolia’s parliament (the State Great Hural) and despite the fact that the technical and economic feasibility study submitted by Ivanhoe Mines Mongolia Inc. had been rejected by Mongolia’s Mineral Expert Council [the technical council that has the responsibility to approve mining projects]” said Ms. Urantsooj of the Centre for Human Rights and Development, a NGO which has made a study of Mongolia’s mining and environmental legislation.[4]
On April 1, 2010, Mongolian NGO Oyu Tolgoi Watch tabled a complaint with OECD National Contact Points (NCP) of the U.K. and Canada on behalf of the Centre for Citizens’ Alliance, the Centre for Human Rights and Development, Steppes without Borders, Drastic Change Movement, and National Soyombo Movement.[5] In brief, the complaint alleges the company’s Technical and Economic Feasibility Study that was accepted by Mongolia’s Technical Council of Minerals Experts in March and implemented in April 2010 does not demonstrate the availability of sufficient water resources to carry out the project. It also raises issues concerning the long-term commitment of Ivanhoe Mines to the region and proposed royalty transfers among owners of the mining licence.[6]
After a lengthy process of requesting further information and documents from both sides the Canadian NCP decided not to take the case to the next stage. In its final statement the NCP determined the “environmental assessments to be complete and of a high quality” and finding the “governance and management of the water and all other resources of the area” to be “the responsibility of the Government of Mongolia.” The NCP further argued that “it is not practical or realistic to expect these extensive and complex matters to be resolved by dialogue between NGOs and companies on a case-by-case basis. These matters are more appropriately addressed by the national government using a comprehensive governance mechanism with appropriate laws, regulations and enforcement mechanisms.”
This finding is remarkable for at least two reasons. Firstly, the Canadian NCP made a statement of fact about the quality of Ivanhoe’s environmental assessment. The Canadian NCP normally takes the position that it will not make determinations of fact regarding the validity of a complaint but rather seeks to offer its “good offices” to bring about dialogue between the parties. The fact that the Canadian NCP determined that dialogue could not be expected to resolve these issues, and that they be best handled by the Mongolian government, is the second remarkable finding. As noted elsewhere in this newsletter, non-judicial grievance mechanisms such as the NCP are touted by U.N. Special representative John Ruggie as an effective response to weak governance. It is hard to see how non-judicial grievance mechanisms can fill the void left by weak governance if they refuse to accept that role. The question of whether there was a conflict of interest given that the complaint came in to the Canadian NCP at the same time that Ivanhoe was seeking funding from Export Development Canada is pertinent in this case.
Not long after the Canadian NCP prepared its final statement on the Oyu Tolgoi complaint, the International Finance Corporation (IFC) replied to a letter of concern by Oyu Tolgoi Watch.[7] The IFC’s letter confirms many of the very concerns regarding the lack of adequate environmental assessment, particularly with respect to water resources and social impacts, that were raised in Oyu Tolgoi Watch’s complaint to Canada’s National Contact Point. The financial institution insists it is “deeply committed to helping the Oyu Tolgoi project develop in a manner that will maximize its benefits to the people of Mongolia.” The question is whether the IFC’s stated commitment to achieving benefits for the Mongolian people is more believable than the less politically smooth, but perhaps more honestly rapacious statements of Friedland when he described the Oyu Tolgoi project as a “cash machine” for investors and shareholders.


In Mongolia, lessons for Obama from Genghis Khan

Misha Japaridze/AP - Mongolian President Tsakhia Elbegdorj, right, reviews an honor guard upon his arrival during a welcoming ceremony at Sheremetyevo airport, in Moscow, Russia, May 30, 2011.
ULAANBAATAR, Mongolia — As the leader of a diminished land that was once an invincible superpower, President Tsakhia Elbegdorj of Mongolia has some advice for Americans fatigued by the burdens of global power: Remember Genghis Khan, and stick with your friends.
“It is tough, but Mongolia was the biggest power in the world, and we had the same responsibility,” said Elbegdorj, who is to meet with President Obama at the White House on Thursday to pitch his country as a stable, pro-American democracy deserving of more attention.
Sandwiched between a rising, authoritarian China and an often pugnacious and, in these parts, still very powerful Russia, Mongolia is the only nation in the vast expanse of territory conquered by Genghis Khan in the 13th century that holds regular elections and lets power pass peacefully between rival parties.
The United States, like Mongolia in its heyday, “has a responsibility to help those who are trying to follow in its steps,” Elbegdorj said in an interview in a felt-lined tent outside his official residence in the Mongolian capital.
Genghis Khan’s warriors killed lots of people, to be sure, but according to the president, a Soviet-trained former military journalist who helped lead Mongolia’s democratic revolution in 1990, it was done in a good cause.
“Do you think we just went to places and killed?” Elbegdorj said. “No.”
Mongolia, he said, used its muscle to keep trade along the Silk Road flowing and toenforce a written law. And “when there was a killer, or in today’s expression, a terrorist nation,” he said, “we were God’s will to make them peaceful. . . . When there was a poor nation, we helped them.”
Today, too, Elbegdorj said, “sometimes you have to pay attention to your friends.”
Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, said that the Obama administration is “committed to developing a broader, deeper and more strategic relationship with Mongolia, including expanded commercial, political and cultural ties.” Thursday’s meeting in the Oval Office, he said, speaking from Washington, “is testament to that, as will be other high-level American visits and engagements in the months to come.”
Vice President Biden and Secretary of State Hillary Rodham Clinton are both due to visit Mongolia.
So far, however, only one U.S. leader has trekked to Ulaanbaatar, the world’s coldest capital city in winter: President George W. Bush stopped off for a few hours in 2005. Efforts to secure a free-trade agreement have gone nowhere, and U.S. investment in Mongolia is tiny, despite the country’s bountiful natural resources and a big push by other countries, particularly China and Canada, to join what looks set to be a minerals-driven economic boom. The World Bank in a recent report described Mongolia’s prospects for growth as “excellent.”
Mongolia has sent troops to support U.S. forces in Afghanistan and Iraq, and unlike China, Russia and the former Soviet lands of Central Asia, it has a vibrant free press, allows street protests and does not routinely harass critics. Some local leaders are bullies, and the national parliament is heavily influenced by Mongolia’s version of Russian oligarchs, but Mongolia is far freer than its neighbors.

Elbegdorj, Obama hail shared common interests

US President Barack Obama speaks with Tsakhia Elbegdorj (L), President of Mongolia, during their meeting at the Oval Office of the White House in Washington, DC. Mongolia promised to give US companies a role in its booming energy sector as Obama reached out to the young democracy that is also being courted by neighboring China.

President Barack Obama and President Ts. Elbegdorj discussed steps to expand diplomatic, economic and defense cooperation between the two nations during an afternoon meeting in the Oval Office in the White House on Thursday. The two leaders said in a joint statement released after their meeting they shared common interests in promoting freedom and human rights.
The US and Mongolia have common interests in "protecting and promoting freedom, democracy and human rights worldwide, and confirmed their intention to strengthen trade, investment and people-to-people ties so as to support economic growth and deepen the bonds of friendship between their two peoples," the statement said. "Mongolia welcomed and supported the key role played by the United States as an Asia-Pacific nation in securing peace, stability and prosperity in the region," it said.
The two nations also decided to "explore mutually advantageous activities in nuclear energy based on the September 2010 Memorandum of Understanding between the two countries," and the United States "applauded Mongolia"s nuclear-weapons-free status."
Mongolia is a U.S. friend that merits increased U.S. attention, Elbegdorj said before his meeting with Obama. "Sometimes you have to pay attention to your friends," Elbegdorj told The Washington Post.
The United States, like long-ago superpower Mongolia, "has a responsibility to help those who are trying to follow in its steps," said Elbegdorj, whose market-economy nation is a parliamentary republic that holds regular elections and lets power pass peacefully between rival parties.
Vice President Joe Biden and Secretary of State Hillary Clinton are to visit the giant, landlocked, minerals-rich country bordered by Russia to the north and the China to the south, east and west.
Mongolia -- which broke free from China in 1921 but then was under heavy Soviet influence until the early 1990s -- is the 19th-largest independent and the most sparsely populated country in the world, with about 2.8 million people occupying an area the size of western and central Europe combined.
The country is now a U.S. ally -- sending troops to support U.S. forces in Afghanistan and Iraq -- has a vibrant free press, allows street protests and does not routinely harass critics, the Post said. "Maybe if we caused problems -- if we hid [Osama] bin Laden or atom bombs -- America would pay more attention," Elbegdorj joked.
U.S. Ambassador to Mongolia Jonathan Addleton said Mongolia -- which gets about USD10 million a year in U.S. assistance -- would be "in a better place when it moves from an aid relationship to commercial relationships, as it is doing now." Mongolia plans to buy three airplanes from Boeing Co., Elbegdorj told the Post, with the deal to be announced soon.
The World Bank recently described Mongolia"s prospects for economic growth -- due in part to its rich mineral resources, including copper, coal, molybdenum, tin, tungsten and gold -- as "excellent". "The values connection is very important," Elbegdorj said. "We have to strengthen that connection. If America invests in that, America will have many friends [in Mongolia] who live on their own, not with bombs or American troops."


Mongolia’s prime minister says development of giant copper-gold mine, coal mine on track

HONG KONG — Mongolia’s prime minister says a huge copper and gold mining complex in southern Mongolia is on track to be completed next year.
Sukhbataar Batbold also said Tuesday the government is aiming to choose a bidder for the giant Tavan Tolgoi coal mine this year
Canada’s Ivanhoe Mines and Anglo-Australian Rio Tinto are jointly developing the $4.6 billion Oyu Tolgoi copper and gold mine. It is expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold per year in the first decade of operation.
Mongolia is inviting foreign companies to bid to operate Tavan Tolgoi, which is estimated to hold 6 billion metric tons of steelmaking coal. Batbold spoke to reporters on a visit to Hong Kong.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

source: AP


President Ts.Elbegdorj concludes Russia visit

Kalmykia aspires to preserve the language and culture of Mongolia
Mongolian President received in Kalmykia On June 1, President Ts. Elbegdorj’s official visit to the Russian Federation continued in the historic city of Saint Petersburg. The President travelled directly from ‘Moscowsky’ train station to Piskarevsky Memorial Cemetery where he laid flowers in memory of the residents of the city who heroically stood up against enemy besiegement for nine hundred days during the Second World War. Residents and natives of Saint Petersburg are greatly proud of their heroic wartime history during which 1 million lives were lost in their city alone.
President Ts. Elbegdorj next travelled to the State Hermitage Museum which contains invaluable treasures and displays exhibiting the impact of Mongols in the history of mankind. This collection includes Hun Empire artifacts discovered during the Noyon Mountain expedition, the silver Gerege used in the times of Chinggis Khaan, a silver seal inherited through the lineage of Mongol khans and nobleman, diplomatic gifts and souvenirs sent to the monarchs of Russia in the 17th and 18th Centuries and so forth. The President of Mongolia also visited the Institute of Oriental Manuscripts at the Russian Academy of Sciences. The institute holds a total of over eight thousand pieces of manuscripts and other artifacts in connection with the history and culture of Mongols and their samples were presented during President Ts. Elbegdorj’s visit. The representatives of the Institute of Oriental Manuscripts stressed that when it was first established, the first research activities of the organization was on Mongol Studies.
The Museum of Anthropology and Ethnography named after Peter the Great was the next stop for President Ts. Elbegdorj’s cultural tour. The President was acquainted with rare and valuable articles and unpublished photos illustrating pieces of Mongolian history from the Mongolian section of the museum. The collection of the museum contains over forty-two thousand such photos representing different cultures of the world. President Ts. Elbegdorj’s official visit was remarked as of high importance as it opens new avenues of cooperation between academics of the two countries to cooperate in the field of Mongol studies and research of Mongolian historical and archeological artifacts.
President Ts. Elbegdorj visiting Gunzechoinei Monastery in Russia
 During the official visit, talks were also successfully held between the Mongolian Academy of Sciences and their Russian counterparts to put invaluable articles and other items up for public display and host joint research in this field. The same day, President Ts. Elbegdorj met with Ms. Valentina Matviyenko, the governor of Saint Petersburg city. The President underlined that his visit was not accidental because Mongolia wants to study all related valuable creations, findings and exhibits in Petersburg, show them to Mongolians, and exchange scientists and scholars.
“Mongolia intends to persistently support studying and saving rare valuables of Mongolian history,” he stressed.
Ts.Elbegdorj expressed satisfaction with keeping bilateral cooperation in the educational sector, noting the need to prepare energy, machines and mechanism industries experts.
In response, Ms. Matviyenko thanked the President for visiting their city and appreciated his proposal to cooperate in education, history and sciences. She said she wants to establish a partnership and cooperation agreement between the two cities. Then, Ms. Matviyenko sounded a proposal to host a business forum in Saint Petersburg to establish business ties between the cities.
On June 2, the President had breakfast with Mongolists at Hotel ‘Baltiishkaya Zvezda’ and expressed his support.
Later the President visited the summer palace of Peter, the Great, and the Gunzechoinei Buddhism monastery. Monks invited the President to the seat of honor, made offerings to God, and recited a mantra. The President gave them a Buddha statuette and wished them success in their deeds. The monastery was built in 1909 at the initiative of Agvaan Dorjiev and was funded by Mongolia’s 8th Bogd.
Unfortunately, it was completely destroyed in times of political repression but was rebuilt in 1993 with the sound help of Mongolians.
In the afternoon, President Elbegdorj left Saint Petersburg for Elista city of Russian Kalmykia Republic where he was cordially welcomed by Mr. Aleksey Orlov, head of Kalmykia; L.Ivanova, head of Kalmyk government; and A. Kochachko, speaker of the People’s Great Khural.
The President met with authorities of Kalmykia Republic, Mr. Orlov and some members of the government. Mr. Orlov said he believes the Mongolian President’s visit to Kalmykia will be a vital step to strengthen friendly cooperation between the people of Mongolia and Kalmykia and that it would also be beneficial for Russian, Kalmyk and Mongolian people.
Russian Academy of Sciences holds over 8,000 pieces of Mongol manuscripts and artifacts

In turn, President said, “I saw happy people and images of peaceful life while I walked through the garden to get to the Government House and conversed with Kalmyk people. It seemed very nice. For Mongolia, this year is full of wonderful historical anniversaries, the 2220th anniversary of foundation of first statehood, the Hun Empire, in Mongolian territory, 100th anniversary Liberation Revolution of Mongolia, 90th anniversary of People’s Revolution of Mongolia, 90th anniversary of establishment of diplomatic relations between Mongolia and Russia, 50th anniversary of Mongolia’s joining to the UN, 30th anniversary of joint space flight of Mongolia and Russia and 50th anniversary of cooperation of scientific academies. This year’s Naadam Festival will be celebrated more magnificently.”
“Compared to previous years, bilateral trade turnover increased 40 percent from 2010. We are willing to maintain and increase this growth. Kalmykia has many proposals and aspirations. We need to help to put the good initiatives and aspirations businesses and people have into action. Mr. Orlov said that Kalmykia’s beef is considered the best in Moscow. Therefore, a joint meat factory can be established in Kalmykia or Mongolia.
This visit aims at giving more force to bilateral relations and cooperation. I have held meetings with the Russian President and Prime Minister to discuss pressing issues and we were able to reach agreements.”
That day, a ceremony took place to present a Mongolian ger to Kalmykia in Elista, and a concert was given by Mongolian and Kalmykia artists such as the ‘Tulip’ national dance group, State Honored Artists of Mongolia, D. Sosorbaram and G.Ravdan, ‘Overture’, ‘Khosogton’ and ‘Shurankhai’ groups, and the ‘Ev Eye’ national song and dance group.
Later, the President held a meeting with senior people of Kalmykia. The latter expressed satisfaction with seeing the Mongolian President.
“We never forget that we are part of the Mongolians. We are doing a lot to save our language and culture,” they stressed, adding that state pays attention to it.
On June 3, the delegation led by the President paid tribute to the ‘Eternal Flame’ memorial place dedicated to Kalmyk soldiers who fought in the Red Army during World War II and visited the State University of Kalmykia to meet students and instructors. At the meeting, the President said, “I am so happy to meet Kalmyk students. Originations of language, culture and religion connect us. Mongolia has a long history of collaboration and relations with Russia. While conducting a poll about which country we need to have close cooperation, over 60 percent of participants preferred to have it with Russia. The words of people are a guide for us. We are willing to cooperate with Russia in new sectors. I hope my visit can give impetus to it. I hope you will have contact with Mongolians and support each other. This is our common wish and aspiration. I felt it when I met senior people. We are willing to have close relations with Kalmyk, Torguud, Tuva and Buryat people.”
Kalmyk students asked questions in Mongolian and Kalmyk languages.
At the end, the President presented scholarships to five Kalmyk students to study in Mongolia. The State University of Kalmykia bestowed the title ‘Honorable Professor’ to President Elbegdorj.
After the meeting, the President visited the Golden Monastery of Buddha and President Ts. Elbegdorj got au fait with ‘Oiratsky stan’ farm, near the Elista city of Russian Kalmykia.
The farm breeds cattle, horses and sheep. “The Kalmyk people left their homeland some 400 years ago but the cattle’s genes have not changed, they can adjust to any weather,” said farmer Ozaev. All the cattle have electronic chips in their ears to see information about their birth place, date, weight and registration number.
The farm breeds seven pedigrees of horses and sells them to Germany and France. The President had a cup of tea in the farmer’s home. His spouse Tatyana Ozaeva said she erects several Mongolian gers in the summer to receive foreign tourists. This was the last leg of the President’s visit to Russia and he returned to home country on June 3.
source: 'The Mongol Messenger' newspaper

Modifications to Mongolia-OT Agreement ratified

Mining executives and Ministers signing the contract modification
As the Oyu Tolgoi Investment Agreement and Shareholders’ Agreement came into force on March 31, 2010, the Mongolian side became owner of 34 percent of Oyu Tolgoi Company’s shares. During the period since the agreements were effective, issues on cutting the interest of the financing and resolving means and conditions of financing effectively to the Mongolian side were frequently discussed at negotiations and meetings with the investor side.
1.The following amendments were made to the Shareholders’ Agreement:
-Interest rate of financing and loans: As a result of the talks, it was agreed with the investor to change the interest of total financing and loans to be made within frames of the project into LIBOR plus 6.5 percent.
Previously, it was 9.9 percent plus the American consumer price index. Newly agreed interest of the financing and loans came to effect from starting January 31, 2011.
- The right of Mongolian side to finance: The sides agreed that the Mongolian side will have the right to make financing equal to its ownership in the total amount of money required for the project at any time.
- Funding hedging options: In case LIBOR has a higher cost to the company and shareholders, depending on world economic and financial situations, the company will study funding to hedge options and take required measures. It was also agreed to reconsider the interest of funding and loans with the investor every 7 years.
- Project funding to come from third body: The Company will get project funding from a third body which is fruitful and suitable to Oyu Tolgoi from the international banking market in the first instance.
- Mongolia’s ownership will not be lower than 34 percent: It was previously stated in the agreement that Mongolia’s ownership of 34 percent will not be lowered. It has been confirmed not to lower Mongolia’s ownership without its permission regardless of whether or not it made a resolution to make financing to the company.
- Preferential shares: With a purpose to completely change the issue in relation to preferential shares that was previously stated in the Shareholders’ Agreement, it was decided to take it away from the agreement.
2.On June 8, the amended Shareholders’ Agreement was signed at the State House by Erdenes MGL Company CEO, B. Enebish from the Mongolian side, President and CEO of Oyu Tolgoi Company, Cameron McRae, John Foniani, Executive Vice President of Ivanhoe Oyu Tolgoi (BVI), and Sam Riggall, Executive Vice President of Business Development and Strategic Planning at Ivanhoe Mines Ltd. 2.On June 8, another agreement was signed to limit sale and transfer of shares.
According to this agreement signed by Minerals and Energy Minister D. Zorigt, Finance Minister S. Bayartsogt and Nature, Environment and Tourism Minister L. Gansukh representing Mongolia’s government and Andrew Harding, Chief Executive of Rio Tinto’s Copper Group representing Rio Tinto International Holdings Limited, the investor side has to negotiate with the Mongolian government and receive permission in writing before Rio Tinto International Holdings Limited sell or transfer its shares in Oyu Tolgoi Company to any state-owned entity and/or persons who have direct and indirect connections with Oyu Tolgoi Company.
It was agreed with the investor side to cut interest of financing of the Oyu Tolgoi Project to LIBOR (The London Interbank Offered Rate) plus 6.5 percent, to have the Mongolian side have a right to make financing and take part in financing the project, to receive financing from a third body in the first instance, use funding hedging options if required, to alter the issue on
preferential shares that was previously stated in the agreement as well as to not lower Mongolia’s ownership of 34 percent in any case.
source: 'The mongol Mesenger'newspaper

Rio Tinto makes $100 million final installment-Oyu Tolgoi contract modification signed

Big money changing hands at Mongolia’s foreign ministry
Pursuant to the 2nd annex of parliamentary resolution #40 dated December 12, 2008, approving the basic principle and directive to establish an Investment Agreement to co-exploit Oyu Tolgoi copper-gold deposit, the government was given a duty to negotiate receiving a certain part of royalty and taxation as an advance payment.
Accordingly, the Investment Agreement was established on October 6, 2009 between the Government of Mongolia and Rio Tinto International Holdings Limited, Ivanhoe Mines Limited Corporation and Ivanhoe Mines Mongolia Inc., and it was agreed that the Mongolia side would receive an advance payment worth USD250 million through certain phases.
Advance payments were received in phases. Mongolia’s government received the first part of the advance payment of USD100 million in October, 2009 from the investor and the second part worth USD50 million on April 7, 2010.
Based on parliamentary resolution # 40 in 2008, the Finance Minister was authorized to build an agreement on receiving a certain part of the royalty and taxation of the Oyu Tolgoi Company according to government resolution # 164 ‘Giving authority to establish an agreement’ was approved on May 25, 2011. It has the purpose to regulate relations regarding the remainder of the advance payment.
On June 7, a signing ceremony in accordance with the agreement was held at the Finance Ministry. Finance Minister S. Bayartsogt and Oyu Tolgoi Company President and CEO Cameron McRae concluded the agreement.
As the agreement was signed, the last installment worth USD100 million of the advance payment was transferred to the Mongolian side. The installment carries an interest rate of 1.59 percent.
source: 'The Mongol Messenger' newspaper

No exploration licenses issued in 2011

Mining operations can be detrimental to the environment
Issuance of special licenses for exploration of mineral resources has been banned until December 31, 2011.
When parliament discussed a Bill at its plenary meeting on prohibiting the issuance of the special license on the exploration of mineral resources, initiated by President Ts. Elbegdorj on June 3, 34 members out of 44 turnouts or 77.3 percent supported the bill. The law came into effect the day it was approved.
In accordance with a recommendation by the National Security Council, the same law initiated by the President was approved by Parliament before and issuance of special exploration licenses was stopped from May, 2010 to December 31, 2010. However, the President submitted another proposal in 2011 and the issuance exploration licenses was cancelled until April 30, 2011 because it was considered that actions to be taken in the minerals sector and further purposes of the sector have not been determined in legal frames during that period. The period of prohibiting license issuance finished early in May and they are still not issuing licenses.
At discussion about the new minerals law, President Elbegdorj said, “The National Security Council issued a recommendation on April 27, 2010, and gave instructions to the President to initiate a Bill on temporarily prohibiting the issuance of special licenses on minerals’ exploration and submitted it for discussion in parliament. Why this issue was discussed at the National Security Council is that relations surrounding mineral resources became an issue connected with the common interest and national security of Mongolia. There is no issue about starting to issue licenses from April 30. The issuance must be stopped until a new law to regulate relations of mineral resources is made based on previous lessons. Also, instructions were given to stop license trading and re-issuance of licenses given back by companies and individuals.”
The bill submitted by President Ts.Elbegdorj stated not to issue exploration licenses until a new minerals law is adopted. But MPs considered the law necessary to state a certain deadline to ban issuance of license. During discussion of the Bill, MPs asked about the process of drawing-up a revised bill on mineral resources. A working group comprised of over 10 people from the Economic Standing Committee and relevant officials from the Presidential Office, government, and many experts are working on the revised Bill. D. Zorigt, head of the Economic Standing Committee, responded that the Bill is expected to be submitted by mid June and it is possible to discuss the Bill during this spring session, or autumn session if it does not succeed. MP D. Gankhuyag said that there is talk that over 40 special licenses have been issued since approval of the previous law on prohibiting issuance of exploration licenses and asked if the issue has been confirmed. He added, “The minerals sector has been so disorderly and it became a mine for dirty money. There are many negative incidents to export raw minerals very cheap, share monies beyond the border, avoid taxation, swindle the State by the guise of a Stability Agreement, use poisonous substances and not rehabilitate the environment.
For example, a ton of coking coal costs USD300 on the world market, but it is exported from Mongolia at just over USD50. Although Mongolia’s coking coal is raw and unprocessed, there is much discrepancy in cost.
There is no need for such a mineral resource sector. Can these issues all be resolved with the revised Bill?” D. Zorigt responded, “No exploration license was given since license issuing was prohibited and members of the standing committee went to the Mineral Resources Authority and checked. The working group for the revised Bill made assessments to previous laws of mineral resources and are working to revise the law because there are many problems in the sector.”
As of 2011, a total of 14,734 licenses were issued since 1997 according to the studies. More than 600 deposits were registered in Mongolia and by 2000, all deposits were licensed. In 2000-2004, most of the minerals exploration licenses (7418) were issued.
source: 'The Mongol Messenger' newspaper


Wool and cashmere production supported Bonds worth Tgs300 billion issued

Greater productivity is expected in the cashmere industry
Parliament authorized government to issue bonds worth Tgs300 billion with the purpose to support national producers and increase jobs.
Government first submitted a bill to parliament to issue bonds worth Tgs110 billion for supporting cashmere manufactures. During the discussion, it was decided to issue bonds worth Tgs300 billion by expanding its scope to not only involve cashmere but also wool and small and medium sized enterprises. On June 3, Parliament approved its resolution on some actions to support national producers and increase jobs.
The first Bill was stated to issue bonds worth Tgs110 billion and disburse loans to 12 cashmere companies. It was criticized by some MPs that it did not cover the entire cashmere production, is late, and has conflicts of interest. As T. Badamjunai, Minister of Food, Agriculture and Light Industry explained, citizens are interested in receiving loans with a purpose to manage small and medium-sized enterprises, but the resource for loans is lacking; therefore, government was working out a project on issuing loans not only for cashmere manufactures, but for other productions as well in order to circulate extra money in the banking and financial market. As MPs’ proposed, these two were combined.
Parliament resolved issuing loans worth Tgs100 billion from total bonds worth Tgs300 billion to producers of cashmere thread and cashmere endproducts and the remaining Tgs150 billion to small and medium-sized enterprisers. Remaining bonds worth Tgs50 billion will be spent on herders who prepared and sold sheep and camel wool to national industries as a bonus, and on national producers who process wool. It was considered necessary to give Tgs2,000 per kilogram of wool sold by herders to domestic industries. To do it, it was stated to give this bonus to herders who are members of a cooperative, with the added purpose to support cooperatives.
MP D. Gankhuyag said, “Good quality infrastructure, processing industries, tourism and construction sectors are priorities that need to be developed first. We need to improve their competitiveness when government supports it with relevant policies. Within these frames, the state needs to support those who are working. For this reason, loans worth Tgs100 billion will be disbursed to the cashmere sector. Although the loan will cover 12 manufacturers, threading enterprises will also be issued.
Therefore it will also support family production and small enterprises.” It will be an important impetus to support national industrialization. At the press conference, members of the Economic Standing Committee working group emphasized that the resolution aims to directly link animal husbandry sector with national producers by creating a mechanism for conveying raw materials from animal husbandry to industries. MPs believe that issuance of the bonds will support national producers and herders and it will also create 50,000-60,000 jobs. Within the last two years, loans for small and medium sized enterprises worth Tgs60 billion were issued to individuals and companies and it resulted in the creation of 12,000 jobs. Based on past performance, it estimated that each Tgs5 million creates one job. “Processing cashmere will bring Tgs300 million into the State Budget. Out of 60,000 jobs to be created thanks to issuance of Tgs300 billion, 35,000 jobs will be in Ulaanbaatar. Now we have a measure to raise the export duty on raw materials with the purpose to support national production,” said MP D. Gankhuyag.
MPs said that banks demand collateral that is worth more than the amount of the loans individuals request. By considering it makes trouble for people to build small and medium sized enterprises, the loan should be stated to be issued with collateral worth 30-40 percent of the loan amounts when the resolution is implemented. The loan is expected to have a term of 5 years and interest rate up to 7 percent. Within frames of the government project, the loan will be issued in integrity with a policy that determines

what industries will be established and in which aimags. MPs underlined that the resolution is in accord with the Mongolian Livestock Program and the Law on Exchange of Raw Materials.
Parliament intends to continue policy to support national industrialization stage by stage and issue a policy to support meat, milk and leather producers in the next stage
source: 'Mongol Messenger ' newspaper


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