Mongolian President Makes First Visit to North Korea in Nine Years

SEOUL (Yonhap) -- Mongolian President Tsakhia Elbegdorj made a four-day visit to North Korea from Oct. 28-31 to become the first foreign head of state to visit the socialist country since the incumbent leader Kim Jong-un took control in late 2011.
Elbegdorj, who was also the first Mongolian leader to visit Pyongyang in nine years, discussed with North Korean officials the furthering of economic and other cooperation between the two countries, including the North's titular head of state Kim Yong-nam, according to the North's state media. A much-expected meeting with Kim Jong-un did not take place, however.
The last visit by a Mongolian head of state to North Korea was in December 2004 when former President Natsagiin Bagabandi visited Pyongyang. Bagabandi held talks with Kim Yong-nam but did not meet with Kim Jong-il.
In a banquet hosted by the North's Presidium of Supreme People's Assembly (SPA) on Oct. 29, the Mongolian president stressed that his country will work with Pyongyang to promote stability in Northeast Asia, the North's state media reported on Oct. 29.
The (North) Korean Central Television (KCTV) said President Elbegdorj emphasized the important role that can be played by Pyongyang and Ulaanbaatar in pushing forward peace and stability in the region. The broadcaster said the remark was made by the chief executive following talks with Kim Yong-nam, the president of the SPA Presidium.
Elbegdorj added that Mongolia was ready to work with all interested parties so as to contribute to the prosperity of Northeast Asia.
KCTV then said that officials from the two countries were in agreement on the need to expand cooperation in trade and investment, and shared the view that such developments will further bilateral interests.
Kim Yong-nam, meanwhile, said that there has been continuous cooperation in military and sports as well as in political and economic realms, and that Pyongyang is committed to expanding strong ties with Ulaanbaatar.
North Korea experts in Seoul and abroad said Elbegdorj's visit is significant, as it marks the first one by a foreign head of state since Kim Jong-un took control of the communist country.
Elbegdorj arrived in Pyongyang on Oct. 28 and visited the truce town of Panmunjom and the Kumsusan Palace of the Sun in Pyongyang, a mausoleum housing the bodies of North Korea's founder Kim Il-sung and late leader Kim Jong-il. He also watched a performance by the Mansudae Art Troupe at the East Pyongyang Grand Theater.
Elbegdorj also met with Pak Pong-ju, premier of the North's Cabinet, at the Mansudae Assembly Hall in Pyongyang on Oct. 30, the (North) Korean Central News Agency (KCNA) reported the same day, without elaborating on the content of the talks.
Elbegdorj's visit to North Korea will likely expand substantial bilateral cooperation, North Korea watchers said.
North Korea and Mongolia have maintained close ties as socialist countries. Elbegdorj's visit is expected to contribute to expanding the traditional ties further, especially in the field of economic cooperation, they said.
The two countries signed an agreement on cooperation in the fields of industry and agriculture and an agreement on cooperation in the fields of culture, sports and tourism on Oct. 28 between the governments of the DPRK (North Korea) and Mongolia.
The agreement on cooperation in the fields of industry and agriculture was inked by Ri Ryong-nam, minister of Foreign Trade, and Khaltmaa Battulga, minister of Industry and Agriculture. The agreement on cooperation in the fields of culture, sports and tourism was inked by Kim Jong-suk, chairwoman of the (North) Korean Committee for Cultural Relations with Foreign Countries, and Luvsanvandan Bold, minister of Foreign Affairs and Trade, on behalf of the governments of the DPRK and Mongolia. Kim Yong-nam and and Elbegdorj were present at the signing ceremony.
Meanwhile, the 2013-2015 plan for exchange in the IT field between the General Bureau of Software Industry of the DPRK and the IT, Post and Telecommunication Bureau of Mongolia was signed.
North Korea experts also pointed out that the Mongolian president's visit to North Korea may be a result of Mongolia's judgment that it will serve its national interest by showing a sense of its presence in international community . The country is surrounded by superpowers Russia and China.
While Mongolia can be branded as a contributor to the peace and stability in East Asia by helping in the globalization of North Korea, North Korea will also be able to improve its image of an isolationist country.
Chang Yong-suk, a researcher at the Institute for Peace and Unification Studies at Seoul National University, said Mongolia can enhance its international status while gaining benefits from economic cooperation with North Korea. North Korea, on the other hand, can utilize Mongolia as an exit to escape from diplomatic and economic isolation.
North Korea is becoming increasingly isolated within the international community as it continues to defy international warnings against its nuclear and missile programs. In April this year, Pyongyang asked Ulaanbaatar for food aid.
"North Korea appears to be trying to diversify its diplomatic front as it faces increasing isolation," a diplomatic source in Beijing said.

Source:Yonhap News Agency

Mongolia signs cooperation deals with North Korea

October 30, 2013

Mongolia signed off on a raft of cooperation agreements with North Korea on October 29. The Central Asian state eyes its reclusive neighbour as an aid to improving energy security and diversifying market reach for its growing mining output. 

Mongolian President Tsakhia Elbegdorj has signed several agreements including a pact on cooperation in the industrial and agricultural sectors, during a visit to Pyongyang. Elbegdorj, who arrived in the North Korean capital on October 28, was the first foreign head of state to meet with the country's new leader Kim Jong Un. 

According to the Mongolian presidential website, agreements were also signed on cooperation in the roads and transport sector, as well as culture, sport and tourism. A 2013-15 cooperation plan between the Postal Authority of Mongolia and the North Korean Computer and ICT Centre, has also been sealed. 

The Mongolian delegation included Mongolian foreign minister Luvsanvandan Bold and industry and agriculture minister Khaltmaa Battulga. 

Mongolia currently enjoys relatively good relations with North Korea, given the latter's status as a pariah state. In March, Ulaanbataar offered to help broker a solution between North and South Korea after Pyongyang said that it was in a state of war with the south. 

Three months later, the announcement that Mongolian oil trading and processing company HBOil had bought a 20% stake in the operator of North Korea's Sungri refinery surprised many. HBOil said at the time that the plan is to supply crude oil to the state-controlled refinery for processing, then re-import the products, in an attempt to reduce Mongolia's reliance on fuel exports from Russia. 

Relations between Ulaanbaatar and Pyongyang have fluctuated since the end of the Cold War, when Mongolia has embraced the free market and diplomatic reforms. North Korea suspended diplomatic relations in 1999 when South Korean President Kim Dae Jung visited Mongolia, but ties were later restored. 

Mongolia has several times supplied food aid to North Korea in recent years. Meanwhile, somewhat ironically, it’s the potential access to international markets that cooperation with the closed-off country could offer that is enticing Ulaanbataar. 

The two countries are already linked by a rail line connecting Mongolia to the port of Rason. Officials involved in the HBOil deal told bne in July that access to international shipping lanes via North Korea could soon expand. That would offer Mongolia’s growing minerals output reach to new markets. Currently China consumes more than 90% of the country's mineral exports, but with the giant's growth slowing, access to Japan, South Korea and India would hedge Mongolia's risks. 


Mongolia, North Korea sign economic accords

BloombergHONG KONG (Bloomberg)—North Korea and Mongolia signed a series of agreements to step up cooperation in a move that could help ease the two former Soviet allies’ economic reliance on China.
The agreements were signed Monday hours after Mongolian President Tsakhia Elbegdorj arrived in Pyongyang to become the first head of state to visit since Kim Jong Un became supreme leader in December 2011. The accords covered cooperation in industry, agriculture, sports, culture and tourism, the official Korean Central News Agency said. It did not provide details.
“North Korea and Mongolia are particularly reliant on China,” Charles Krusekopf, head of the American Center for Mongolian Studies, said by phone from Victoria, Canada. “Mongolia is looking for outlets to the sea to export minerals, coal and energy resources. There are a lot of people talking about potential for Mongolian resources to be shipped through North Korean ports to world markets.”
Mongolia, a nation of 2.9 million people squeezed between Russia and China, adopted democracy and free elections in 1990, and moved to welcome foreign trade by offering access to its mineral riches. North Korea has been reaching out to friendly nations such as Mongolia and Indonesia as international sanctions over its nuclear weapons program have limited trade and hobbled the economy.
In June, HBOil JSC, an oil trading and refining company in Ulan Bator said it acquired a 20 percent stake in the Sungri refinery in the North Korea’s northeastern free trade zone of Rason.
Sungri has a refining capacity of 2 million tons a year and is connected to the Russian railway systems, HBOil said in a release. In September, Russia completed a 54-kilometer rail link between Khasan in its southeastern corner and a rebuilt North Korean port in Rason.
“I am sure that the [North] Korean people will successfully achieve prosperity and progress of the country, their happiness and regional peace and stability in close cooperation with the international community,” KCNA reported Elbegdorj saying at an official banquet in Pyongyang.
In September last year, after meeting with the visiting chief of North Korea’s parliament, Elbegdorj pledged to help the new North Korean leader pursue economic reform, offering his nation’s experience of moving toward capitalism.
North Korea and Mongolia first set up diplomatic relations in 1948, the year the North was founded. The relationship between the two countries dates back to 1939 when North Korean founder Kim Il Sung joined Mongolian-Soviet forces in fighting the Japanese, Song Byeong Gu, a professor of Mongolian studies at Dankook University outside Seoul, wrote in a paper in April.
North Korea cut its ties with Mongolia in protest when then South Korean President Kim Dae Jung visited Mongolia in 1999. The sides reestablished ties when North Korea’s foreign minister visited Mongolia in 2002.
Mongolia sees its national security guaranteed better if it maintains neutral relations with both Koreas and major powers such as China, Russia, Japan and the United States, Song wrote.


China’s Shenhua Agrees to Buy 1 Billion Tons of Mongolian Coal

Three companies that mine coal in Mongolia’s Tavan Tolgoi basin have agreed to export 1 billion tons of the fuel to China’s Shenhua Group Corp. in the next 20 years, said the chief executive officer of one of the suppliers.
Erdenes Tavan Tolgoi JSC, Mongolia Mining Corporation (975) and Tavantolgoi JSC signed the memorandum of understanding with Shenhua on October 25, Yaichil Batsuuri, CEO of state-owned Erdenes Tavan Tolgoi, said in an interview yesterday in Ulaanbaatar. The coal delivered by the three companies could generate about $50 billion at current prices, Batsuuri said.
The MOU would ensure a long-term buyer for the companies operating in the Tavan Tolgoi basin, which contains 6.4 billion tons of coal reserves. Shipping 1 billion tons of coal over 20 years would be an average of 50 million tons annually. That’s almost triple the 18 million tons that Batsuuri said he expected the three Mongolian companies to export this year.
The agreement signed with Shenhua also stipulates that any coal supplied by the Mongolian companies and not wanted by Shenhua can then be sold on the international market, Batsuuri said.
Mongolia’s total coal exports fell to 11.38 million tons in the first nine months from 14.29 million tons a year earlier, according to the nation’s statistics bureau. The value of the coal exports dropped to $783.94 million from $1.43 billion a year earlier, according to the agency.
State-owned Erdenes TT may export 5 million tons of coal this year, Batsuuri said. The company doesn’t currently earn revenue from these shipments, which are going to Aluminum Corp. of China Ltd. (2600) to pay back a $250 million loan from 2011.

Chalco Loan

Batsuuri said 3 million tons of coal, valued at $170 million, needs to be delivered to Chalco to pay off the balance on the loan. He said he expects the debt to be paid in full by January or early February.
MMC exported 3.2 million tons of coal in the first half of 2013, according to an August statement by the company, citing data from the National Statistics Office. It accounted for 42 percent of Mongolia’s total coal exports in the period.
Shenhua, China’s biggest coal producer, also signed a separate MOU with the three companies and Mongolia’s state-owned railway company to build a freight line that will help deliveries to the Chinese border. Shipments of coal from the Tavan Tolgoi basin to the border have stalled this year amid complications with trucking companies, said Batsuuri.
To contact the reporter on this story: Michael Kohn in Ulaanbaatar at
To contact the editor responsible for this story: Andrew Hobbs at


SouthGobi Resources to Announce Third Quarter 2013 Financial Results on November 11, 2013

ONG KONG, CHINA, Oct 30, 2013 (Marketwired via COMTEX) -- The board of directors of SouthGobi Resources Ltd. CA:SGQ 0.00% HK:1878 +1.54% (the "Company") will meet on Monday, November 11, 2013 to consider and approve the third quarter 2013 financial results of the Company and its subsidiaries. These financial results will be released before TSX market open.
The Company will host a conference call and audio webcast to discuss third quarter 2013 financial results and provide an update on the Company's operations. Date and time of the call for various regions will be as follows:

        --  Monday, November 11, 2013 at 6:00 p.m. EST / 3:00 p.m. PST
        --  Tuesday, November 12, 2013 at 7:00 a.m. Hong Kong Time

Conference call details:
The conference call may be accessed through the following dial-in details:

        North America toll-free:  416-340-8530 / 877-240-9772
        Hong Kong toll-free:      001- 800-2787-2090
        UK toll-free:             00-800-2787-2090
        Australia toll-free:      0011-800-2787-2090
        International:            International access code + 800-2787-2090

The conference call will also be simultaneously webcast on SouthGobi's website at The archived playback will also be available at the website.
About SouthGobi
SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill Resources Ltd. ("Turquoise Hill"), also publicly listed in Toronto and New York, has a 58% shareholding. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior management. Rio Tinto has a majority shareholding in Turquoise Hill.
SouthGobi is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia's South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, Mongolian registered company that holds the mining and exploration licences in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.

        SouthGobi Resources Limited
        Galina Rogova
        Investors Relations
        Office: +852-2839-9208
        SouthGobi Resources Limited
        Altanbagana Bayarsaikhan
        Media Relations
        Office: +976 70070710

SOURCE: SouthGobi Resources Limited

Seoul: Mongolian Church says 'thank you' to its Korean brothers

y Joseph Yun Li-sun
Mgr Wenceslao Padilla, apostolic prefect of Ulaanbaatar, visited South Korea to raise funds for Catholic schools in Mongolia. "I cannot imagine how the [Mongolian] Church would have started without the help of the Korean Church," he said. For Seoul Archbishop Yeom, "it is time for us to repay the kindness" that others showed to the Korean Church, and thus we shall "look for different ways to help until the Lord's Good News is thoroughly spread in Mongolia."

Seoul (AsiaNews) - The Catholic mission in Mongolia "cannot do the work alone," said Mgr Wenceslao Padilla, apostolic prefect of Ulaanbaatar, during his visit to Seoul. "Without the help of outside organisations, we cannot support our missionary work," he added. Help is needed and the Korean Church has always been there. In fact, "I cannot imagine how the [Mongolian] Church would have started without the help of the Korean Church."
The meeting with the Church in Korea was the last leg of the bishop's fund-raising trip to help for Catholic schools in Mongolia, Asia's youngest Church. Established just 20 years ago, it now has about 800 members.
"When I arrived in Mongolia 21 years ago, there was no church, no Catholic-no Mongolian Catholic; the Church is still very new," Bishop Padilla explained. "So we faced many, many challenges."
"Financial problems have always been a challenge because we have no local income," he said. "Without the help of outside organisations, we cannot support our missionary work in Mongolia".
Besides the lack of money, "there was also the challenge of cultural differences. It's been so many years and I am still struggling with the Mongolian language," said the Filipino-born prelate.
"The newness of the mission has also proven to be a challenge. The Christian religion was totally new to them [Mongolians]. There was no environment, no Christian atmosphere".
Still, despite the many challenges, the missionary work can still raise hope through the cooperation of local people, missionaries and founding organisations.
Speaking with Mgr Andrew Yeom Soo-jung, archbishop of Seoul, Bishop Padilla expressed his gratitude towards the Church of Korea for its continuous financial support and missionaries.
"I cannot imagine how the church would have started without the help of the Korean Church," he said.
For his part, Mgr Yeom noted that since the mission in Korea was made possible by help from other countries, so "it is time for us to repay the kindness" others showed us by delivering "the Lord's grace to others. We consider the Mongolian Church as our brothers, and we will look for different ways to help until the Lord's Good News is thoroughly spread in Mongolia."
(Stephany Sun, from the archdiocese's' social secretariat, contributed to the article)


Mongolia pushing for rail, pipeline links with China, Russia, official says

Oct 28 (Reuters) - Mongolia has agreed to establish a working group with China to oversee the construction of new road, rail and pipeline infrastructure connecting the two countries with Russia, a member of a Mongolian government delegation to Beijing said.
The official, speaking to Reuters on condition of anonymity, said landlocked Mongolia aimed to become a "transit corridor" to facilitate trade between its two giant neighbours and reduce the costs of delivering Russian commodities like oil and natural gas to energy-hungry Chinese markets.
The topic was high on the agenda during talks between Mongolian Prime Minister Norov Altanhayag and his Chinese counterpart, Li Keqiang, last week, according to the official, who is a senior adviser to Mongolia's economics ministry.
Speaking by phone from the Mongolian capital, Ulan Bator, he said the working group would probably be set up soon and that Mongolia was open to allowing Chinese firms to invest and build the infrastructure.
"Given the capacity that both countries can bring to the table, China is expected to be heavily involved in terms of financial resources and technology," he said.
Soaring Chinese demand for commodities like coal has underwritten Mongolia's rapid growth, with more than 90 percent of its exports sold to China.
But Beijing's growing economic hegemony has caused disquiet among Mongolian lawmakers, with a decline in foreign investment last year caused in part by a hastily drafted law to limit foreign ownership in "strategic" sectors.
The law was designed to block efforts by China's state-owned Chalco Group to acquire a majority stake in Mongolian-based coal miner South Gobi Resources.
But the official said such fears had now abated.
"The atmosphere is more mature now, and that implies that there should be a pragmatic approach to economic relations with our two neighbours, and we hope that the investment community will also recognise this subtle shift," he said.
"There was such a (negative) current of thought in 2010 and 2011 -- Mongolia has never experienced such rapid industrialisation based on mining, and so of course we had to look at the security implications. Now the people are more comfortable working with our two neighbours."
Mongolia had ambitions to become China's top coking coal supplier, largely through the development of one of the world's biggest untapped mines at Tavan Tolgoi, near the Chinese border.
But Mongolia has complained that it has not received fair value for the coal, arguing that the lack of alternative buyers allows Chinese firms to drive down prices. A dispute with Chalco, which signed a supply deal with Tavan Tolgoi in 2011, has contributed to a decline in coal shipments this year.
Mongolia hopes improved infrastructure will allow it to generate more revenue from its coal sector. A rail link to the Russian far east is under construction and half of a direct rail line into China has been completed, with the project scheduled to be finished by 2015.
The official said that Mongolia's state-owned railway operator signed a memorandum of understanding with Chalco last week on building cross-border railways to help deliver coal. Chalco would not immediately comment on the matter. (Reporting by David Stanway)

Mongolian president visits N. Korea to boost ties: report

SEOUL, Oct. 28 (Yonhap) -- The Mongolian president arrived in North Korea Monday to strengthen economic, social and cultural ties, the communist country's media said.
The Korean Central Television said President Tsakhia Elbegdorj's plane landed at Pyongyang's Sunan International Airport at 11:55 a.m. and was greeted by Kim Yong-nam, the president of the Supreme People's Assembly (SPA) Presidium and the North's ceremonial head of state.
It said the chief executive reviewed honor guards with Kim at the welcoming ceremony.
The arrival of the Mongolian president marks the first ever visit by a foreign head of state after Kim Jong-un took power upon the death of his father Kim Jong-il in late 2011.
If the incumbent leader holds a summit meeting with Elbegdorj, it will mark Kim's debut into the world of international diplomacy.
The paper, meanwhile, claimed that with the stature of the North rising within the international community, the visit will allow the two sides to advance common goals and ideals, it added.
The paper said Elbegdorj comes on the 25th anniversary of North Korean founder Kim Il-sung's second trip to the land-locked Asian country.
North Korea and Mongolia first normalized diplomatic relations in 1948. The North's founder then visited the country twice, in 1956 and 1988, while the secretary general of Mongolia's socialist party traveled to the country in 1958 and 1986.
Relations soured in 1999 after Ulaanbaatar supported South Korea's so-called Sunshine Policy, although relations improved after 2002.

Source:Yonhap News agency

Mongolia Closer to Ending Dispute With Rio Tinto on Copper Mine

Mongolia and Rio Tinto Group have resolved some of the disputes that have stalled the expansion of their $6.6 billion Oyu Tolgoi copper mine, a Mongolian board member of the venture said.
“Within the last 10 days we could resolve certain issues; we have reduced the state of urgency,” Davaadorj Ganbold, one of three Mongolian nationals on the Oyu Tolgoi LLC board, said in an interview in Ulaanbaatar, adding that some points remain to be agreed on.
“Issues related to cost overrun, the feasibility study and project financing are large and broad issues that cannot be resolved in four or five days,” said Ganbold, a board member since September and also executive director at Erdenes Oyu Tolgoi LLC, the company that holds the government’s 34 percent stake in the project.
Rio in July delayed work on the expansion, which is expected to cost about $5.1 billion, until wrangles with the government on funding and other issues are resolved. While open-pit work continues, the dispute has led to the suspension of underground construction and the layoff of about 1,700 workers.
The saga has taken its toll on Turquoise Hill (TRQ) shares, which have fallen 34 percent in Toronto over the year to date. It has also hurt Mongolia by weakening investor confidence and delaying other projects. Foreign Direct Investment fell 47 percent over the first eight months of the year.

Dispute Points

London-based Rio, the world’s second-biggest mining company by market value, manages the venture through its 51 percent stake in Turquoise Hill Resources Ltd., which owns 66 percent of the mine. Oyu Tolgoi, located 80 kilometers (50 miles) north of the Chinese border, is forecast to account for about a third of Mongolia’s economy when in full operation.
Mongolia had listed 30 points of dispute with its partner over the mine. Chief among these have been criticism of cost overruns on the open-pit operation and objections to the mine being used as collateral for the financing of the underground portion.
Facing down problems in a project of this size is inevitable, Ganbold said. Oyu Tolgoi wouldn’t be the first big project to experience delays or ownership tiffs, he said.
“The construction of the Panama Canal took 100 years,” said Ganbold, who holds a economics from Moscow State University. “How many companies were bankrupted? How many people died? How many financial collapses occurred? But finally the project was completed.”

Seeking Guarantees

On Oct. 1, Mongolian board members said the number of outstanding issues was down to 15 following discussions with Rio in London, conceding that some Oyu Tolgoi assets could be used as collateral.
Mongolia has also sought guarantees that the mine expansion won’t be subject to cost overruns, a reset of Rio’s management fees to be based on revenues earned rather than money spent, and a pledge that all money raised against Oyu Tolgoi assets be spent within the country.
“No one wanted to see any cost overrun or project delay,” Ganbold said. “No one wanted to see any decreasing of the profits and benefits. But life is life and that is why we have to solve these issues.”
Issues related to water use, transportation of the concentrate, exports to China and company management are closer to resolution, said Ganbold.
“Both sides are being very tolerant and cooperative towards each other,” said Ganbold, who was deputy prime minister from 1990 to 1992. “Solving one thing may bring some movement or success in other items.”

Financing Package

Resolving the terms of the $4 billion project financing package remains the biggest hurdle as development of the second phase of the mine relies on another influx of cash. The deadline to approve the financing comes due on Dec. 12.
Ganbold declined to comment on the deadline, saying that details of the financing are in the hands of the investors.
The second phase of the mine includes extensive underground tunneling needed to reach the richest parts of the ore body. The open pit section currently in operation will only yield about 20 percent of the mine’s overall wealth.
Commercial production at the mine started in July although Chinese customs delayed deliveries to customers for over three months before releasing the first batch of concentrate from a bonded warehouse in China earlier this week.
“The concentrate started to go last week, so the first official, touchable, visible cash flow has started to go to this joint venture company. That is big progress,” said Ganbold, adding that so far Mongolia has received over $1 billion from the mine in the form of taxes and other payments.
To contact the reporter on this story: Michael Kohn in Ulaanbaatar at
To contact the editor responsible for this story: Jason Rogers at


Mongolia continues to confound investors

The mining sector makes up about 20% of Mongolia’s GDP, 40% of its budget income, 85% of its investment and 90% of its exports, but the uncertainty that permeates everything from the security of mineral tenure and resource rights to the enforcement of commercial contracts has taken a big toll on foreign direct investment levels, the growth of the private sector, and the nation’s foreign debt, warns Dale Choi, the Ulaanbaatar-based founder of Independent Mongolian Metals & Mining Research. 
Foreign direct investment in the country has fallen off a cliff since August 2012 — plunging about 47% year-on-year, while foreign reserves are depleting at a burn rate of US$175 million a month, foreign debt has ratcheted up to about 54% of GDP and there has been an 18% depreciation of the Mongolian currency against the U.S. dollar, according to Choi’s statistics.
Calling the current economic crisis in Mongolia “largely self-inflicted” — unlike the financial crisis of 2008 — Choi argues that Mongolia’s leadership has to get its act together if it hopes to reverse the collapse in foreign investment and re-assure foreign companies that it is in fact open for business and that there are laws in place to protect their investments.
“The fall session of Parliament commences Oct. 3, and while well overdue legislative change is a potential positive development in the near term, without flagship transactions and resolution of key security of tenure uncertainties we do not believe the foundation for a return towards private sector growth will be provided,” he says.
The uncertainties go much further than the impasse on project financing that lead Turquoise Hill Resources (TSX: TRQ; NYSE: TRQ) in August to announce that it would delay development of the underground Oyu Tolgoi copper-gold mine. They include erratic progress on a draft Minerals Law, the ongoing debate about royalty rates and the extent of state ownership. Other issues that worry investors are the concept of strategic deposits, fitful moratoriums on exploration licences and more recently, the fate of 106 licenses caught up in a government corruption scandal.
The latest concerns developed in January when a series of criminal court cases involving a number of high-ranking officials in the Mineral Resource Authority of Mongolia (MRAM) brought into question the legal rights and interests for the 106 exploration licence holders. Two of those involved in the case are D. Batkhuyag, the former head of the MRAM and L. Davaatsogt, the former head of geology in the mining department.
Kincora Copper (TSXV: KCC) is one of the foreign companies that holds title to two of the 106 Mongolian licences in question. In a corporate update to investors earlier this week, the company said that it continues to monitor its Tourmaline Hills and North Fox licenses, about 250 km from the Chinese border and about 140 km from Oyu Tolgoi.
In Kincora’s case, it has spent about $1.85 million in exploration on the two licences already. “The acquisition of the licences followed full detailed due diligence, with the licences confirmed to be in good standing by the Mineral Resource Authority of Mongolia (MRAM),” the company stated.
The junior estimates that the 106 licences “cover a landmass approximately six times larger in surface area than active mining licences in Mongolia.”
“Issues like the 106 case significantly impacts both current activities and the next generation of projects,” Choi notes, adding that he believes some of the foreign groups tangled up in the investigation of the MRAM officials “have already left the country” while others may do the same “if an adequate resolution is not agreed in a timely manner.”
Like most Mongolia watchers, however, Choi agrees that progress at Oyu Tolgoi is the key catalyst required to lift confidence. “OT needs to be successful to support positive investor sentiment toward Mongolia and further significant FDI,” he writes.
He estimates development of the underground operation was originally expected to produce about a third of the country’s GDP. “Originally it was expected that by now a US$4.2-billion project financing package, the largest of its kind ever in the global mining industry, to enable continued advanced of the underground mine would have been secured,” he adds. Instead, “approximately 2,000 jobs have been lost with a similar number still at risk.”
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French firms eye Mongolian resources and contracts

French Foreign Minister Laurent Fabius is spending the weekend in Ulan Bator, in a bid to cement relationships and gain access to the country’s vast natural resources. The Mongolians are keen to reciprocate.

By Ségolène ALLEMANDOU (text)
French Foreign Minister Laurent Fabius led the latest foreign investment delegation to visit Mongolia on Friday accompanied by an array of leaders of France’s biggest industrial companies.
The delegation is the first French visit on such a scale and arrives hot on the heels of German Chancellor Angela Merkel who was in Ulan Bator last week, signing agreements on coal exploitation and securing a gas turbine deal for the Siemens group.
Mongolia has a vast wealth of mostly untapped mineral resources including coal, copper, uranium and gold.
The former Communist-bloc country, which joined the World Trade Organisation in 1997, “has only just started to bring these minerals out of the ground, we’re only at the tip of the iceberg right now”, according to Lee Cashell, who heads the Mongolia-based Asia Pacific Investment Partners investment group.
The American businessman, who has been living in Ulan Bator since 2001, believes Mongolia will achieve steady growth that should go on “for at least 20 years”.
The vast steppe country, sandwiched between Russia and China and with a population of just three million, has seen high and steady growth in recent years – 17.5 percent in 2011, 12.4 percent in 2012 and a projected 13 percent in 2013, according to World Bank figures.
'Strategic uranium deal'
The French industrials visiting the country this weekend, include nuclear developer Areva, pharmaceutical multinational Sanofi, and gas companies Air Liquide and GDF Suez, who see big opportunities as Mongolia continues to develop.
Areva, which has been prospecting in Mongolia for the last decade, is hoping to seal a “strategic agreement for uranium extraction” to feed France’s huge nuclear energy sector.
Other French firms include Systra (engineering and transport) as well as satellite manufacturing and deployment companies Arianespace and Tahles Alenia space, who are hoping for contracts as Mongolia plans to develop 5,600km of new rail lines and is looking at acquiring two new satellites.
Despite being sandwiched between Russia and China, Mongolia has every reason to welcome France with open arms.
With 86 percent of its exports going to China, Ulan Bator is keen to diversify into new markets with its “Third Neighbour” (a Mongolian policy aimed at building bridges with countries other than Russia and China), and in particular with France and Germany.
French President François Hollande is due to cement that relationship further with a planned visit from his Mongolian counterpart Tsakhia Elbegdorj to Paris in January 2014.


China's top legislator meets Mongolian prime minister

China's top legislatorZhang Dejiang met with visiting Mongolian Prime Minister NorovAltankhuyag in Beijing on Friday.

Zhangchairman of the Standing Committee of the National People's Congress (NPC), saidChina-Mongolia relations are currently enjoying their best time in historyHe said Chinawill firmly pursue the road of peaceful development and continue to carry out a friendlypolicy toward Mongolia.

"This will remain inalterable forever," Zhang said.

Zhang said the two economies are highly complementaryNoting that Mongolia'slegislaturethe State Great Huralhas recently passed a new investment lawZhang saidthis is good news for China-Mongolia tradeeconomic cooperation and Chinese companies.

He said the NPC is ready to work with the State Great Hural to earnestly implement thememorandum of cooperation between the legislatures of the two countries by carrying outexchanges at all levels and strengthening the exchange of experience on legislationHe saidthe two sides should jointly create a sound legal environment for practical cooperation so asto lift inter-legislature relations to new levels.

Altankhuyag said it has been the stance of Mongolia's foreign policy to expand a friendlyand neighborly relationship with ChinaHe expressed the wish to deepen bilateralcooperation in all fields and advance the strategic partnership for sustained growth.

On FridayAltankhuyag also met with Chinese President Xi Jinping and held talks withPremier Li Keqiang

Source:Xinhua news agency

French energy giant agrees to build Mongolia thermal plant

French energy giant GDF Suez on Friday signed an agreement with private Mongolian firm Newcom to build a thermal power plant in the fast-developing country, which still suffers from blackouts.
This will be the fifth such plant in the resource-rich but still impoverished nation, which has huge needs for electricity and endures freezing winters.
The agreement was announced by Newcom and GDF Suez executives as French Foreign Minister Laurent Fabius paid a visit to Mongolia, accompanied by a delegation of business leaders. It has yet to materialise into a firm deal.
"Mongolia, which is growing at huge speed, still has blackouts at times. There are huge needs for electricity," said Denis Simonneau, a GDF Suez executive.
"This plant will also distribute heat in the buildings of Ulan Bator", the capital city with a population of 1.5 million.
The agreement between GDF Suez and Newcom also includes two other companies -- Japan's Sojitz and South Korea's Posco Energy.
GDF Suez also wants to develop solar parks and wind farms with Newcom in the coming months.
Already, the group's subsidiary Suez Environnement has built water treatment plants in Ulan Bator.

Source:Agence France-Presse

Chinese president meets Mongolian PM

Chinese President Xi Jinping met with Mongolian Prime Minister Noroviin Altanhuyag in Beijing on Friday and pledged to further advance the strategic partnership between the two countries.

Hailing the frequent high-level interactions between the two sides, Xi said China and Mongolia respect each other's independence, sovereignty, territorial integrity as well as path of development, looking after each other's core interests and major concerns.

Xi said mutual trust and traditional friendship had been growing in a sustained way over the past years.

This year, Xi met with his Mongolian counterpart Tsakhia Elbegdorj in September and Chairman of the State Great Hural of Mongolia, Zandaakhuu Enkhbold in April, and stated some basic principles for the development of the bilateral relationship.

Both China and Mongolia, as close neighbors, regard each other's development as an important opportunity and the two have seen ever-expanding economic cooperation in various areas, Xi said during Friday's meeting.

The 4710-k.m. border between China and Mongolia is one featuring peace, stability and friendship, said the Chinese president.

Xi said, if the two sides stick to the principle of mutual trust and reciprocity, the China-Mongolia relationship will surely grow in a sustained, healthy and stable way, which will benefit the people of the two countries.

To further advance the bilateral ties, Xi proposed the two sides should increase high-level interactions, enhance strategic cooperation, expand the scale and improve the quality of practical cooperation and expand people-to-people exchanges.

China and Mongolia should communicate more frequently on strategic issues, he said.

As to economic cooperation, Xi said the two countries should give full play to their mutually complementary advantages and boost cooperation on mineral exploitation and infrastructure construction and in the financial sector at the same time.

Altanhuyag said Mongolia gives priority to the friendship and reciprocal cooperation with China in Mongolia's foreign policy.

Echoing Xi, the prime minister said the Mongolian side is willing to work together with China to maintain high-level interactions, expand practical cooperation, increase people-to-people exchanges and enhance coordination in international and regional affairs to enrich the content of the strategic partnership between the two countries.

What does three PMs visit to China tell the world?

Edited and translated by Liang Jun

At the invitation of Chinese premier Li KeqiangRussian Prime Minister DmitryMedvedevIndian Prime Minister Manmohan Singhand Mongolian Prime Minister NorovAltanhuyag began their official visit to China on October 22. It is a rare event in Chinesediplomacy that three foreign leadersall from countries sharing land borders with China,begin their visits to China on the same day.

The three countries share a long borderline with ChinaEconomic issues will top the agendaduring these visitsAlthough their simultaneous visits to China are part of a coordinatedeffortthere are also inevitable coincidences

Firstthe visit of the three indicates a continuation and acceleration of China's diplomaticstrategy

Recentlyissues with China and its bordering states have become more complexThe newleadership is focused on opening up new prospects for China's diplomacy with surroundingcountriesIt will continue to take "neighboring countries come firstas the guidingprinciple of its peripheral diplomacypursuing the foreign policy of developing good-neighborly relationships and partnerships with neighboring countriesand following apolicy of "bring harmonysecurity and prosperity to neighbors". 

In terms of diplomatic prioritiesChinese President Xi Jinping and Premier Li Keqiang bothchose neighboring countries for their maiden oversea trips after taking officeIn addition,Xi completed China's diplomatic schedule for 2013 as he wrapped up his Southeast Asiatour this month

It is the first time that a new Chinese premier has met his Russian counterpartimmediately after assuming officeit is also the first time since 1954 that there have beenexchange visits between the Chinese Premier and the Indian Prime Minister within oneyearin additionit is Mongolian Prime Minister Norov Altanhuyag's maiden visit to Chinaafter coming to powerThe visit of the three PMs to China will have a major impact onmutual strategic partnerships

Secondit indicates that China's bright economic prospects are attractive to its externalpartnersChina's rapid economic development has laid a solid foundation for economic tieswith its neighbors - China has now become the largest trading partner of almost all itsneighboring countriesincluding RussiaIndia and MongoliaThe long-term economicdevelopment strategy between China and its neighbors is consistentand economic andtrade relations are complementarynot competitive.

During their foreign tripsChinese leaders put forward proposals such as the "Silk RoadEconomic Beltand the "Marine Silk Road", which will bring enormous businessopportunities to the countries concerned

Bilateral ties between China and the three countries are at a new starting pointThe PMs'visit will further tap the potential for bilateral cooperationfocusing first on promotingpragmatic cooperation in tradeinvestmentenergy and other areas therefore pushingmore comprehensive bilateral cooperation to a new level

Thirdit conforms to the modern trend of 'mutual benefit'. HistoricallyChina has hadgrievances with RussiaIndian and Mongoliabut today they will focus on the present andlook to the future.

Needless to say each country's diplomatic policy is determined in accordance with its ownnational interestsand there will be some trade-offs between the partners

Russia is sincere in developing its strategic partnership with Chinaits differences lie in thetrade and economic areas as well as geopolitical issues in Central Asia

India values the characteristics it shares with China as a developing country and anemerging powerbut it is concerned about border issuesits trade deficit with ChinaandChina-Pakistan ties

Mongolia lies between China and RussiaIt gives priority to the development of bilateralties with the two countriesand at the same timeit hopes that diplomatic relations with"the third neighborwill lend additional strategic space and be of benefit to its economicinterests

GenerallyChina and the other three countries have chosen to seek common ground whilereserving their position on any differencesThe consensus on all sides favors enhancingstrategic mutual trust and strengthening pragmatic cooperation

China's simultaneous welcome to the three PMs is a microcosm of big nation diplomacywith Chinese characteristicsand also a positive sign for future developments

The author is Hua Yiwenexpert on global issues.

Source:People's Daily newspaper of China


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