Wrestling with Mongolian Culture

I PEERED THROUGH the opening of the tent, intrigued and anxious. Outside, a tinny amplification of traditional Mongolian folk music reverberated across the small, festively decorated square that paled in comparison to the vast expanse of steppe around us. A number of young Mongolian girls in matching dress were dancing in unison in front of massed crowds from across the province. Obstructing my view from inside the tent were numerous large Mongolian men, wearing nothing but colored underpants, bolero-like tops tied on with string, and bizarre pointed hats. Even more bizarre, I was wearing the same attire, and couldn’t have looked more out of place. I was watching the opening ceremony of the famous Mongolian Naadam Festival, and I was watching it from the competitors’ tent. Naturally, I wondered how on earth I had ended up here.
Naadam is the highlight of every Mongolian’s year: everyone looks forward to it for half the year, and then reminisces about it for the other half. Ostensibly a local sports event but, more importantly, a time when all families reunite to celebrate, feast on prized marmot meat, and drink airag (fermented mare’s milk), Naadam can be best described as a cross between the Olympics and Christmas. Like much of Mongolian culture, the tradition has remained mostly unchanged for thousands of years, and one can easily imagine Genghis Khan riding to his local Naadam to compete in the wrestling competition, as I was about to do.
This was to be my final week in Mongolia, and was without doubt the highlight of my experience. I had been living for eight weeks in Ulaanbaatar, Mongolia’s buzzing, cosmopolitan capital city, interning with the UB Post, the country’s largest English-language publication. In such a young city, both demographically and in terms of the spontaneous, unregulated nature of its society and economy, I was able to do whatever I liked as an intern, publishing more than a dozen stories which I chose, researched, conducted interviews for, and wrote from start to finish, as well as getting involved with editing and layout for the paper.
The family I lived with in Ulaanbaatar had now taken me along on their pilgrimage to stay with their parents in “The Countryside.” For Mongolians, “The Countryside” is everything outside Ulaanbaatar, more than half a million square miles of wilderness where more than half of Mongolians live in traditional ger dwellings—circular tents padded with sheep’s wool. Mongolia is the most sparsely populated country in the world, and one can easily drive for days and not see another soul. Every ger is nearly identical: the door points south and a stove in the center serves both heating and cooking purposes; a couple of thin mattresses, tiny stools, and a Buddhist shrine make up the rest of the average Mongolian’s furniture. All other belongings, from clothing to toiletries, are tucked under the latticed ropes that hold up the roof.
For me, living for a week in a ger was a stunning experience. Each morning I would wake up to a crisp breeze blowing into the ger through the gap in the roof by the chimney. I would wash myself with water from the well, in the middle of a grand landscape of mountains and grasslands, which was utterly empty from horizon to horizon except for our small accommodation and the family’s herd of about a thousand livestock, with their breath condensing into a massive cloud of steam in the cold morning air.
On the first night, we slaughtered a sheep, and our meals for the following days consisted of eating every conceivable part of that animal and very little else. Rural Mongolians live entirely off their livestock—eating meat and dairy products, and drinking vast quantities of ubiquitous Mongolian milk tea. I certainly experienced authentic Mongolian cuisine on this trip, although my sensitive Western stomach didn’t always accept the strict nomadic diet.
Naadam occurred halfway through my week-long trip. About a thousand Mongolians from a hundred-mile radius attended the local festival where I was (somewhat remarkably given its unmarked location in the middle of the steppe with no roads or other landmarks to identify it), arriving either by Jeep or by horseback. My wrestling debut would happen in front of a crowd of people who had never met a white person before. I had never wrestled in my life, but my host family insisted that, as a young, able-bodied man, I should participate. (I was told that this was a matter of custom, although judging by the number of other young men who chose to sit back and drink vodka with their friends, and the hysterical laughter that overcame my host family, I think this may have been a ruse.) Naturally, I lost the fight. My opponent had 20 years of experience and about a hundred pounds on me; I stayed on my feet for a matter of seconds before being expertly flipped onto my back.
My experiences in this individual wrestling competition in the middle of the vast countryside typify in a strange way what I learned about Mongolian culture. Mongolians are fiercely independent and unshakably proud of their history and their culture. As I limped back to the tent to get re-clothed, the entire community cheered (despite my rather pathetic effort). Beaming, I felt welcomed. In credit to the friendliness of these people with whom I could barely communicate, and in spite of the fact that, both geographically and culturally, I couldn’t have been further from Boston, I felt at home.


By Abanti Bhattacharya
On 22 August, Chinese President Xi Jinping wrapped up his two-day trip to Mongolia, which is noteworthy not just because he signed as many as 26 agreements but because this was his second single country visit since he became President and also a first by a head of state after 11 years. This raises questions about why Mongolia has acquired special attention in Xi’s foreign policy and whether this indicates a new shift.
Looking at the bare facts, the current visit suggests quite a few breakthroughs in the economic, political and diplomatic arenas. The visit saw an up-gradation of China-Mongolia relations from ‘good-neighbourly and mutual trust’ in 2003 to ‘a strategic partnership’ in 2011 to the present ‘comprehensive strategic partnership’. Under the rubric of comprehensive strategic partnership, China agreed to provide land-locked Mongolia additional access to Chinese seaports as well as access to railway networks for transportation of goods. It agreed to support a number of projects in medical care, education, railroads and other infrastructure construction. Further, China inked a proposal to set up a bilateral free trade zone and currency swap arrangements. Besides, the two sides targeted to achieve US$10 billion trade by 2020. More importantly, while Mongolia agreed to join China’s Silk Road Economic Belt, Beijing extended an invitation to Ulaanbaatar to the APEC meeting slated for November in Shanghai.
Gauging the achievements, one is tempted to reach the conclusion that the Sino-Mongolian relationship has certainly acquired a new momentum. However, this is not entirely the case. China had outwitted Russia in becoming the largest investor in Mongolia in 1998 and the largest trading partner in 1999. This deepening of ties was in tandem with changes in Mongolia-Russia relations post the Cold War era. The Soviet collapse precipitated a shift in Mongolia’s foreign policy to adopting an omni-enmeshment policy. This meant first putting a stop to one-sided reliance on Russia and normalisation of its relations with China, and second, reaching out to other powers, primarily the US as underscored in its ‘third neighbour’ strategy. Simply put, China’s dominance on Mongolia’s economy in terms of trade and investment is not a new phenomenon.
Rather, economic over-dependence on China has alerted Mongolia to reconstitute its foreign policy and adopt a new strategy in 2011 that Jeffrey Reeves has called the ‘omni-enmeshment and balance of influence’ approach. This new approach called for engaging not only a number of great powers through multilateral and bilateral mechanisms but also balancing against one country through triangular politics. Evidently thus, Mongolia signed the strategic partnership with the US in 2013. It expanded defence ties with India in 2011 much to the concern of China. This new policy thrust though does not lessen its economic dependence on China, however, it does accrue deterrence for Mongolia.
It is pertinent to note that Mongolia’s geographical location, sandwiched between China and Russia, poses a formidable challenge. Bereft of an opening to the sea, it is forced to depend on its immediate neighbours. But depending on China for access to seaports is more cost-effective than depending on Russia. As one study shows, the Russian port of Vladivostok is 3000 miles away from Mongolia’s rich Tavan Tolgoi coal mine, while the Chinese port of Tianjin is barely 1,000 miles away. Naturally, Mongolia has no option but to depend on China.
However, Mongolia fears that closer connections with China that would allow the latter to dominate in its domestic matters, as had happened in the past when the Dalai Lama’s visit to Ulaanbaatar annoyed the Chinese and led the border to be closed, hurting Monglian trade in the process. But China too has its own vulnerabilities. One is the presence of the US in Mongolia as a ‘third neighbour’. Two is the potential influence of Mongolian nationalism on its own five million ethnic Mongolians living in Inner Mongolia. And three, it has concerns regarding the Tibet issue as 92 per cent of Mongolian people follow Buddhism and consider the Dalai Lama their religious leader.
While these vulnerabilities have been around for quite some time, the current fillip to China’s Mongolia thrust has come from the US rebalancing strategy under Barack Obama that in turn has reinforced Mongolia’s ‘third neighbour’ strategy. To this, Xi Jinping has retaliated with a new foreign policy initiative. As articulated by a noted Chinese scholar, Yan Xuetong, this new initiative instead of ascribing top priority to China’s relations with the US, emphasises on giving first priority to its relations with neighbouring countries. Xi Jinping thus, went to Mongolia to sell his dream of the New Silk Road economic belt. Outlining the need for China and Mongolia to be good neighbours and support each other, his 22 August speech in Mongolia offered sops including Mongolia’s bid for membership in the APEC and acceptance for the Ulaanbaatar proposal for a trilateral summit, involving Mongolia, Russia and China. Also, Xi tried to assuage Mongolians’ fear about Chinese intentions and reiterated China’s peaceful development and win-win strategy.
Clearly, Xi’s visit was intended to enlist the support of Mongolia in fulfilling the Chinese dream, but Mongolia like most other China’s neighbours while eager to engage economically, is not sanguine of Chinese intentions.

Details of former Soviet positions in Mongolia unveiled

By YASUJI NAGAI/ Senior Staff Writer

Years ahead of the Soviet Union’s last-minute entry into war against Japan towards the end of World War II, the country massively fortified its position along the border area between Mongolia and Manchuria.
The finding is based on expeditions by a joint team of Japanese and Mongolian researchers to the former battle site of what is known as the 1939 Nomonhan Incident in Japan. Russia today calls it the Battle of Khalkhin Gol.
“Our study showed that the Soviet Union was covertly preparing for a massive assault on Japan even years before it entered war against Japan (in August 1945),” said Hisaya Okazaki, who led the research team.
The recent expedition in Mongolia was carried out in June to mark the 75th anniversary of the Nomonhan Incident.
Mongolia was under the Soviet sphere of influence at that time. As a puppet state of Japan, Manchukuo in Manchuria, in northeastern China, was controlled by the Kwantung Army, a division of the Imperial Japanese Army.
A skirmish between Mongolian and Manchurian troops that broke out on May 11, 1939, escalated into a full-scale battle between Soviet troops and the Kwantung Army. After the Soviet forces’ massive assault on Aug. 20, the Japanese army was wiped out. By the time a cease-fire was reached on Sept. 16, Japanese casualties totaled 20,000 and 26,000 for the Soviet side.
In the recent expedition, the researchers confirmed two former positions built by the Soviet forces--Matad and Sanbeis, which is known as Choibalsan today.
Tamsagbulag, another Soviet position, was confirmed five years ago on the researcher’s previous trip. While the existence of these former Soviet bases had been speculated, their exact locations and details of the facilities had yet to be confirmed until the latest discovery.
Tamsagbulag and Matad are 13 kilometers east to west and 10 km north to south. Sunbeis is 26 km by 29 km. The size of each is larger than the space inside Tokyo’s Yamanote Line, which encircles the city’s central area.
The geography of the locations, which are tucked away in rolling hills, attests to the fact that the Soviet forces picked the sites to elude their adversary.
Remains of rail tracks, barracks for high-ranking officers, batteries, pillboxes, firing ranges, cemeteries with nameless graves, warehouses made of tents and trenches that were used to relay instructions among troops were documented by the researchers.
Among the articles they found on the latest expedition were Soviet soldiers’ iron helmets first used in 1940, fragments of the 1943 jeeps that the United States provided to the former Soviet Union, and cartridge cases with engraved marks showing they were made in the early 1940s.
According to archives in Japan, Japanese aircraft did not observe any military facilities, such as a control tower, a hangar or a building, in Tamsagbulag during a flight over the area in June 1939.
As a result, the research team concluded that the positions were constructed in the 1940s.
Accounts by a local support the team's conclusion.
“Soviet troops built the positions while my grandfather was still alive,” said Gombosuren Bold, 39, a sole nomad living in Matad. “I was told that it was the site for fielding troops and soldiers, from where the Soviet forces made a sortie on the Japanese troops.”
The researchers also believe that the main force of the Soviet Zabaikal theater army was stationed in the area when the Soviet Union declared war against Japan on Aug. 8, 1945.
While the Nomonhan Incident is relatively unknown, it had significant ramifications on Japan’s future.
After the Kwantung Army’s defeat, factions pushing for Japan to advance southward were able to gain momentum. This culminated in the nation entering the Pacific War against the United States in 1941.
Although the Japanese officers defied Tokyo headquarters’ orders by escalating the Nomonhan Incident, no one was ever held accountable.
Those officers went on to play an important role in charting out disastrous campaigns, including the Battle of Imphal in India and Guadalcanal Campaign in Solomon Islands in the South Pacific. With little or no supplies, most of their troops died of starvation or disease in both battles.
By Yasuji Nagai/Senior staff writer

Source:Japanese newspaper Asahi

2014 Tsetserleg festival news

Displaying Tengri_yakwear_Catwalk_AW2014_15_IMG_0527_lores.jpg
Logo of the Tsetserleg festival 2014

Aimag mountains in Mongolia provided the scenic backdrop for the first ever Tsetserleg

Festival on the weekend of August 17-19. Conceived and staged by Mongolia-inspired luxury

fashion brand, Tengri, the festival was a celebration of culture and community spirit. The

town of Tsetserleg was transformed by decorations, live music, art, food and high-end


The weekend commenced with a volunteer incentive which saw Tengri join forces with

RockCorps, the global volunteer organisation whose ethos is ‘Give, Get Given’. Festival

volunteers travelled to the nearby Tamir River, which has suffered badly from pollution,

to begin a clean-up operation. Inspired by the opportunity to see performances by some of

Mongolia’s most famous live acts, the volunteers selflessly dedicated eight hours to cleaning

up the river.

The following day was a fun-filled day for families, with children's activity workshops,

exhibitions and Mongolian musicians, whose performances included combinations of

traditional and modern sounds. As the sun set, the steps of the magnificent Buddhist temple

at Zayain-Khuree became a catwalk for a spectacular fashion show to showcase the first ever

Tengri knitwear collection, which officially launches next month.

To close the festival, Mongolia’s award-winning hip-hop star Quiza took to the stage. More

than 1,500 people, old and young, gathered to see one of the country’s most famous faces

light up the evening with a performance that was truly electrifying.

After his performance, Quiza said: “This weekend we made history in Mongolia. Bringing

together different people from different backgrounds through music, culture and volunteering,

collectively through the (Tsetserleg) festival we were able to put the spotlight on Mongolia

and promote its many cultural and natural characteristics to the world.”

Nancy Johnston, founder of the Tsetserleg Festival and the Tengri label, said: “The

purpose of the festival was to give support to nomadic herder families in the region

by creating an event so inspiring and fun that people not only want to travel there and

experience it, but also tell their friends. Actually we went beyond that. Through fashion,

music and so much more we connected with people in the local community and touched

people interested in social responsibility and environmental activism. Knowing how the

Tsetserleg Festival has made such a difference, together with RockCorps, ensures we’ll

return next year – and it will be even bigger!”


For interviews and press information contact:

Jude at JH Public Relations

jude@jhpr.co.uk / 07979 850 342

Notes to editor:

The Tsetserleg Festival is organised by the herder families that make up the Arkhangai Aimag

Federation of Pasture User Group (PUGs) and delivered in partnership with the Arkhanghai Aimag

Governor’s Office, Tengri and RockCorps.

About Tengri

Tengri is more than just a fashion label. It is a collective movement that brings together design,

fashion, ethics, business, environmental activism and individual consumer choice to do good. Tengri

knitwear is designed and made in the UK, using 100% natural and undyed Mongolian yak wool.

We aim to bring the unique qualities of this fibre to the forefront of the fashion industry through

sustainable, eco-friendly and fairshare business and seek to improve the lives and livelihoods of

Mongolian nomadic herders, while protecting the country’s beautiful and unique landscape and

pastures. www.tengri.co.uk

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Participants of the Tsetserleg 2014 festival

Mongolian Red Cross Society contributing to solution of hygiene problem in Mongolia

The Mongolian Red Cross Society provides advice and materials for new latrines. Where needed, volunteers help construct them. Bat-Erdene Ulziibaatar

By John Sparrow, IFRC
In summer, Bolormaa, 5, and Ariunaa, 2, often have diarrhoea. It worries the little girls’ father, Batbayar Gezegt, a hardworking man and former herder who, like hundreds of thousands of other pastoralists, has been forced from the Mongolian countryside by extreme weather cycles. 
Since he lost all his animals to dzud – an extended natural disaster that begins with summer drought and a shortage of pasture and culminates in the severest of winters – he has lived with his wife and four children in an Ulaanbaatar shantytown. It is one of many deprived areas around the Mongolian capital which is now home to almost half the country’s total population.  
The unremitting flow of rural people has overwhelmed the urban infrastructure and poor access to clean water and decent sanitation has been reflected in a worrying increase of contagious disease over the past two decades. Batbayar’s plight is a common one. His home, a ger – the traditional tent dwelling displaced herders have spread across the city’s outlying hillsides – is in a compound without a latrine. 
“We have urban district’s where, at most, 15 per cent of the population has proper sanitation,” explains Bolormaa Nordov, Secretary General of the Mongolian Red Cross Society (MRCS). “On top of that, only 21 per cent of our households are connected to a water supply and less than half the population has a reliable source of drinking water.” 
This urban sanitation challenge is the subject of an International Federation of Red Cross and Red Crescent Societies workshop being held in Ulaanbaatar from 26 to 28 August. It will look at how Red Cross and Red Crescent National Societies can strengthen their capacity to deliver appropriate and sustainable sanitation, and help bridge what is clearly a sanitation gap. 
The background statistics are grim. Around the world, more than 2.6 billion people still live without basic sanitation. Some 1.8 billion of those are in the Asia Pacific region and in South Asian countries like India, Pakistan, Nepal and Bangladesh; more than 700 million in total still defecate in the open. Progress towards meeting the Millennium Development Goal of access to basic sanitation for all by 2015 is woefully off track, with communities left vulnerable to a multitude of health risks and disasters. Diarrhoea is the leading cause of illness and death around the world, the UN reports, with 88 per cent of diarrhoeal deaths due to water and sanitation shortages, and poor hygiene.
For more than a decade now, the Mongolian Red Cross, in partnership with the Netherlands Red Cross, has worked to turn Mongolia’s plight around in some of its most troubled communities. Over the past three years alone, 60,000 people have benefited from new Red Cross water sources and the provision of latrines, and the MRCS has installed or improved indoor sanitation in schools and kindergartens. Importantly, it has trained children and parents in good hygiene practise, an issue that has been introduced into school curricula.
Things are also about to change for Batbayar Gezegt. He has started work on digging a pit for a ventilated latrine. The Red Cross is providing the design and materials.
It is a wise investment. Apart from anything else, preventing disease through improved sanitation saves on curative and developmental losses. According to a recent World Health Organization study, every dollar spent generates an average economic benefit of $7.
Source:Mongolian Red cross society

Aspire Mining closer to developing Ovoot with China-Mongolia ties

Aspire Mining (ASX:AKM) is a step closer towards developing its Ovoot Coking Coal Project in Mongolia after Chinese President Xi Jinping’s official visit to Ulaanbaatar last week upgraded ties between the two countries to a comprehensive strategic partnership.

For Ovoot, the agreements reached between the two countries will provide:

-    More efficient transport across border points on the Mongolian-Chinese border;
-    Ability to negotiate rail access to a number of Chinese North-Eastern seaports; and
-    Potential access to Chinese financing set aside specifically for mineral resource and infrastructure development in Mongolia.

President Xi’s visit to Mongolia was the first by a Chinese head of state in 11 years and comes on the 65th anniversary of the establishment of diplomatic relations between two countries.

His trip was intended to support Mongolia's bid to export its goods via a trans-shipment route through China, enhancing trade and economic cooperation between the two countries.

“This state visit by the Chinese President is an important milestone in Sino-Mongolian relations and should lead to the significant increase in trade sought through to 2020,” managing director David Paull said.

“Coal exports will be a leading contributor to this increase in trade.

“The agreements for access to a number of seaport options for Mongolian coal will also assist in attracting investment into the sector.”

China/Mongolia Ties

During President Xi’s visit, 24 Memoranda of Understanding and Agreements were signed outlining strategic cooperation initiatives between the two countries in sectors including infrastructure development, financing, education, trade, and tourism.

Many of the Agreements were related to infrastructure development within Mongolia, and access to both rail and north-eastern sea ports in China to not only facilitate increased levels of trade bilaterally but also internationally.

Six seaports, including the major ports of Tianjin, Dalian, and Jinzhou were named to enable Mongolian exports to seaborne markets. Border crossing co-operation and access to rail capacity within China was also covered.

China also agreed to participate in a trilateral summit between Russia, Mongolia and China with trade and security interests being high priorities. A date for the summit is to be agreed.

Mongolia is also set to host an official visit from the Russian President Vladimir Putin during the first week of September, where it is expected a number of similar agreements between Russia and Mongolia will be signed. 

The visits to Mongolia by both Heads of State from China and Russia signify the importance of Mongolia to its closest neighbours and the beginning of long term trilateral cooperation.

Ovoot Coking Coal Project

The agreements add to the progress that Aspire has achieved for the wholly-owned Ovoot project in northwestern Mongolia as well as the key Northern Line Rail Line (NRL).

Current offtake interest in Ovoot coking coal exceeds targeted production with MoUs signed for up to 7.4 million tonnes per annum, or 148% of planned initial production.

The project – along with the Tavan Tolgoi Coal operation – has also been recognised as one of the key potential coal suppliers to Mongolia’s Sainshand Industrial Park.

It has also signed a non-binding MoU to sell up to 250,000 tonnes of oxidised coal per annum to Zavkhan Power Station about 70 kilometres south of Ovoot.

This provides a potential revenue stream from a product that would otherwise have been considered a waste material.

The MoU includes the construction of transmission infrastructure that will allow the supply of 35 megawatts of power per year to Ovoot.

Aspire is also focused on progressing the 547 kilometre NRL that will extend a multiuse railway from Erdenet towards western Mongolia.

It continues to reduce overhead expenditure while waiting on approval to begin construction.

SMEC International has also been commissioned to prepare an updated rail operating cost model.

Non-binding expressions of interest have been received from a number of financial institutions that include the Noble Group for provision of a total US$1.3 billion to construct the railway based on the 2013 Rail Pre-Feasibility Study.

The line has previously been forecasted to be completed in 2018 and will have capacity to carry up to 22 million tonnes per annum of multi-user capacity that includes commodities, goods, and passengers.

Notably, a Mongolian Parliamentary Standing Committee has approved draft amendments to Mongolia’s 2010 National Rail Policy. 

The amendments include the extension of the Trans-Mongolian Railway from Erdenet to Mogoin Gol (near Ovoot), and to the Russian border at Arts Suuri.

These amendments were debated in Parliament on 1 July 2014 and are expected to continue to be debated when Parliament resumes. 

The extension of rail to Arts Suuri and the Russian border has potential long term transport benefits for the Ulug Khem Coal Basin (also known as the Elegest Coal Basin) in Russia’s Tuva province. 

Aspire recently met with a number of holders of coal deposits in this region and there is scope for cooperation on infrastructure and marketing with Aspire over the medium to long term.

Separately, the company has started a Scoping Study with Tak-Raf to assess feasibility of a 10 million tonne per annum coal blending operation at the planned Sainshand Industrial Park.

The agreements between China and Mongolia will benefit Aspire Mining by providing boosting trade, particularly of coal exports. 

More specifically, it will provide the Ovoot Coking Coal Project more efficient transport across border points; allow negotiations for rail access to a number of Chinese North-Eastern seaports; and potentially access Chinese financing.

Access to seaports will also assist in attracting investment.

Proactive Investors continues to maintain a 6 – 9 months share price target of $0.125 per share subject to the rail concession being granted for NRL.

The rail concession will be a catalyst for a major re-rating of Aspire’s share price. 

Aspire had $3.5 million in cash as of 30 June 2014.

Miners seek reset in Mongolia

Lisa Murray 

Chinese president Xi Jinping’s visit to Mongolia last week was a timely reminder of why foreign investors have poured money into the country over the past five years.
While the two neighbours share a difficult history, relations appear to be warming, and the geography is hard to ignore.
Resource-rich Mongolia, which is sitting on top of huge reserves of ­copper, gold and coal is right next door to the world’s biggest market for minerals. That combination prompted Rio Tinto to sink billions of dollars into the Oyu Tolgoi gold and copper mine and attracted dozens more resources companies, including a handful of ASX-listed explorers, to try their luck in the mining frontier.
But Mongolia has had a tough few years.
Many of the investors, who flocked to the country in the euphoria which followed the 2009 signing of Rio’s investment agreement with the ­government, have lost faith.
Foreign investment in Mongolia slumped 70 per cent in the first half of this year and economic growth slowed to just 5.3 per cent, from as high as 17.5 per cent for the full year in 2011.
Confusing legislation, over-the-top regulation and the scarcity of exploration licences have frustrated the ­ambitions of many a foreign miner who set up shop in the capital, Ulan Bator.
Mongolia-Rio Tinto ties strained
Relations between the Mongolian government and Rio have been strained, putting the $6 billion second-stage underground project at Oyu ­Tolgoi under a cloud.
And some companies are reluctant to base staff in the country, ­fearing they will become targets for ­regulators, which appear hostile to ­foreign ope­rators.
All of this is contributing to Mongolia’s deteriorating economic outlook with investment plunging, the currency sliding and inflation running at just under 15 per cent. That has pushed up living and production costs and made it hard for businesses to operate.
“The business environment has been pretty stagnant,” says Minter ­Ellison partner Elisabeth Ellis, who is based in Ulan Bator.
“While we’ve actually had a busy six months, it’s been advising on redundancies, potential enforcement, ­insolvency and, unfortunately, helping a few companies leave the country.”
However, Ellis says there is ­“absolutely no doubt” about Mongolia’s potential and there has been an increase in investor enquiries over the past month. Part of that is related to the improving relationship with China.
Xi’s visit to Mongolia – the first by a Chinese president in 11 years – is ­significant. Mongolia, sandwiched between Russia and China, has been wary of its neighbours and in the past, adopted a foreign policy aimed at bolstering relations with third party countries. But in recent months the ­government has reached out to both Beijing and Moscow as it looks to boost its flagging economy.
China and Mongolia signed more than 20 infrastructure and investment deals while Xi was in town and set a target to boost annual trade between the two countries to US$10 billion by 2020 from just over US$6 billion currently. China has also agreed to give Mongolia better access to its ports and railways and upgrade diplomatic ties.
A nation well-resourced
“The country has huge reserves of resources and is improving ties with China,” Ellis says.
“Mining majors, investment funds and commodities traders still see the inevitable growth potential and want to invest in Mongolia – they’re just looking for the right time. “What’s needed is more clarity around the legislation and regulations,” Ellis says.
Some progress is already being made. The government has repealed its unpopular foreign investment law and last month, it revoked a four-year suspension on the granting of new exploration licences in a bid to boost investment. But it still needs to set the rules for how the application ­process will work.
Investors will be watching closely to see whether the government reaches an agreement with Rio on the Oyu ­Tolgoi project’s second stage before its financing deadline at the end of next month. The government owns 34 per cent of Oyu Tolgoi but can lift its stake after 30 years. The rest is owned by Rio-controlled and Canadian-listed Turquoise Hill, formerly Ivanhoe Mines. Funding commitments from a raft of global banks for the project’s second stage expire on September 30, a deadline that had already been extended by six months.
If it goes ahead, that project would create one of the biggest, deepest mining facilities anywhere in the world.While the returns from the existing open pit mine are significant, it is believed that 80 per cent of the project’s value lies underground.
In a positive sign, Rio secured an agreement with the government ­earlier this month for the construction of a power generation plant to feed the project. But one of the remaining sticking points is an outstanding $127 million tax bill, which the company believes it shouldn’t have to pay.
Positive stories emerging
Travis Hamilton, chairman of Khan Investment Management, is optimistic. He believes an agreement will be reached before the deadline and that, combined with the improving Beijing-Ulan Bator relationship, will serve as a “positive catalyst” for a resurgence in foreign investment.
While many of the ASX-listed exploration companies focused on Mongolia have struggled in line with the country’s deteriorating economic outlook and complex regulatory issues, there are some positive stories emerging.
Shares in Xanadu Mines, which switched its focus from coal to copper and gold, have quadrupled to 16¢ over the past two months on the back of positive drilling results at its flagship Kharmagtai project.
Chief executive George Lloyd says the company has “a high level of conviction about the value of our ­copper-gold projects and the development potential of the south gobi region.”
He believes some of the difficulties facing companies in Mongolia have been caused by unrealistic investment expectations three to five years ago. These days, a lot of the “hot” money has gone, and remaining companies are taking a more sustainable approach.
“The issues at Oyu Tolgoi say more about the technical and commercial challenges of building a complex $10 billion project – anywhere in the world – than they do about the business environment in Mongolia,” he says.
Lisa Murray is The Australian Financial Review’s North Asia correspondent.


Court of Justice in Mongolia Returns the Tax Investigation Case Against SouthGobi Sands and Three of Its Former Employees to the Prosecutor General for Further Investigations

HONG KONG, CHINA, Aug 26, 2014 (Marketwired via COMTEX) -- SouthGobi Resources Ltd. (SGQ)(1878) (the "Company"). The Company announced on August 11, 2014, the trial date for the tax investigation case against the Company's Mongolian subsidiary SouthGobi Sands LLC ("SGS") and three of its former employees was set for August 25, 2014.
The trial commenced on August 25, 2014 and on August 26, 2014, the panel of three appointed judges to the case ordered the matter be returned to the Prosecutor General for further investigation due to insufficient evidence presented by the prosecutor. The Company is still awaiting a written decision by the judges and will update the market accordingly.
The Company, including its Mongolian subsidiary SGS, has prepared its financial statements in compliance with International Financial Reporting Standards, and lodged all its tax returns as required under Mongolian tax law. During the investigative period, which has been ongoing since May 2012, the Company has been fully cooperative with the relevant authorities of Mongolia and devoted considerable internal resources in reviewing and responding to the allegations raised through the investigations by those authorities. The Company disputes these accusations and the procedures and conclusions of the investigations that led to these accusations and will continue to vigorously defend itself and its former three (3) employees against these charges.
About SouthGobi
SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill, also publicly listed in Toronto and New York, has a 56% 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, the Mongolian registered company that holds the mining and exploration licenses in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.
 Contacts: Investor Relations SouthGobi Resources Ltd. Galina Rogova Office: +852-2839-9208 galina.rogova@southgobi.com Media Relations SouthGobi Resources Ltd. Altanbagana Bayarsaikhan Office: +976 70070710 altanbagana.bayarsaikhan@southgobi.com www.southgobi.com
SOURCE: SouthGobi Resources Limited

World Bank Announces the New Country Representative for Mongolia

The World Bank has appointed James Anderson as its new Country Representative for Mongolia. Mr. Anderson has formally taken the position on August 18th and will begin work in Ulaanbaatar next week, according to the World Bank Group.
Mr. James Anderson is a U.S. national and a PhD in Economics. He brings with him broad experience, having worked with the World Bank since 1997. Before joining the World Bank Mongolia, he served as the Senior Government Specialist in Hanoi, Vietnam. From 1998 to 2008, he was a public sector specialist in the European and Central Asia Region of the World Bank. During the 1990s spent some years working in Mongolia as part of a USAID project and consulting for the World Bank, organizing training on institutional reform and conducting research on the effects of privatization and on Mongolia’s burgeoning informal sector.

Mr. Anderson will soon begin making courtesy calls with government officials, including the with the Minister of Economic Development and Minister of Finance, according to the World Bank Group.

“Mr. James Anderson will lead the World Bank’s engagement in Mongolia, working in partnership with the government and other stakeholders to support Mongolia’s development, leveraging its resources to help reduce poverty and ensure that Mongolia’s prosperity is widely shared among the population,” said the Country Director for Mongolia, China and Korea Mr. Klaus Rohland.

Under Mr. Anderson’s leadership, the World Bank Mongolia will continue to support the Mongolian government’s efforts on a broad range of development issues and closely work with development partners, the private sector, and civil society, according to the World Bank Group.

Source:World Bank

Khan Files Third Quarter 2014 Financial Results

Khan Resources Inc. 


Khan Resources Inc. 
August 22, 2014 08:00 ET

Khan Files Third Quarter 2014 Financial Results

TORONTO, ONTARIO--(Marketwired - Aug. 22, 2014) - Khan Resources Inc. (CSE:KRI) ("Khan" or "the Company") announced today that it has filed its financial statements and management's discussion and analysis for the nine months ended June 30, 2014 on SEDAR and has posted these documents to its website www.khanresources.com.
  • International arbitration action against the Government of Mongolia - All submissions and hearings have now been completed in respect of the international arbitration action against the Government of Mongolia for the illegal expropriation in 2009 of the Company's mining and exploration licenses for the Dornod uranium project in northeastern Mongolia. The hearing on merits and quantum was completed between November 11 and November 15, 2013 and two post-hearing briefs were subsequently submitted; the first on February 5, 2014 followed by a final brief on April 11, 2014. The Tribunal is now in the process of formulating their decision which is expected in the second half of 2014. The amount of damages sought by Khan currently exceeds $350 million.
  • Cash - Substantial cash outflows for legal expenses related to the international arbitration came to an end by March 31, 2014. Management is now conserving its cash resources pending the judgment of the
    Tribunal. The Company's rate of cash expenditures has declined significantly since April 1, 2014.
  • Investments - As at June 30, 2014, Khan held 14.8 million common shares of Macusani Yellowcake Inc. ("Macusani"), which represents 8.8% of the 167.6 million Macusani outstanding common shares. The fair value of the investment at June 30, 2014 was $889,000 - a decrease of $275,000 from the value at September 30, 2013. The decrease was due to a decline in the price of Macusani common shares from $0.075 per share at September 30, 2013 to $0.06 per share at June 30, 2014 and the sale of 700,000 shares during February and March for gross proceeds of $92,000.
  • Corporate matters - The Mongolian subsidiaries were closed on September 30, 2013 and all Mongolian tangible assets were retired. The office in Ulaanbaatar was closed on June 30, 2014.
  • The following table summarizes financial results of the Company for the three and nine months ended June 30, 2014 and 2013.
In thousands of dollars
Net loss from continuing operations
Three months ended June 30(389)(1,121)65.3%
Nine months ended June 30(2,240)(3,216)30.3%
Net income (loss) from discontinued operations
Three months ended June 30(27)(26)-3.8%
Nine months ended June 30(12)(98)87.8%
Basic and diluted earnings per share ($)
Three months ended June 30(0.01)(0.02)66.7%
Nine months ended June 30(0.03)(0.03)0.0%
Cash flow
Nine months ended June 30(1,880)(2,867)34.4%
Cash and cash equivalents
As at June 303511,813-80.6%
Working Capital
As at June 301,2372,314-46.5%
Forward-Looking Statements and Information
This press release may contain forward-looking statements and forward-looking information, which are subject to certain risks, uncertainties and assumptions. Forward-looking statements and information are characterized by words such as "will", "plan", "expect", "project", "intend", "believe", "anticipate", "forecast", "schedule", "estimate" and similar expressions, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements and information are not historical facts and are based upon a number of estimates and assumptions and are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors, including the impact of international, Mongolian and Canadian laws, trade agreements and regulatory requirements on Khan's business, properties, licenses, operations and capital structure, Khan's ability to re-instate or re-register the Dornod uranium project licenses, regulatory uncertainty and obtaining governmental and regulatory approvals, legislative, political, social, regulatory and economic developments or changes in jurisdictions in which Khan carries on business, the nature and outcome of pending and future litigation, arbitration and other legal proceedings, the speculative nature of exploration and development, risks involved in the exploration, development and mining business, changes in market conditions, changes or disruptions in the securities markets and market fluctuations in prices for Khan securities, the existence of third parties interested in purchasing some or all of the common shares or Khan's assets, the method of funding and availability of any potential alternative strategic transactions involving Khan or its assets, including those transactions that may produce strategic value to shareholders, the need to obtain, maintain and/or re-register licenses and permits and comply with national and international laws, regulations, treaties or other similar requirements, and uncertainty in the estimation of mineral reserves and resources. In addition, a number of other factors could cause actual results to differ materially from the results discussed in such statements and information, and there is no assurance that actual results will be consistent with them. For further details, reference is made to the risk factors discussed or referred to in Khan's annual and interim management's discussion and analyses and Annual Information Form on file with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com. Such forward-looking statements and information are made or given as at the date of this news release, and Khan assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.


  • Investor Relations Contacts:
    Grant Edey
    Khan Resources Inc.
    President & CEO
    Office: 416.360.3405

    Bruce Gooding
    Khan Resources Inc.
    Chief Financial Officer
    Office: 416.360.3405

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