Mongolian Democracy: From Post-Soviet Success To Post-Transition Struggle

December 09, 2009
By Daisy Sindelar
ULAN BATOR -- In 1981, 17-year-old Sanjaasuren Oyun left her native Mongolia to study geology at Prague's Charles University.

She was among hundreds of young people from privileged Mongolian families invited to study at the universities of the USSR and Eastern Europe in the 1980s, a time when the first ripples of democratic change were forming across the region.

The students came in search of a top-rank, Soviet-sponsored education. But Oyun, who went on to serve as Mongolia's foreign minister and is now a parliamentary lawmaker, says they often walked away with a little bit more.
"My brother graduated from Moscow State University, and his subject, funnily enough, was 'nauchny kommunism,' or scientific communism," says Oyun, sipping coffee in a plush hotel bars in the capital center. "So he was brainwashed with all these communist ideas, and he was supposed to be coming back home to teach communism. And yet he actually came back with the idea that it was time to transform society."

Peaceful Change

That same idea had already gained ground across Eastern Europe, where popular demonstrations would lead to the collapse of communist regimes in much of the region in 1989.

Mongolia, which in 1921 had followed the Soviet Union to become only the second communist country in the world, soon staged a democratic revolution of its own -- with Oyun's brother, the Moscow-educated Sanjaasuren Zorig, among those leading the charge.

The transition began on December 10, 1989 -- international Human Rights Day -- when Zorig and other activists rallied a small crowd of 200 people for a peaceful pro-democracy demonstration on Ulan Bator's Sukhbaatar Square.

Mongolia's communist leadership watched with alarm from the square's monolithic Government House as the protests quickly swelled to tens of thousands of people, with students, academics, miners, and nomadic herdsmen all taking part in the demonstrations.

On March 9, 1990, the government quietly stepped down. Zorig, who came to be known as the "golden magpie of democracy," announced victory to the joyous crowds outside.

Cutting The Cord

The outside world marveled at the bloodless transition. Zorig and other pro-democracy leaders had urged protesters to remain peaceful through the three months of demonstrations. The communists -- under pressure from Soviet leader Mikhail Gorbachev to avoid conflict, and wary of repeating the Tiananmen Square bloodshed that rocked China the previous year -- voluntarily ended 70 years of single-party rule without a single shot fired by security forces.

Free elections later that year brought democrats into Mongolia's parliament for the first time. By 1996, the Democratic Party had gained a majority over the communist holdovers, the Mongolian People's Revolutionary Party (MPRP) and an era of sweeping constitutional and market reforms was well under way.
The period marked a renaissance of Mongolian national awareness, long suppressed during the communist period. Mongolian replaced Russian as the language of instruction in schools, Buddhist monasteries were rebuilt, and historians raced to restore the tarnished legacy of the country's most revered figure, the 13th-century ruler Genghis Khan.

Mongolia's democratic evolution was celebrated as a regional success story and a model for change in the autocracies in Central Asia.

But Morris Rossabi, who teaches Mongolian history at New York's Columbia University, says the exuberance of breaking free from years of Soviet domination also came with a price. Long dependent on subsidies from Moscow, Mongolia suddenly found itself without a patron after the collapse of the USSR.

"Mongolia had 90 percent of its trade and investment coming from the Soviet bloc. So when all that happened, they scouted around and moved toward the international financial agencies," says Rossabi. "They went in immediately, with immediate privatization, no matter the consequences. And the result was tremendous unemployment, inflation, tremendous poverty."

Too Hard, Too Fast

The International Monetary Fund (IMF), Asian Development Bank, and World Bank all flooded into Mongolia, and as early as 1990 were pushing the same aggressive economic reforms prescribed across the former Soviet space. But rapid privatization and free-market reforms were a poor fit for the Mongolian culture, with its emphasis on communal use of resources.

Mongolians, by nature, are not an acquisitive nation -- a legacy, perhaps, of their nomadic heritage, wherein you own only what you can carry. But even by the population's hardscrabble standards, the post-socialist years were devastating.

Tens of thousands of Mongolians were left jobless after a massive privatization drive left former state-run industries in shambles. The local currency, the tugrik, experienced massive devaluation, shrinking from 10 to the dollar to 800. Education and health care, readily available during socialism, became erratic.

Mongolia became the fifth-highest recipient of international aid per capita. But the government, which had been urged by the IMF and others to allow economic reforms to play out with only minimal state interference, was unable to capitalize on the country's substantial mineral wealth, which was rapidly being extracted by foreign mining firms.

The economic meltdown, coinciding with a series of devastating winters, began to force a seismic cultural shift, as herders abandoned their traditional nomadic existence, migrating en masse to Ulan Bator and other large cities in search of a new way of life.


Mongolia's economic reforms, says Rossabi, have ultimately proven a failure.

"Despite all sorts of so-called programs that the international financial agencies have developed, the 36 percent of people who were living below the poverty line in 1994 hasn't changed -- in fact it's gone up," he says. "So all of this so-called economic growth and trickle-down, pure market economy has been proven to be in error."

End Of An Era

Even worse, the legacy of Mongolia's peaceful transition was soon marred by corruption and violence. In October 1998, pro-democracy leader Zorig was brutally stabbed to death in his apartment by masked assailants. The killing took place the same day he had been nominated as the country's next prime minister.

His wife, who had been bound and gagged during the attack, later suggested her husband had been killed because he had refused to accept bribes while serving as the country's infrastructure minister.

His sister Oyun says the murder, which remains unsolved, is a "black spot" on Mongolian democracy, particularly after her brother's efforts to keep the peace in 1990. "It's very, very unfortunate that the person who was calling for all these nonviolent means had to suffer so much, and be killed in such a violent way," she says.
Many of Zorig's allies have since gone on to be powerful players in the Mongolian political scene, including the current Democratic president, Tsakhiagiin Elbegdorj, a fellow 1990 demonstrator. But the vitality that marked the early days of Mongolia's postcommunist politics has since given way to stalemate and infighting.

If Mongolia was formerly a one-party state, it has become just as rigidly a two-party one, with the Democrats and the still-powerful MPRP holding all but three of the Grand Khural's 76 seats.

(Oyun, who founded her own party, Civil Will, is among the exceptions. She is also one of only three female lawmakers, down from 10 a decade ago. "I like to say that most of the work in Mongolia is done by women, and most of the decisions are made by men," she says wryly.)

The two parties formally comprise a grand coalition, and even their headquarters are nestled within whispering distance of each other along Sukhbaatar Square. Some critics say the relationship has become too cozy; others that the two sides prefer squabbling to lawmaking.

After Openness, Fear

Frustration with the situation has simmered for years; in July 2008, it boiled over, when fraud allegations in the country's parliamentary vote prompted violent riots outside the headquarters of the MPRP, which was claiming a two-to-one victory.

Five people were killed in clashes between protesters and police; state television broadcast footage of bloodstained stairs inside the MPRP headquarters; the building was eventually set ablaze. Nearly 800 protesters, mainly young men, were arrested; many later claimed to have been brutally beaten by police. (International monitors ultimately pronounced the poll free and fair.)

Tumursukh Undarya, a political scientist and NGO activist, says the incident ultimately had the effect of dampening many Mongolians' enthusiasm for democracy and civil rights.

"Many parents are still held by fears that were cultivated during the socialist period, that you would get in trouble if you were outspoken," she says. "They tell their children to stay away from anything to do with human rights and democracy. So last year, when many young people were arrested, beaten up by police, and then very severely sentenced by the courts, that fear was deepened."
Such developments have undoubtedly tarnished Mongolia's reputation as post-Soviet Asia's democratic success story. To build Mongolia up as a standard for political transition in Central Asia or elsewhere is "fallacious," says Rossabi, who has chronicled the country's evolution in "Modern Mongolia: From Khans to Commissars to Capitalists."

Democracy, he says, "hasn't really set in."

In this, Mongolia may be suffering from an aggravated case of the same post-transition doldrums that have afflicted many post-Soviet countries farther west. Considering the country's wild 20th-century ride from Soviet satellite to democracy poster child -- not to mention its far longer legacy of khans and communal nomadic culture -- one could argue it could hardly be otherwise.

Still, Mongolia doesn't appear to be looking back. Nearly 20 years later, polls indicate that 80 percent of the population says the transition was the right thing to do.

Slow But Steady

Oyun, for one, remains optimistic even as she acknowledges the challenges -- including the glacial half-decade it took the government to conclude a critical $4 billion mining deal that was finally sealed in October.

Mongolia, she says, has made important political strides since her brother first stepped onto Sukhbaatar Square with a plan to change Mongolia -- and still remains a positive example for other countries in the region.

"We look at Kazakhstan, where their GDP per capita is several times higher than ours. We know that Kazakhstan is not a vibrant, multiparty parliamentary democracy. And yet we've had to debate for the last five years just to get a single, huge mining agreement to be approved," she says. "And then somebody says, 'Well, look at Kazakhstan. [President Nursultan] Nazarbaev makes his decision one day and the project starts the next day. And we're spending five years debating.'"

Oyun pauses, then notes that Mongolia's mining deal, though long in coming, had the support of the majority of the public and civil society.

"We still hope and believe that, in the long run, the way we do things is good for Mongolia."

Source:Radio Free Europe and Radio Liberty

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RZD specialists complete track reconstruction in Mongolia

Russian Railways (RZD) specialists have completed a programme to repair the track infrastructure of the Ulan Bator Railway.

In line with an agreement between Ulan Bator Railway and RZD, more than 100 km of track was reconstructed. Wooden sleepers were replaced with reinforced concrete sleepers, and accompanying infrastructure was reconstructed.

During the summer renovation period, Russian specialists laid 54.43 km of track, and the Mongolian track repair centre put down 54.72 km of track. Continuous welded rail (ribbon rail) technology was introduced to Mongolia’s network. Following the reconstruction of the Mandal-Davaany line of the Ulan Bator Railway, maximum train speeds on the route were increased from 80 km/h to 120 km/h.


The management Ulan Bator Railway sent a letter of thanks to Russian Railways, saying the volume of work stipulated in the contract has been exceeded. Deliveries of materials were made on time and in the agreed volumes, and thanks to the technical and professional assistance of Russian specialists, the Mongolian track repair centre was able to conduct its work at record speed.

“The Management of Ulan Bator Railway expresses its gratitude to all those involved in carrying out the programme, and in view of the experience gained from this successful joint work, hopes for a continuation of partner relations and further mutually beneficial cooperation in 2010”, the company’s message said.

Source:www.rail-news.com
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Centerra boosts gold reserves, provides 2010 output guidance

By: Liezel Hill
8th December 2009
TORONTO (miningweekly.com) – TSX-listed Centerra Gold expects to produce 660 000 to 680 000 oz of gold in 2010 from its mines in Kyrgyzstan and Mongolia, the company reported on Tuesday.

The Kumtor mine is expected to produce about 540 000 oz, with almost half of the annual production (43%) scheduled in the fourth quarter.

The mill is expected to shut down temporarily during the second quarter, when the ball mill ring gear will be changed and the mill liners replaced, Centerra said.

The company also expects to produce between 120 000 oz and 140 000 oz from its Mongolian operations, the Boroo mine and Gatsuurt project.

The forecast assumes that Centerra receives the final operating permit for the heap leach facility at Boroo, and that it starts processing oxide ore from Gatsuurt in the second half of the year.

Later on Tuesday, Centerra and 48,5% shareholder Cameco announced that Cameco will sell all its shares in the gold-miner in a bought-deal offering. The sale has been anticipated for a while.

RESERVE UPDATE

Centerra also announced on Tuesday that it has revised the reserve estimates at both Kumtor and Boroo and updated the life-of-mine operating plans.

At Kumtor, the company has added about 1,3-million ounces of gold reserves since the reserve calculation.

After accounting for processing of some 409 000 oz of contained gold up to October 31, Kumtor's proven and probable mineral reserves stood at 4,9-million ounces of contained gold at the end of October.

The additional reserves will extend the Kumtor openpit mine life to 2017, Centerra said.

The company has also updated the mine plan to include remedial measures to manage ice and waste movement in the southeast highwall of the Kumtor pit.

At the Boroo mine, reserves increased by 25 000 oz of contained gold before accounting for processing of approximately 188 000 oz of gold up to October 31 in the Boroo mill and heap leach pad.

The company calculated the new reserve and resource estimates with a gold price of $825/oz, compared with the $675/oz used a year ago.

Centerra shares slid 8% on Tuesday, to C$11,59 each by 14:30 in Toronto. The stock was halted shortly afterwards for the Cameco announcement.

Edited by: Liezel Hill

Source:www.miningweekly.com
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Cameco Agrees to Sell Full Stake in Centerra Gold

By Christopher Donville

Dec. 8 (Bloomberg) -- Cameco Corp., the world’s second- largest uranium producer, agreed to sell its stake in Centerra Gold Inc. for about C$872 million ($820 million), fulfilling a pledge to focus on uranium and nuclear energy.

The transaction includes the sale of 88.62 million Centerra shares to the public at C$10.25 through underwriters led by CIBC World Markets and RBC Capital Markets, Saskatoon, Saskatchewan- based Cameco said today in a statement.

The companies have faced regulatory obstacles in the Kyrgyz Republic, home to Centerra’s Kumtor mine, and in Mongolia where the gold producer operates the Boroo mine. The Kyrgyz government has sought a stake in Centerra while Mongolia temporarily suspended Boroo’s operating permits in June and July.


“The big political issues that have hung over Centerra like a plague have been resolved,” David Davidson, a Toronto- based analyst at Paradigm Capital Inc., said today in a telephone interview.

Cameco Chief Executive Officer Jerry Grandey said last month the company was undecided about whether to sell the stake in Toronto-based Centerra to a strategic buyer or through a secondary offering.

“The thing that probably pushed them to do a deal now was the realization that gold isn’t going up in a straight line,” Davidson said.

Gold Falls

Gold fell today, capping the steepest three-day drop since October 2008, as an advancing U.S. dollar curbed demand for precious metals as alternative investments. The most-active contract on the New York Mercantile Exchange’s Comex division dropped 6.1 percent in the past three sessions after touching a record $1,227.50 on Dec. 3.

Cameco declined C$1.54, or 4.7 percent, to C$31.17 at 3:36 p.m. on the Toronto Stock Exchange before trading was halted pending the announcement. The shares have risen 48 percent this year. Centerra fell C$1.41, or 11 percent, to C$11.19.

Cameco also said today it will transfer 25.3 million shares to Kyrgazaltyn JSC under an April agreement with the Krygyz government.

Cameco intends to use the net proceeds “primarily to grow its core uranium business as it pursues its target of doubling uranium production,” the company said in the statement.

London-based Rio Tinto Group was the world’s largest uranium producer by 2008 production, the World Nuclear Association said on its Web site.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

Last Updated: December 8, 2009 17:49 EST

Source:www.bloomberg.com
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From Macon to Mongolia: An Ambassador's Journey

For Jonathan Addleton and his family, home has been many places over the last 25 years: Cambodia, Yemen, Pakistan, Jordan, South Africa, Kazakhstan and now Mongolia, where he is the new U.S. ambassador.

But his deepest roots are in Middle Georgia near Macon, where he owns a home on Ben Hill Drive. It is named after his grandfather, Ben Addleton, a farmer and railroad carpenter who bought 120 acres in the early 1940s near the Bibb-Jones County line.

“It was indeed a working farm and my father remembers plowing with a mule,” Dr. Addleton told GlobalAtlanta in an interview at his Georgia home.


The dirt road leading to the farm was always called Ben’s Hill. It was eventually paved and given a somewhat fancier name. But for Dr. Addleton, it is the family headquarters, where his parents live and where he always returns between assignments across the world.

Dr. Addleton was born in Pakistan, where his parents were Christian missionaries, and he spent much of his childhood there. He earned a journalism degree from Northwestern University and later a doctorate in international studies from Tufts University, specializing in the economics of migration, before joining the U.S. Agency for International Development, which helps countries fight poverty and institute democratic reforms.

With USAID, Dr. Addleton lived all over the world, including three years in Mongolia. In 1985, he met his wife, Fiona, who is originally from Scotland, in Islamabad, Pakistan's capital. It was his first assignment with USAID. She was a teacher at the British School there.

Dr. Addleton was not expecting to become a U.S. ambassador since his career has been in a specialized agency, not the U.S. State Department proper.

He was also surprised by the fact that he was named an ambassador to a country where he previously served, which is not a customary practice. Yet he enjoyed his previous service in Mongolia and is happy to be back there, even if the temperature sometimes reaches 40 below zero.
“Winter is not as bad as you would expect,” said Dr. Addleton, who assumed his new post in Ulaanbaatar, Mongolia’s capital, in November just as the cold weather approached. “It’s clear skies all the time. You don’t have those short, damp European kinds of winters. It’s blue sky all the time.”

Mr. Addleton’s 15-year-old daughter, Catriona, who was born in Macon and is now a ninth grader at the International School of Ulaanbaatar, also has good things to say about the Mongolian weather.

"There is a new ski resort just outside Ulaanbaatar that has a chair lift, three slopes and equipment for snowboarding as well as skiing,” she told GlobalAtlanta. “I can't wait to try it out."

Mongolia, situated between Russia and China, is an exotic country with a long history. “The founding father was Genghis Khan,” said Dr. Addleton.

Larger than Alaska, it has fewer than 3 million people, many of whom are nomads, raising yaks, camels, sheep and Cashmere goats.

Even in the capital of Ulaanbaatar, half the people live in round tents called "gers," better known outside Mongolia as "yurts."

Mongolia became part of the Soviet Union's orbit in the 1920s but is now a market-based democracy with growing revenues from mining coal, copper, gold, uranium and other minerals.

“It’s got traffic jams, it’s got air issues,” Dr. Addleton said of the Mongolian capital.

The evolving economy of Mongolia presents great opportunity for American business, said Dr. Addleton, noting that mining industry in particular is poised to expand rapidly. There is only about $100 million in annual trade currently between Mongolia and the U.S., the ambassador said. In comparison, Panama, with a similar population, has $5 billion in annual trade with the U.S.

“Coca-Cola was one of the early arrivals,” he said. “There are now two Coca-Cola bottling plants. A lot of the exports from the U.S. right now are in the consumer goods area and mining equipment. So in this area, there are prospects for American companies.”

Tourism is also a growing field in Mongolia, particularly adventure tours, with companies offering guided trips, some that include overnight stays with nomad families.

Dr. Addleton expects to do a three-year tour as ambassador in Mongolia before leaving for another assignment.

Macon remains the family’s base of operations. Dr. Addleton's sister, Nancy White, is a member of the Macon City Council. His oldest son, Iain, is a sophomore at Davidson College in North Carolina and graduated from Mt. DeSales Academy, a high school in Macon, in 2008.

Another son, Cameron, is currently finishing up high school at Mt. DeSales, staying with his grandparents on Ben Hill Road.

“We always return to Middle Georgia,” Dr. Addleton said.

By David Beasley Atlanta - 12.08.09

Source:www.globalatlanta.com
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Pastoralism Unraveling in Mongolia

By SARAH J. WACHTER
Published: December 8, 2009

A pungent odor like turpentine wafts over the hillsides north of the Mongolian capital. It comes from the sharilj, a wild plant that has taken over the scalloped landscape, a telltale sign of overgrazing since the plant is inedible for sheep and goats.
Sukhtseren Sharav has a herd of 150 goats and 100 sheep, and as they chew their way through everything else, and the sharilj spreads, he must shepherd them ever higher into the mountains to find fresh grazing land.
The lack of foraging terrain is not Mr. Sharav’s only worry. The price for cashmere, the wool made from the fleece of his goats, has plunged 50 percent from last year. The price of flour, his most essential food staple, has more doubled.

These are hard times for Mongolia’s cashmere industry, which provides jobs and income for a third of the country’s population of 2.6 million and supplies about 20 percent of the world’s market for the fluffy, feather-light fiber, prized for its warmth, delicate feel and long wear.

To compensate for low prices, herders have been increasing supply by breeding more goats — a classic vicious circle. Mongolia’s goat population is now approaching 20 million, the highest ever recorded.


Environmentalists and social scientists say this is destroying biodiversity and pastureland, and undermining herding livelihoods. But goats are hardier than other livestock, breed faster and can survive on sparser resources: so, the more the land is degraded, the more herders are driven to switch from cows, camels or other less destructive herds — another vicious circle.

Mixed into the problem is climate change. According to Erdene-Ochir Badarch, environment officer of the World Bank, rainfall on the Mongolian steppe has become increasingly erratic, resulting in the disappearance of 600 Mongolian rivers and 700 lakes. This too may be a chicken-and-egg problem. Increasing aridity and loss of plant species may itself be contributing to the dwindling rains.

In a study funded by Sony, Dennis Sheehy, a rancher from Oregon with a doctorate in range management, last year measured two of Mongolia’s four major ecological zones — desert and forest steppe — to determine changes in the composition of species compared with an earlier study made in 1997.

Mr. Sheehy found a 34 percent loss in plant species in the Gobi Desert and about a 30 percent loss in Mongolia’s forest steppe.

“Two conditions have created the loss in species: the proportion of goats in the herd in the last 10 to 12 years, and the areas are becoming increasingly arid,” Mr. Sheehy said. “The plant species that had disappeared were most palatable to all livestock, but especially to goats,” he added. “There are too many of them.”

The problem with goats is not only what they eat. In arid regions, their sharp hooves have been accused by environmentalists of piercing the soil surface, known technically as the cryptobiotic crust, a tangle of gray-brown material composed of fungi, mosses, lichens and bacteria which helps to retain moisture. Once the crust is torn, strong northwesterly winds carry away the sand underneath in dust storms that are contributing to the spread of the desert, according to a 2003 World Bank report.

Still, large parts of Mongolia remain in good shape, notably in the eastern parts of the country, and some researchers, including Andrei Marin, a doctoral student preparing a thesis on climate-change adaptation at the Institute of Geography, part of the University of Bergen in Norway, caution against jumping to conclusions about cause and effect.

Mr. Marin says the 10-year timetable for Mr. Sheehy’s comparative study may be too short to measure environmental shifts, and a 25-year span would be more meaningful.

The reasons goats are proliferating are as much about nurture as nature, Mr. Marin said by telephone from Bergen. When the country shifted from a planned socialist economy to a market economy and a parliamentary democracy, it largely retreated from supporting the livestock industry, leading herders to increase the size of the goat herd to finance rising expenses, he said.

“Government subsidies for transportation, boarding schools and a hay reserve have disappeared to a large extent,” he said.

Adding some complexity to the debate, land degradation, as a term, lacks a precise and widely accepted definition, and environmentalists urge a note of caution when discussing it.

“There are seven different ways to measure desertification in Mongolia,” said Tony Whitten, a biodiversity specialist with the World Bank in East Asia and the Pacific.

Yet another layer of the problem is the dysfunctionality of Mongolia’s cashmere marketing.

China is the largest buyer of Mongolia’s raw and washed cashmere by far, taking an estimated two-thirds of all exports — one-third legally and one-third smuggled to avoid export taxes.

Facing such a dominant buyer, Mongolian traders tend to get the short end of the bargain even in good times, accepting prices far below market value for high-quality fleeces and passing on the pain to the producers; and in the past year, times have not been good. As the global economic crisis shrank Chinese clothing exports, Chinese cashmere purchases effectively ground to a halt, just as another rain failure was pushing the herders into longer and more expensive migrations in search of grazing land.

“Climate change and globalization interacted to severely curtail the adaptive capacity of the herders,” Mr. Marin said.

Whatever the exact mix of causes, Mr. Sheehy says, the result is the same: a situation that poses a major risk to sustainability, with too many goats, and too much livestock in general.

The total Mongolian livestock herd numbers about 44 million animals, but Mongolia is haunted by the decimation of its herds when four successive years of summer drought, from 1999 to 2002, were followed by cold and snowy winters, killing off 9 million animals — a disaster from which many smaller herders have still not recovered.

“We’re predicting that with any significant drought, the whole livestock pastoral system will crash,” he said. “Especially in central Mongolia, where there is not much resilience — it is on the verge of a breakdown.”

But the solution is easier envisaged than done: reduce livestock numbers, when herders are hard up for cash, and introduce modern market management to a country that has never known it.

“Everyone thinks there are too many goats. But no one does anything about it,” Mr. Sheehy said.

Source:www.nytimes.com
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Centerra says expected life of Kumtor mine extended to 2017 with new reserves

TORONTO - Centerra Gold Inc. (TSX:CG) said Monday that 1.3 million ounces of gold reserves have been added at its Kumtor mine, extending the project's open-pit mine life to 2017.

The company said after accounting for the processing of approximately 409,000 ounces at the project in the Kyrgyz Republic, Kumtor's proven and probable mineral reserves total 4.9 million ounces of contained gold.

Centerra also said that reserves at its Boroo mine in Mongolia increased by 25,000 ounces of contained gold before accounting for processing of approximately 188,000 ounces of gold in the Boroo mill and heap leach pad.

A gold price of $825 per ounce was used for all of the updated Kumtor and Boroo reserve and resource estimates, compared with $675 per ounce as of Dec. 31, 2008.

No changes were made at the company's Gatsuurt project or at its REN project, which Centerra plans to sell.

Centerra has operations in Central Asia, the former Soviet Union and other emerging markets.

Source:The Canadian Press
http://www.winnipegfreepress.com/business/breakingnews/78732387.html

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Media war between Energy Resources and others on railroad from Tavan Tolgoi coal deposit

Media war between Energy Resources, consortium of powerful Mongolian companies and Ministry of Urban Planning and Infrastructure Development over railroad from Tavan Tolgoi coal deposit is continuing.
Last Sunday, Mongolian media representatives and journalists accompanied pro-Sainshand (meaning supporters of building of railroad from Tavan Tolgoi to Sainshand,capital of Dornogobi)legislators and "Genco" Battulga Khaltmaa, Minister of Urban Planning and Infrastructure Development to Sainshand by rail. There in Sainshand, the media was received by Gankhuyag, Governor of Dornogobi aimag and taken to proposed site to build heavy industrial complex.

On the other hand, executives and shareholders of Energy Resources and officials of pro-mining groups constantly appeared on TV and Radio giving interviews about importance of building direct rail to China from Tavan Tolgoi. Former Minister of Foreign Affairs and former board chairman of Energy Resources and current board chairman of World Growth, pro-mining lobby group, Gombosuren said during his interview with the Mongolian National TV (MNB) "building of direct rail to China can not threaten national security of Mongolia. Government already gave special permit to Energy Resources to build the rail. Reputable organizations like World Bank and European Bank of Reconstruction and Development is supporting this Ukhaa Khudagt Project and have become shareholders. I don't understand where this nonsense of stopping this rail is coming from? Deutche Bahn, German Railway and Leighton Asia of Australlia is building this railroad. Maybe some individuals want to stop this project out of pure jealousy?".

Some sources claim Battulga is acting for interests of powerful Russian Oligarch Oleg Deripaska, owner of Basic Element group which are bidding for Tavan Tolgoi coal deposit.
In interview with Mongolian Newspaper "Zuunii Medee" (Century News), Battulga said he is not attempting to halt the direct rail project because of the Russian interest but because of national interest of Mongolia."If direct rail to China is built, plan of creating heavy industrial zone in Sainshand will be in serious trouble" he emphasized.

Trade Union of Mongolian Railway workers sided with the Minister in opposing the building of direct rail by Energy Resources. The Union claimed if narrow gauge rail like Chinese rail is built in Mongolia and integrated with giant Chinese railway network, Mongolian mineral wealth will be sucked easily to China.The direct rail project by Energy Resources is direct threat to Mongolian railway workers which may eventually lose their jobs to Chinese railway workers who knows how operate narrow gauge rail, according to the Munkbayar, chairman of the Union.

Mongolia railway is wide gauge system built by Soviet political exiles and Vlasov army soldiers during 1940s and 1950s.

According to Energy Resources, Government of Mongolia already permitted building the direct rail line to China and the company spent about 160 billion Tugrig so far in the project. If project is halted, Government of Mongolia may have to reimburse the cost to the Energy Resources.
Shareholders of the Energy Resources include some of the most powerful Mongolian businesses such as MCS Group, Shunkhai Group and Petrovis.

By Ganbat, editor of MonInfo News Service

Sources:www.energyresources.mn, Mongolian National TV (MNB)
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Ivanhoe Mines Announces Construction Budget of US$758 Million For Development Work in 2010 at Oyu Tolgoi Mining Complex in Mongolia

Majority of Oyu Tolgoi Investment Agreement conditions precedent have been satisfied in recent weeks
December 07, 2009: 08:52 AM ET


Ivanhoe Mines' (NYSE: IVN)(NASDAQ: IVN)(TSX: IVN) President and Chief Executive Officer John Macken announced today that the joint Ivanhoe Mines-Rio Tinto Oyu Tolgoi Technical Committee has approved a conditional US$758 million budget for 2010 to begin full-scale construction of the copper-gold mining complex in southern Mongolia.

"The approval of the 2010 construction budget represents the next big step toward bringing this project into production," Mr. Macken said. "Ivanhoe is considering a schedule that could see construction of the initial open-pit mine completed in 2012 and commercial production begin in 2013."


The 2010 budget provides for an early start on a site-wide development program, pending the successful completion of the remaining conditions precedent required to give full effect to the Oyu Tolgoi Investment Agreement signed October 6, 2009.

Work in 2010 is planned to include:

- Resumption of the sinking of the 10-metre-diameter Shaft #2, which will be used to hoist ore to the surface from the deep, underground, copper-gold-rich Hugo Dummett Deposit.

- Construction of a 97-metre-tall (approximately 31-storeys), reinforced-concrete headframe for Shaft #2.

- Pouring the concrete foundation for the 100,000-tonne-per-day concentrator and deliveries of building materials for the concentrator and infrastructure.

- Installation of a 20-megawatt power station and 35-kilovolt distribution system.

- Initial earthworks for the open-pit mine at the Southern Oyu deposits.

- Continuation of lateral underground development off Shaft #1 at the Hugo Dummett Deposit.

- Construction of a 105-kilometre highway link to the Mongolia-China border, which will be fully paved by the time production begins.

- Construction of a regional airport, with a concrete runway to accommodate Boeing 737-sized aircraft.

Ivanhoe Mines' present consolidated cash position is approximately US$1 billion. Mr. Macken said additional funds are expected during 2010 either from Rio Tinto's exercise of Series A warrants, priced at US$8.38-$8.54 and yielding US$385-$393 million, or through potential investments in Ivanhoe by one or more strategic shareholders, including sovereign-wealth funds, that have expressed unsolicited interest in participating in Ivanhoe's growth opportunities.

Seven of 10 Investment Agreement conditions completed

A total of seven of the required 10 conditions precedent now have been satisfied since the signing of the Investment Agreement on October 6, 2009.

The conditions were:

- the increase of Rio Tinto's ownership stake in Ivanhoe Mines from 9.9% to 19.7% through a US$388 million payment to Ivanhoe;

- the conversion into mining licences of exploration licences held by Entree Gold on extensions of the Oyu Tolgoi mineralized trend, whose development is covered under a joint-venture agreement with Ivanhoe Mines;

- the establishment of a Standing Working Committee, comprised of representatives of the Government and Oyu Tolgoi LLC, which will operate during construction of the mining complex to streamline the granting of permits and expedite Mongolian customs clearances;

- the signing of the Investment Agreement and companion Shareholders' Agreement by all relevant parties;

- the restructuring of Ivanhoe's subsidiary, Ivanhoe Mines Mongolia Inc. - now renamed Oyu Tolgoi LLC - which continues to hold the Oyu Tolgoi licences and will operate the project;

- the separation of assets unrelated to the Oyu Tolgoi Project; and

- the registration in Mongolia of a revised charter for Oyu Tolgoi LLC.

After the remaining conditions precedent have been satisfied, 34% of the shares of the holding company, Oyu Tolgoi LLC, will be owned by Erdenes MGL, a Mongolian state-owned resources company, and 66% will continue to be owned by Ivanhoe Mines.

Independent Technical Report to declare first underground reserve at Oyu Tolgoi

A panel of experts appointed by the Mongolian Government has completed an initial review of a feasibility study for the planned open-pit and underground mines. Mr. Macken said that the Government's consideration of the feasibility study, which is one of the conditions precedent that remains to be satisfied under the Investment Agreement, is expected to be concluded in coming weeks.

Following conclusion of the feasibility study's consideration, Ivanhoe Mines will be in a position to publicly release an independent Technical Report that will declare the first underground reserves at Oyu Tolgoi and update the project's total mineral resources that have been confirmed by Ivanhoe's ongoing exploration program.

The Technical Report, which is the basis for the 2009 Integrated Development Plan (IDP-09), also will provide an independent evaluation of long-term production scenarios for the 12-kilometre-long chain of Oyu Tolgoi deposits that have been discovered to date, with associated capital and operating cost projections. The report is being prepared for Ivanhoe Mines by several of the world's foremost engineering, mining and environmental consultants, which are led by GRD Minproc and include Stantec (formerly McIntosh) Engineering.

Ivanhoe Mines' shares are listed on the Toronto, New York and NASDAQ stock exchanges under the symbol IVN.

Forward-Looking Statements

Certain statements made herein, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information and statements are typically identified by words such as "anticipate," "could," "should," "expect," "seek," "may," "intend," "likely," "plan," "estimate," "will" "believe" and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to, statements respecting anticipated business activities; the timing of the release of the IDP-09; the timing of the Government's consideration of the feasibility study; the timing of the construction of the initial Oyu Tolgoi mine; the timing of commencement of full construction of the Oyu Tolgoi Project; and other statements that are not historical facts.

All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines' management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risks and Uncertainties" elsewhere in the Company's MD&A filed on Sedar. The reader is cautioned not to place undue reliance on forward-looking information or statements. Except as required by law, the Company does not assume the obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events.

Contacts:
Ivanhoe Mines Ltd.
Bill Trenaman
Investor Contact
+1.604.688.5755
Ivanhoe Mines Ltd.
Bob Williamson
Media Contact
+1.604.688.5755
www.ivanhoemines.com

Source:www.ivanhoemines.com
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Minister of Minerals Zorigt Dashdorj met with Tom Albanese, executive Director of Rio Tinto

On second day of his trip to UK, Zorigt Dashdorj, Minister of Minerals met with Tom Albanese, executive director of Rio Tinto company. First time since signing huge Oyu Tolgoi investment agreement, both sides met in London and exchanged opinion on successful implementation of the provisions of the agreement.

Minister Zorigt suggested to use Mongolian contractor companies more in the Oyu Tolgoi project in procurement of services and goods.Albanese said Rio Tinto company has been taking all necessary actions in order to implement provisions of the agreement and would emphasize use of Mongolian supplier companies in the project.

By Battsetseg, reporter of MonInfo News Service
Source:Press and Information Division
Ministry of Foreign Affairs and Trade

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Mongolian herders harness the sun for greener lives

By Jargal Byambasuren

TUV AIMAK, Mongolia (Reuters Life!) - Often, the best eco-friendly initiatives stem out of necessity.

In Mongolia's vast steppe, where thousands still practice the nomadic lifestyle of their ancestors, solar panels are pitched atop more and more tents, taking the place of fixed power lines.


The panels, which cost around $118 each, allow families to charge their phones, power their energy-saving light bulbs and even watch a couple of hours of television in the evening.

But the best thing about the panels -- and the solar energy they harness -- is that they can be packed up along with the tent, or yurt, when the herders need to move to greener pastures.

Complementing the panels are supplies of dried animal dung, courtesy of the cattle that are integral to nomads' livelihood, and which are used to provide heat in the harsh winter.

Otgonsuren Perenlei, 27, and her husband moved back to the grasslands from Mongolia's capital city, Ulan Bator, a few years ago, attracted by cleaner air and a more eco-friendly lifestyle.

But despite her own conservation efforts, she said climate change was taking its toll on the steppe, and making it more difficult for nomads like her to make a living.

"The global warming issue has made grazing very difficult these days. The grass hardly grows," she told Reuters Television.

"When I was a child I do not remember having to use fodder to feed the calves. Then, we had enough grass. Now, there is just not enough grass and there is less rain."

Desertification caused by overgrazing, especially by goats who are raised for their soft cashmere wool, has added to their woes.

The steppe herders' attempts to sync their lifestyles with nature is in stark contrast to their counterparts who have chosen a more permanent home in the city, and where heavy pollution is a serious problem, especially in winter.

Air pollution levels now reach almost 10 times the allowed rates during winter, according to Mongolia's Air Quality Agency, as more nomads flock to the suburbs, seeking a more permanent lifestyle.

These "yurt" districts, which account for about 50 percent of the population, are the worst polluters, according to the agency, as these permanently settled nomadic communities rely on fossil fuels and wood for energy and heat.

And the mountains surrounding the city trap the resulting pollution, making it difficult for everyone to breathe.

"Traditionally Mongolians are nomads who live in harmony with nature. They care for their surroundings and this reflects in their own health. What we see in the city is negligence," said Air Quality Agency analyst Munkhbat Tsendeekhuu.

Over the past year, around 15,000 people moved from the grasslands to the city, seeking a more consistent life.

Many, like Gantuya Chimedsambuu and her family, are determined not to return to the grasslands, and accept the pollution as a price to pay for their new lifestyle.

"There is thick smoke every evening. We burn coal too so it's smoky outside. You can't see your surroundings clearly," she said nonchalantly.

Sparsely populated Mongolia is home to around 2.6 million people, just under 1 million of whom live in Ulan Bator.

(Editing by Miral Fahmy)

Source:www.reuters.com (Reuters news agency)
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No one to mess with


A 13th-century bronze-and-silver paiza was a diplomatic passport that guaranteed the bearer safe passage throughout the Mongol Empire.


Traditional Mongolian clothing from the 19th century is on display at the Denver Museum of Nature & Science.


This porcelain vase dates back to the Mongol Empire's 13th-century Yuan Dynasty.


This Jamsran Tsam mask is worn by a Tsam dancer as part of a Buddhist dance-drama and religious ritual.


PHOTOS FOR THE CHIEFTAIN/STEPHEN M. VOYNICK -- A life-sized statue of a fully armed, mounted Mongol soldier is part of the Genghis Khan exhibition at the Denver Museum of Nature & Science.


Genghis Khan exhibit takes closer look at legendary Mongol warrior
By LYNDA LA ROCCA
SPECIAL TO THE CHIEFTAIN
DENVER - His people revered him; his enemies feared him. And both had good reason.

Genghis Khan, the 13th-century ruler whose unified Mongol nation formed the foundation of the largest contiguous land empire the world has ever known, was a bold and brilliant military strategist. He also was an illiterate peasant who nevertheless managed to give his people their first written language. And he was a gifted statesman who established a sophisticated society that championed religious freedom and open trade, supported the arts, believed in self-determination and the rule of law, and embraced - and often improved upon - the ideas and inventions of other cultures.

Yet despite his broad-mindedness, Genghis Khan was still someone you didn’t want to mess with.

The wildly dichotomous nature of this great leader is highlighted in Genghis Khan, a special exhibition at the Denver Museum of Nature & Science now through Feb. 7. “Yes, Genghis Khan was a ruthless warrior and history’s greatest conqueror,” says Jennifer Moss Logan, the exhibition’s lead educator. “But he was also a man very much ahead of his time who introduced incredible innovations to his people. This exhibition goes beyond black or white, good or bad, and lets visitors discover the nuances of the actual human being behind the legend.”

Housed in the museum’s newly renovated, 14,000-square-foot Phipps Special Exhibits Gallery, Genghis Khan traces the rise of this powerful sovereign from his humble beginnings as a member of an outcast peasant family left to perish on the harsh steppes, to his 21-year reign over a 12-million-square-mile territory which, at its peak, encompassed nearly 30 conquered nations and extended from the borders of Eastern Europe north to Siberia, south to India, and clear across China to the Sea of Japan.

More than 200 artifacts, most dating from the 13th and 14th centuries, reflect the lives of Genghis Khan and his descendants and the rise and decline (by the late 15th century) of the Mongol Empire. These include weapons of war such as swords, helmets, maces, shields, leather armor and a variety of arrowheads (larger for up-close killing, smaller for shooting at a distance), along with finely crafted household and personal items like golden bowls and goblets, colorful glazed ceramics, musical instruments, handwoven silk robes and exquisite silver, gold, turquoise and carnelian jewelry.

Gold and silver coins bear inscriptions glorifying Genghis Khan as “Khan of Khans, the Just, the Most Mighty . . . the Great,” while rare manuscripts recount the history of his reign. Medallion-like “passports” called paizi reflect his emphasis on diplomatic relations: Envoys, traders and government representatives carrying paizi were guaranteed safe passage throughout the empire; anyone failing to honor this edict could be put to death.

There are displays focusing on the “four Khanates,” the semi-autonomous kingdoms ruled by Genghis Khan’s four sons and their families after their patriarch’s death in 1227 at age 65; Karakorum, the walled city that became the empire’s capital during the reign of Ogodei, Genghis Khan’s third son and chosen successor; and China’s Yuan dynasty, governed by Genghis Khan’s most famous grandson Kublai, who completed his grandfather’s conquest of China and played host to Venetian merchant and traveler Marco Polo. The exhibition concludes with a look at modern Mongolia and a tribute to Colorado’s 2,500-member Mongolian community, one of the largest of its kind outside of Mongolia.

Hands-on and interactive exhibits take visitors inside a Mongolian ger, a tent-like nomadic dwelling, where they can compete at knucklebone, a children’s game originally played with real sheep bones. There are live cultural performances by Mongolian folk dancers, contortionists and musicians; tables for making paper replicas of a traditional Mongolian hat; and demonstrations of such Mongol weaponry as the catapult-like traction trebuchet. (Fortunately, the museum’s miniature model only fires pingpong balls.) A life-sized, lifelike statue of a fully armed Mongol warrior on horseback and two nearly full-sized siege engines, along with giant video screens depicting a loud and furious Mongol raid on a walled city, make me feel like I’m actually going to war with the mighty Genghis Khan and his highly organized and disciplined, 120,000-member army. These expert archers were also superb horsemen who could accurately launch arrows while facing backward in the saddle or clinging to a mount’s flank for protection.

But while Mongol men and women both learned to ride horses almost as soon as they could walk, women rarely played direct combat roles (although one of Genghis Khan’s daughters is recorded as having led a successful attack). Instead, women were sent into the field after a battle to collect arrows for re-use - and to dispatch wounded enemy soldiers.

Nothing instilled terror quite like the sight of an approaching Mongol horde - unless it was the eerie, frightful noise made by their “whistling” arrows or the dreadful siege engines that hurled not just stone projectiles but also the disease-ridden bodies of dead animals in an early form of biological warfare.

If these weapons didn’t force an immediate surrender, Genghis Khan could always employ psychological warfare, putting straw “soldiers” on horseback to make his army appear even larger, or using captives - often the neighbors, friends or relatives of besieged defenders - as human shields.

Even his own people suffered from his ruthlessness. Genghis Khan once ordered three of his strongest wrestlers to ambush and kill his overly ambitious chief shaman by breaking the man’s spine. And as a teenager, he launched his own career by making himself the head of his family - after joining forces with a brother to murder their half-brother.

What a guy, huh?

“That depends on who you talk to,” says museum public relations manager Heather Hope. “I think the real question is, ‘Was the world better off with or without Genghis Khan?’ And I’d say with him, because he was politically adept, he single-handedly created the world’s greatest empire, and he is still honored and celebrated today, 800 years later, as the father of his country.”

Actually, his paternal reach was much broader.

According to a 2003 study in the American Journal of Human Genetics, Genghis Khan’s direct patrilineal descendants make up 0.5 percent of the current world population. That means 16 million men are walking around today carrying his Y chromosome.

It also means that modern technology has discovered yet another field in which Genghis Khan excelled.

Sunday, December 6, 2009
Source:www.chieftain.com (Pueblo Chieftain newspaper of Colorado, USA)
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Mongolian performers add life to exhibit


PHOTO FOR THE CHIEFTAIN/STEPHEN M. VOYNICK -- Ariunbold Mijiddorj, a member of the Denver-based Mongolian Cultural Center for the Arts, displays a morin khuur or horse-head fiddle, Mongolia's national instrument.

DENVER - It sounds like a real horse whinnying. But that’s just one of the haunting notes Ariunbold "Ari" Mijiddorj can coax from the morin khuur or Mongolian horse-head fiddle.

Mijiddorj of Boulder is one of several local Mongolian musicians, folk dancers and contortionists who perform daily at the special Genghis Khan exhibition now at the Denver Museum of Nature & Science. These artists are all members of the Denver-based Mongolian Cultural Center for the Arts, which is dedicated to promoting and preserving the arts and culture of Mongolia.
During Genghis Khan’s time, says Mijiddorj, every man was expected to know how to play the morin khuur. According to legend, the instrument was created by a boy who lost his beloved horse in a race. The boy turned the animal’s bones into a fiddle bearing a carved horse’s head in remembrance of his equine friend. Also performing this day is artist and Tsam dancer Tsogtsaikhan Mijid, president of the Mongolian Cultural Center for the Arts. Dressed in a long, off-white silk robe, bearing a staff tied with red, blue, yellow and green silks, and wearing an oversized papier-mache mask - that he made himself - of a balding old man with a long white beard, Mijid performs the Dance of the White Elder, an ancient Tsam mask dance. Tsam is a Buddhist dance-drama and religious ritual designed to frighten away evil spirits and please the gods.
The old man stares at me as he dances, approaching and extending his hand for me to shake. Afterward, Mijid explains that the White Elder represents long life, happiness and luck; anyone whose hand he shakes receives an entire year of good fortune.

What a bonus!


- Lynda La Rocca

Source:www.chieftain.com (The Pueblo Chieftain newspaper)
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Made in Mongolia


‘It’s great to be able to do something for women,” says Kim Rowan, above with her daughter, model Amber Jean Rowan, sporting a cute felt hat and scarf from Made in Mongolia (MIM). The pair are part of a group of well-known Irish women who have helped the Mongolian charity by modelling some of their latest fashion accessories. Others involved in the shoot included Mariad and Domino Whisker, Leigh and Chloe Arnold, photographer Mark McCall, stylist Catherine Condell, hairdresser Michael Leong and make-up artist Christine Lucignano, who gave their time for free.

For Kim, it means a lot because she has just quit a career in marketing to do a course in crisis counselling in Trinity. “It’s all about what’s happening in society and I have never been so aware of helping others, and this is the first opportunity to do so,” she says.

Daughter Amber is equally enthusiastic about the charity, which enables female heads of impoverished Mongolian households to become self-sufficient by using their traditional skills in new ways. Since her appearance on The Model Agent series earlier this year, when she gave courage to women with alopecia by revealing she suffered from it, Amber has modelled for fashion shows in Dublin, London and Mexico. Currently, she has “three little parts” in the Gate’s current production of A Christmas Carol (she plays a beggar woman, a jack in the box and Miss Fezziwig). “I love these cute hats from MIM,” she says. “I’ve always been a hat girl and it’s such a great charity.”

For designer Pat McCarthy, who supervised the voluntary Irish-Mongolian partnership project in association with local NGO Asral, the challenge was to move traditional crafts in a more contemporary direction. “There’s now a structure in place following donations from Irish Aid and €100,000 from the Dalai Lama,” he says, “and the women have a proper factory where the wool is brought from the Gobi Desert and Shankh . . . then all the intricate sewing and embellishment is done by hand. It’s building on skills that are already there.”

Joining him and also working with the local women is Irish designer Mary Donoghue, an NCAD graduate and former Late Late Show award winner who worked with Donna Karan in New York. “She has been working with them on pattern, introducing more appealing colours and details, while locals on the ground are superb at pattern cutting and quality assurance,” says McCarthy.

It’s a small business employing 50 women in four centres, who now produce five ranges, from pencil cases and document holders to scarves, slippers, cushions and Christmas decorations. They will be exhibiting at design fair Maison et Objets in Paris next September, and in November were invited to participate in a Fair Trade initiative set up by a group of people in the fashion business in Los Angeles. Apart from Ireland (where Avoca was the first stockist), Made in Mongolia now sells in Japan, the US, Italy and France. According to McCarthy, MIM “is finally beginning to become known and build an international network.”

Made in Mongolia products can be found in Avoca and Kilkenny stores and gift shops throughout the country, including Ballymaloe in Cork, Irish National Heritage Park and Westgate Design in Wexford. Prices start from €9.95 for Christmas baubles, €36.95 for slippers and €39.95 for scarves. See www.madeinmongolia.net for more information.

Source:www.irishtimes.com
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Head of Mongolian Border Troops discharged as consequence of the deadly mutiny

Irregular cabinet meeting of Mongolian government was held this afternoon and replaced A.Baatartsogt, head of the Border Troops with Ts.Sergelen. On Nov 22, four young soldiers shot dead three of their superiors in the middle of night and run away with truck kidnapping seven other soldiers. This unprecedented mutiny among border guards in southern border of country neighboring China shocked the nation. The government appointed working group to investigate the deadly incident and what caused the mutiny.

Sergelen, new head of the bordder troops graduated Military University by then Ministry of Social Security, Management Academy, Higher Courses of Border Troops Academy of Russian Federation and Police Academy of Arab Republic of Egypt.
He served in various positions of the border troops ranging from deputy of border troop station to vice head of administration.

By Battsetseg, reporter of MonInfo News Service

Sources:Press Service of Government of Mongolia and MonInfo News Service

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World Bank’s New Mongolian Monthly Economic Update: November

Executive summary

On November 27, 2009, Parliament approved the 2010 budget which projects a 5 percent of GDP deficit.

However, Parliament had to increase the copper price assumption to achieve the deficit target. A significant increase in total social spending was also approved, including that under a newly created Human Development Fund (HDF) which is earmarked to pay pension and health insurance, housing, education and health services, and cash transfers to Mongolian citizens. Since budget allocations to the “old” cash transfers to newlyweds, newborns, and child money programs, approved during the mining boom years, have been cut, analysts hope that creation of the HDF will pave the way for implementation of comprehensive social welfare reform with the view of moving towards a targeted new poverty benefit, using objective allocation criteria.


With respect to the budget outturn for this year, the 12-month rolling deficit improved somewhat in October, reflecting both reduced expenditures and stabilization of the revenue decline. However, it remains high, at around 9 percent of GDP. While the long-term fiscal outlook looks good, because of future large increases in revenues from the mining sector, the medium-term scenario until 2015 looks more uncertain. In particular, 2011 will see the Windfall Profits Tax disappear and, in the absence of continued donor funding, a series of large fiscal deficits would be difficult and costly to finance.

On the external sector, the trends of recent months have continued—narrowing of the trade deficit and accumulation of international reserves and stability of the nominal exchange rate. Indeed the export contraction seems to be bottoming out and the imports decline moderating. Preliminary balance of payment figures for Q3 indicate a narrowing of the current account deficit to US$470 million (10.9 percent of GDP), after it peaked in the first quarter of 2009.

In banking sector developments, Zoos Bank was taken into receivership at the end of November 2009. Anod Bank was also, finally, put under receivership. To date, the Zoos Bank situation does not seem to have had an adverse impact on overall confidence levels, likely in part reflecting the blanket deposit guarantee which was put in place in November, 2008, in response to the failure of Anod Bank. However, non-performing loans continue to increase across key sectors of the economy including individual lending, construction and agriculture, and banks remain exposed to the failure of large individual borrowers. Real deposit and borrowing rates also continue to be at extremely high levels. Average real loan rates of almost 25 percent are very high by international standards.

Third quarter real GDP data, down by 3.7 percent year-on-year after growth of 0.7 percent in the second quarter, along with recent industrial production figures, highlight the continued weakness in the real sector. The latest World Bank commissioned survey of the daily wage of unskilled workers in key informal labor markets in Ulaanbaatar in December 2009 also shows no improvements in real income relative to September 2009, pointing to continued economic stagnation and the on-set of winter.

New analysis by the World Bank of poverty trends between 2002/3 and 2007/8 using the national household survey data from the National Statistics Office (NSO), but using the same, absolute poverty line in both years, shows a sharp reduction in poverty during that period of high economic growth. Recall that the official consumption-based poverty headcount in 2007/8 was 35.2%, as estimated by the NSO. Working backwards from that benchmark and using a consistent poverty line over time, World Bank staff calculations indicate that the poverty headcount in Mongolia declined from 66.2% in 2002/3. This finding of substantial poverty reduction over this period is robust to the choice of the poverty line used.

Finally, a recently released analysis of the civil service in Mongolia suggests three main challenges to improving its efficiency. First, the civil service grading and compensation system requires significant changes in order to be able to attract and retain high caliber staff. Second, movement in a phased manner towards centralized payroll administration is required in order to increase control over staff numbers and personnel expenditures. Third, the personnel management regime needs to be improved as it presently does not fully protect civil servants from undue political interference.

Budget developments
There was some positive news on the fiscal balance in October as the 12-month rolling deficit showed some sign of improvement. However, the overall fiscal balance on this basis remains high, at around 9.2 percent of GDP, compared with 10.3 percent in the 12-months to September. The fiscal balance in the first ten months of 2009 was MNT 336 billion, compared with a full-year budget target of MNT 364 billion. Further continued fiscal adjustment will be required in order to reverse the deterioration of the past year and to place the fiscal position on sustainable footing.

Total fiscal revenues and grants (rolling 12-month) increased by 1.7 percent in October relative to September. This was due primarily to a rise in windfall tax revenues. On the expenditure-side the fall on this basis from October to September was 1.3 percent. Reduced purchases of goods and services were the main driver of this fall.

On November 27, 2009 Parliament approved the 2010 budget projecting a 5.0 percent of GDP deficit. However, it had to change the copper price assumption from US$5,187 to US$5800/tonne to achieve this. Parliament also approved a significant increase in total social spending (by around MNT150 billion), including spending under a newly created Human Development Fund (HDF). In 2010, the HDF will receive MNT346.7 billion from the budget, earmarked to be used to pay pension and health insurance, housing, education and health services, and cash transfers to Mongolian citizens. The latter are to make good on campaign promises made by both parties in the coalition to distribute cash to the citizenry in an effort to share the mining wealth of the country.

In light of these recent events, it would be important to continue the fiscal effort, and use the existing resources to more effectively protect the poor from the current downturn.

Around 22 percent of total expenditures and net lending in the 2010 budget are allocated to the payment of wages and salaries, down slightly from 24 percent in the 2009 budget. Ensuring that such expenditures are used to finance an effective and efficient civil service remains a challenge, despite the significant transformation over the past two decades and the relatively strong levels of service provision in areas such as health and education. Box 1 highlights three main areas of weakness which are particularly challenging – civil service grading and compensation, payroll administration and personnel management. This area of reform forms part of the wider fiscal reform agenda in Mongolia, different aspects of which have been discussed in previous monthly updates.

External sector
The 12-month rolling trade deficit narrowed to US$451 million in October, from US$511 million in September. This represents an almost halving of the US$1090 million deficit reached in February 2009. The adjustment has been driven by the faster pace of import compression relative to the contraction of exports, reflecting the continued slowdown of the economy.

In October total exports of US$193 million were up slightly on their value a year earlier. This was driven primarily by an increase in gold exports to US$35 million, compared with US$13 million in October 2008. The volume of monthly gold exports doubled. However, the unit price also increased (by around 25 percent), reflecting the rise in international gold prices to about US$1100/toz in November. Most of the gold exports went to the European Union. However, total goods exports over the period from January to October continue to be down by 31.2 percent in dollar terms from a year earlier with declines across most commodities due to lower prices, rather than volume. The strong economic growth in China continues to be supportive for Mongolia’s export recovery with the annual contraction in exports to China falling in recent months.
In October the dollar value of goods imports was down by around 20 percent year-on-year, compared with contractions of over 50 percent in the first half of 2009. In the first ten months of 2009 goods imports were down by 37 percent compared to the corresponding period from 2008.

The current account of the balance of payments recording the balance of goods and services trade, net investment income, remittances and grants to the government came in at US$470 million deficit in the third quarter of 2009 (10.9 percent of GDP). The deficit has narrowed, after it peaked in the first quarter of 2009. The main driver of the narrowing of the current account deficit was the goods trade deficit. The services balance, another key driver, improved due to a surplus of US$30.2 million in the third quarter of 2009 as transportation and tourism revenues eased. Throughout, net income flows were negative, due to dividends paid to foreigners.

The current account deficit was primarily financed by net capital inflows in the financial account, which amounted to US$689 million (16 percent of GDP) in the third quarter of 2009. Direct investment by foreign companies (FDI), mainly in the mining sector, has increased compared with the second quarter of 2009. Net borrowing from abroad by both government and the private sector jumped in the third quarter of 2009, due to the donor disbursement and loans to the commercial banks. Other capital inflows, such as trade credits and short-term lending to the private sector fell from their peaks in the fourth quarter of 2008.

The remaining portion of the current account deficit was financed by a disbursement from the IMF under the SBA ($24.6 million), FX purchases through the BoM’s auction, and gold purchases from domestic producers. This also allowed the BoM to rebuild its net international reserves to US$1062.6 million at the end of September 2009.

The exchange rate against the USD remains stable
The exchange rate against the USD has been stable since April, when the BoM raised its policy rate substantially and introduced an auction system. In addition, the spread between the ask and bid rates in parallel and commercial bank foreign exchange markets, which is often a good indicator of the liquidity, has remained low, after the sharp spikes in late 2008 and early 2009. In November, the average monthly exchange rate against the USD appreciated slightly, by 0.4 percent, compared with October. This stabilization of the exchange rate has allowed the Bank of Mongolia to bring its international reserves back to the levels prior to the collapse of the copper price in mid-2008 and the Bank’s attempts to support a de facto peg against the US dollar by selling its reserves into the market. However, in November, the BoM sold US$19.5 million of foreign exchange in its regular auctions, with no foreign exchange purchases. Instead, reserves were boosted by the receipt of the pre-payment from the OT agreement.

Inflation
The overall CPI inflation rate was minus 1.1 year-on-year in October, compared to minus 1.9 percent in September. While core inflation remains positive, it fell to 3.9 percent year-on-year in October

Banking sector
Despite the Bank of Mongolia having cut its official policy rate from 11.5 to 10 percent in September, nominal interest rates on both local currency deposits and loans have barely moved. But, with inflation having fallen sharply and turned negative in recent months, real economy-wide borrowing costs have soared. As a result, real borrowing costs are close to 25 percent in Mongolia, which is extremely high compared to real interest rates in comparator countries, and poses a constraint to the recovery in private sector activity. Such high rates also constrain the room the Mongol Bank has to raise rates even further, if macroeconomic conditions would seem to warrant this.

The high real interest rates cause MNT deposits to continue to rise. Indeed, at MNT 1,134 billion in October 2009, local currency deposits are now only slightly below their peak of MNT 1,149 billion in March 2008. While the weighted average interest rate stayed the same on the month for MNT deposits, it was reduced for foreign currency deposits in October to 6.3 percent from 7.0 percent in September. This contributed to the reduction in foreign currency deposits over October by US$13 million to US$391 million at end-October. Still, these are US$115 million higher than corresponding levels in October of 2008.

Following the failure of Anod Bank at the end of 2008, which was taken into conservatorship by the Bank of Mongolia, a second bank in Mongolia was now taken into receivership at the end of November 2009. Earlier, rumors about the insolvency of this publicly-traded bank did not seem to have much adverse impacts on overall confidence levels. For instance, its share price was relatively stable (at around MNT 2,000 compared with around MNT 2,500 at the beginning of the year) prior to the suspension of trading on the Mongolian Stock Exchange. Recall that the government put in place a blanket deposit guarantee since November, 2008 to avert any possibility of a bank run when Anod Bank failed last year. This safety net would explain why the second bank failure has so far not had obvious knock-on effects, such as an outflow of MNT deposits at the time Anod failed. The blanket deposit guarantee is, however, a rather crude measure to ensure continued confidence. It also has several disadvantages, including providing an incentive to the banks for excessive risk-taking in lending.

On average, the banking system remains weak as loan quality, in particular to the private sector, continues to deteriorate. Non-performing loans (NPLs) to residents and nonresidents rose to MNT 443 billion or 16.7 percent of outstanding loans in October, slightly up from 16.3 percent in August 2009. Loans with principal in arrears, which, if the borrower does not improve repayment, will eventually turn into NPLs, reached MNT 201 billion in September (7.7 percent of outstanding loans). As a result, non-performing loans and loans with their principal in arrears now stand at 24.3 percent of all loans. Excluding the two failed banks, the number is still 17.3 percent, or MNT 402 billion.

A comparison of the sectoral composition of the changes in NPLs and loans with principal in arrears between the third quarter of 2009 and the second quarter of 2009 shows that the largest increases were recorded in the “other sectors” (MNT 49 billion) which comprises mortgages, salary and pension advances. The second highest increase was in construction (MNT 27 billion) followed by the agriculture sector (MNT 26 billion). These three sectors also account for 54 percent of the total NPLs (to residents) and loans with principal in arrears at the end of the third quarter of 2009, with “other sectors” amounting to MNT 138 billion, construction MNT 139 billion and agriculture 45 billion.

The construction sector has the highest sector ratio of NPLs and loans in arrears to total loans at 35.5 percent, with mining and quarrying second at 26.4 percent. Between the third quarter of 2008 and the second quarter of 2009, NPLs and loans in arrears increased by around 350 percent. The construction sector alone accounted for 100 percentage points of this increase, i.e. almost one third, with wholesale and retail a distant second at 55 percentage points.

During the crisis period from mid-2008 there was a sharp rise in the share of loans accounted for by the top 50 borrowers by loan size, increasing from around 20 percent of total loans to just over 30 percent. Whilst this ratio has fallen slightly in recent months, the concentration of credit exposures remains high. These figures are on an aggregate basis and individual banks may well have higher exposures. This concentration increases the impact on the health of a bank’s loan portfolio of shocks hitting individual creditors.

Newly issued loans dropped 13 percent to MNT 802 billion in the third quarter of 2009 from MNT 921 billion in the third quarter of 2008. The largest decreases in newly issued loans occurred in the “other sector”, i.e. primarily lending to individuals, at MNT 315 billion, with the wholesale and retail sector a second at MNT 180 billion (Figure 18.a). However, around 48 percent of the loan portfolio remains exposed to the “other sector” and the wholesale and retail sectors, the two sectors which recorded the highest increases in NPLs from the second to the third quarter of 2009.

Total loans outstanding to individuals in October increased slightly over September. However, total loans outstanding to the private sector continued to decrease by 21.5 billion MNT in October.

Aggregate losses of commercial banks increased to MNT 112 billion from an aggregate profit of MNT 64 billion a year ago.
Given the worrying signs in the banking sector, the BoM has been intensifying its partnership with Mongolia’s development partners, including USAID, the IMF, the ADB and the World Bank Group, to ensure continued confidence in the banking sector and implement a range of banking sector reforms to help strengthen the system. A key measure is to complete audits by internationally reputable firms of the majority of the banks to allow for the formulation and implementation of a strategy tailor-made for the Mongolian situation.

World Bank
Source:www.worldbank.org
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Tavan Tolgoi bidder selection delayed to 2010-execs

SHANGHAI, Dec 4 (Reuters) - Budget negotiations and a new prime minister mean that Mongolia will likely delay to early next year the selection of winning bidders for the giant Tavan Tolgoi coking coal deposit, industry executives said.

Mongolia had earlier planned to select the winners for the $2 billion stake sale by the end of this year, following quickly on the conclusion of negotiations over investment in the Oyu Tolgoi copper and gold deposit which was considered a bellwether for mining investment in the landlocked country.

The nomination of a new prime minister, after the previous one fell ill, and negotiations over next year's budget could delay the selection, said Badamdamdin Ragchaa, chairman and chief executive of Mongolian state uranium firm MonAtom.

"I believe the issue will be solved early next year," said Badamdamdin.

Masa Igata, chief executive officer of Frontier Securities, also expected a slight delay in the selection process.

"The selection is likely to be made early next year, but it's not a big problem," said Igata.

Shortlisted bidders for Tavan Tolgoi include BHP Billiton (BHP.AX), India's Jindal, Brazil's Vale (VALE5.SA), U.S. coal miner Peabody (BTU.N), and China's Shenhua (1088.HK), as well as South Korea's COPEC consortium, a group of Japanese companies, and a Russian consortium including Gazprom (GAZP.MM) and Renova, according to an executive in Erdenes MGL, the state company that will own at least 51 percent of the project [ID:nPEK305507]. (Reporting by Rujun Shen and Lucy Hornby, Editing by Jacqueline Wong) ((lucy.hornby@thomsonreuters.com; +86 10 6627-1269; Reuters Messaging: lucy.hornby.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

Source:Reuters news agency

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Chairman and CEO of Manas Release Letter on Future Strategy

Manas Petroleum (OTCBB: MNAP)

Dear friends and fellow shareholders,

These past months since my last CEO letter have been very exciting times for Manas. We have been using the time to add valuable assets to our portfolio of properties and we are in the process of making arrangements for substantial financing with a large resource investor in North America. This investor has a proven track record of creating shareholder value.

Strong emergence after the storm


In keeping with our philosophy of building a strong and enduring resource base, earlier in 2009 we added blocks 2 and 3 in Albania, blocks 13 and 14 in Mongolia and the Western blocks in Tajikistan, expanding our portfolio from 11 to 16 blocks in 5 countries; we now believe that Manas controls in excess of 4 Billion Barrels of Oil. There appears to be substantial interest in these properties and we have been offered both multiple short & long-term financing options. Based on extensive evaluation of each financing proposal, we have chosen the financing plan that we believe is the most beneficial for Manas' long-term success and growth and one that we believe has the potential to maximize shareholder value.

Alliance with a sustainable partner

The financing plan that we have chosen involves only Albania, leaving the Mongolian and the Tajikistan assets in our control. We have signed a letter of intent that provides that our Albanian assets will be transferred into WWI, a company currently listed on the Canadian TSX Venture stock exchange and, at closing, our new investor and our company will both be major shareholders. WWI currently has C$5 million in the bank and our investor has agreed to raise an additional C$25 million for WWI in a private placement that will close at the closing of our transaction, which we intend to use to drill multiple wells in Albania. We will have equal representation on the board of directors of WWI and our current management will manage the project. Following this initial cash injection, WWI should begin drilling the first deep well. Following a successful drilling and the issuance of additional shares, we hope to hold nearly 40% of the new company on a fully diluted basis. However, we might also decide to raise further capital being in the position to drill a series of wells. Please take note that a portion of Bankers' Petroleum present production comes from the shallow rights on a small portion of one of our Albanian blocks and that WWI intends to drill the same block; however, WWI will be targeting the deeper subthrust structures which were previously proven by Occidental's Oil discovery on Manas' block 2 and by other numerous discoveries of large structures of light oil in the same geological area, across the Adria.

What does this mean to Manas and you, our friends and shareholders?

We have put in place the foundation to build a great company and have acquired what we believe is a spectacular portfolio of properties. Now we can say that each project is moving forward and maturing toward production. In Kyrgyzstan we will continue to drill with our 6 shallow and deep well program in 2010. In Tajikistan our seismic program will be moved forward. In Mongolia we will expand our exploration with a seismic campaign to encompass approximately 20,000 square kilometers. Additionally, to expose Manas to a much larger and more sophisticated audience, we are continuing to take the necessary steps to become listed on the TSX Venture stock exchange.

Building a great oil company

Our commitment to acquiring, developing, drilling and producing oil remains as intense, and perhaps more so, than ever. We now believe that we have the foundation in place to become a great company, discovering, developing and producing oil for years to come. We look forward to reporting our ongoing progress, to you, our friends and shareholders.


Heinz J. Scholz (Chairman)
Erik Herlyn (Chief Executive Officer)


Forward-Looking Statement Disclaimer

This press release contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for future operations. In some cases you can identify forward-looking statements by the use of terminology such as "may," "should," "anticipates," "believes," "expects," "intends," "forecasts," "plans," "future," "strategy," or words of similar meaning. Forward-looking statements in this press release include statements about the Letter of Intent and the possibility that it will enter into a formal agreement as contemplated in the Letter of Intent or that the transaction outlined in the Letter of Intent will proceed on any basis. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks that the parties cannot agree on the terms of a definitive agreement or obtain the necessary approvals therefore, that WWI will not be able to raise the $25,000,000 at or prior to closing, the risks inherent in the industry, poor capital markets and other risks identified by Manas in its periodic filings on EDGAR (which can be viewed at www.sec.gov). Any of these risks could cause Manas' or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect current judgment regarding the direction of Manas' business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this press release. Except as required by applicable law, including the securities laws of the United States and Canada, Manas does not intend to update any of the forward-looking statements to conform these statements to actual results.

For further information please contact:
Manas Petroleum Corp.
Erik Herlyn
Bahnofstr. 9 P.O. Box 155
CH-6341 Baar, Switzerland
Phone: +41 44 718 1030
Fax: +41 44 718 1039
Email: info@manaspete.com
Web: www.manaspete.com

Source:www.manaspete.com

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Mongolia's wild horses have come home

Published on : 2 December 2009 - 3:17pm | By Dheera Sujan
For decades they were extinct in the wild, but the Przewalski horse is back on the Steppes of Mongolia. And that’s largely thanks to three Dutch people who made it their life mission to save this small pale-gold pony.

Twenty years ago, couple Jan and Inge Bouman, together with their lifelong friend Annette Groeneveld, realised the dangers faced by the Przewalski horse.


The horses were discovered on the Mongolian Steppes a century ago by a European expedition headed by Nikolai Przhevalsky (the name of the horse is the Polish variant of the name). After they realised that they were the last living ancestor of our domestic horses, 55 foals were shipped back to Europe.

It was a move that saved the species. Within 60 years, they had been eradicated from the Steppes. But years of inbreeding had taken a terrible toll. There were only a few sorry specimens left in zoos around the world and most of the foals born to them died within a couple of years.

Fund raising
The Boumans and Groeneveld mounted a formidable fund raising campaign to buy the horses from zoos and cross bred the pairs to refresh the stock. But the ultimate goal was clear – the Przewalski should return to its natural home.

They were lucky. In the 1990s Mongolia was emerging from seven decades of Soviet rule. And the Przewalski horse was a powerful symbol of Mongolian identity. They had always been known to Mongolians as takh – holy. The Mongolian government responded to the call of the Boumans and Groeneveld by offering the Hustai National Park as a refuge to the takhs coming home.

To a nation of horse lovers, the return of the takh was an emotional moment. Nowadays, 200 of these pale ponies graze peacefully on the grass sea that fed their ancestors for centuries.

Source:Radio Netherlands Worldwide
http://www.rnw.nl/nl/node/43123
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Solartech Int'l to buy Mongolian mine for HK$1.5 bln

Dec. 2, 2009 (China Knowledge) - Solartech International Holdings Ltd<1166> has announced that it plans to acquire a mine in Ulaanbaatar, the capital of Mongolia for HK$1.5 billion, sources reported.

The Hong Kong-listed firm will pay RMB 68 million in cash and will pay the remaining HK$1.43 billion by issuing convertible bonds. The bonds will have an initial conversion price of HK$0.15, which is a price 7.14% higher than the HK$0.14 the closing price before shares of the firm were suspended from trading.

The mine, which has 1.44 million tons of copper reserves, 4.19 tons of gold reserves and 196.34 tons of silver reserves, is expected to produce 5,000 tons of copper in its first year at a cost of HK$178 million. In its second year, it will produce an estimated 30,000 tons of copper at a cost of HK$69.75 million.

Solartech International, a firm incorporated in Bermuda, is engaged in the manufacture and trading of cables and wires, copper rods and connectors and terminals.



Copyright © 2009 www.chinaknowledge.com

Source:www.chinaknowedge.com
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Muslims celebrate Kurban Ait festival in Mongolia

ULAN BATOR, Dec. 1 (Xinhua) -- Muslims in Mongolia continued their celebration of Kurban Ait, the most important feast of the Muslim calendar, which fell on November 27.

Muslims in the country arranged a banquet for the poor during the event, which is dedicated to paying tribute to Allah -- the Great Owner of the World for Muslims.

Muslims from Turkey, Austria and Germany went to Olgii in Bayan-Olgii Province to present gifts and strengthen the community of the religion.

"We intend to make a wide introduction of the celebration of Kurban Ait in Mongolia and its religious formalities," said Osman Altan and Ismail Yavuz, two guests who also vowed to come to Mongolia again in the future.

It is estimated that more than 10 thousand sheep were used for food during the celebration.

The Union of Muslims of Mongolia reopened the first mosque in Olgii, which had been newly repaired, during the celebration.

Source:www.xinhuanet.com
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What is wrong with having two, three branch railroads?

Morning Must Reads-Review of Mongolian newspapers by MonInfo News Service

Next political upheaval on Tavan Tolgoi and related railroad shook Mongolia. Exploitation of Oyu Tolgoi and Tavan Tolgoi and other mineral deposits naturally draws issues of infrastructure development. Oyu Tolgoi investment agreement will be validated by April 6 of next year. However, it can be said Oyu Tolgoi " railcar" has moved. Oyu Tolgoi project people already said they will not rely much on railroad and can transport the products by motor roads.
This time railroad issue has been emerged in connection with Tavan Tolgoi.

Now we are talking of two options here.One is to build rail from Ukhaa Hudag (portion of Tavan Tolgoi deposit retained by Energy Resources) to Gashuun Sukhait border point. Another is to build rail from Tavan Tolgoi to main railroad through Sainshand and Dalanzadgad.

Last week's political upheaval targeted Energy Resources which plans to build narrow gauge rail road from Tavan Tolgoi to China through Gashuun Sukhait border point. I'm talking about emergence of public media campaigns which blamed ER for building rail that will put Mongolia under Chinese control and thus touched national security issue.
ER said why it becomes issue of national security when Mongolian owned company builds rail road to Gashuun Sukhait and why not when ships to Zamiin Uud.ER issued statement saying last weekend's media campaign (run on TV stations) attacking them is an organized effort against them and if need to, will disclose who is really behind the campaign.
When ER announced Press Conference yesterday, there was expectation that they are going to announce names of those people behind the campaign.However, they did not do this, instead, they talked about what they are doing in Tavan Tolgoi and justification for building rail directly to China.

ER was given special permit to build rail in June of 2008 signed by then PM Bayar and Minister of Infrastructure, Raash. This strategic issue was discussed by National Security Council and then President Enkhbayat was against this idea. However, the council did not reach a decision and the issue was put aside with comment" this needs to be discussed further by the council and Great Khural".

Battulga, minister of Urban Planning and Road, Transportation raised this issue again and expressed opinion this needs to be discussed again by the council. Expanded meeting of the council debated this issue again and however, no decision was taken. Great Khural is expected to debate this soon.

It is 240 km to Gashuun Sukhait from Tavan Tolgoi. Of course, it will be less costly to transport coal through this route. Another route or build rail to Dalanzadgad and Sainshand and connect to existing main rail will open up opportunities to export to other countries like Russia besides China.

ER said during yesterday's press conference they support the other route to Sainshand as well. Building railroads in two directions will benefit Mongolia they said. Building of railroad to Gashuun Sukhait already started as permits were already given. There is suspicion why ER was given the permit without bids. Most likely government gave the permit to ER for license of Tavan Tolgoi.

Everybody understands Sainshand project will benefit Mongolia more in the long run. However, now it is only on the paper.What are future scenarios for this development? What if the council decides building direct rail to China harming national interest of Mongolia and stops the building of rail?
What if ER rail project is allowed to continue and Sainshand rail project gets "stuck"? If parliament supports ER rail project, there is concern that nobody will support the Sainshand rail project and it will go nowhere.

How about supporting both projects?

By A.Altantuya, columnist of "Ardiin Erkh" (People's Right) newspaper
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Oleg Deripaska will not go into exploration

En+ Group sold its share in GCE

«Kommersant» Russian daily business newspaper No.223/Fri (4278) dated 30.11.2009
En+ Group of Oleg Deripaska sold its 31% share of Mongolian “Gobi Coal & Energy (GCE) for $25 million dollars. GCE is engaged in geological-exploration of coal deposits. However, the group which sold earlier its coal units VostSibUgol ( Eastern Siberian Coal) and IrkutskEnergo is not giving up coal altogether.The Group announced it will retain its interest in Mongolian Tavan Tolgoi-one of largest coal mines in the world. However, tough competition is going on for the deposit. Development of the deposit requires up to $ 10 billion dollars.

En+ Group Holding which is part of “Basic Element” of Oleg Deripaska sold its 31% stake at GCE (Ulaanbaatar) reported sources familiar with the deal. GCE owns more than 20 coal exploration licenses in gobi Desert in Eastern Mongolia.Buyers of the 21% stakes were constortium of investment funds including Origio Resource Partners Ltd, China Commodities Absolute Return Ltd and Origo Sino-India plc.Last Friday, Origo Sino-India announced about this deal.Remaining 10% stakes were obtained by shareholders of the GCE, on preemption rights said the sources.Total sum of the deal, according to Origo Sino-India plc reached about $ 25 million dollars.

En+ purchased 31% stakes of GCE in 2006. Estimates of coking and fuel coal deposits of GCE reach 322 million tons.Currently, the company is completing feasibility studies of two projects said sources close to “Basic Element”.According to Denis Nushtaev, analyst of “Metropol” Russian investment, financial company, the sale of stakes at GCE and VostsibUglya (VostsibUglya was purchased by Irkutskenergo for 12 billion roubles) is connected foremost to need for restructuring debts of En+ group which reached $ 1 billion dollars.

En+ group is not planning to give up coal projects completely. “Basic Element” which owns En+, have Kaa-Hem deposit in Tuva republic of Russia. Basic Element is also part of consortium of "Renova"group which is bidding for Tavan Tolgoi coal deposit in Mongolia. Reserve of the Tavan Tolgoi deposit is 6.5 billion ton of coal. About 40% of the reserve is high quality coking coal.Vladislav Soloviev, head of the En+ group confirmed through representative its interest in the Tavan Tolgoi coal deposit.Bidding for 49% stake of the Tavan Tolgoi deposit which estimated to bring $ 5-6 billion dollars for Mongolia expected to complete by first half of 2010.Following companies are bidding for Tavan Tolgoi: BHP Billiton, Indian Jindal, Brazilian Vale, American Peabody, Chinese Shenhua, South Korean consortium COPEC and Mongolian-Russian Joint venture "Infrastructure Development" (50% owned by “Russian Railways” and 25% owned by Mongolian state company”Erdenes MGL” and 25% owned by "Mongol Railway" state owned company).

Denis Nushtaev, the analyst considers Russia has no chance for Tavan Tolgoi, largest coal deposit in Asia.Since banning of participation of foreigners in Australian mining companies, China is offering for the deposit huge amount of money. Russian companies have no such funds, assumes the analyst. Needed investment for the deposit is about $ 5 billion dollars which scares off Russian investors, added Dmitri Smolin of “Uralsib”, Russian financial corporation.This estimate is confirmed by the sources. The analyst said it will be easier for Mongolia to work with China as it will remain main consumer of raw materials for next five or six years.

By Roman Asankin, reporter of Kommersant newspaper
Translated from Russian to English by Ganbat, editor of MonInfo News Service
P.S:For those that read Russian, original Russian text of the story posted below.

Source:Kommersant newspaper

Original Russian Text of the Story

Олег Дерипаска не пойдет в разведку
// En+ Group продала долю в GCE


Газета «Коммерсантъ» № 223/П (4278) от 30.11.2009



En+ Group Олега Дерипаски продала за $25 млн 31% в монгольской Gobi Coal & Energy (GCE), занимающейся геологоразведкой угольных месторождений. Полностью группа, передавшая ранее "Востсибуголь" "Иркутскэнерго", от угля не отказывается, заявляя о сохранении интереса к одному из крупнейших в мире угольных месторождений — монгольскому Таван-Толгою. Однако за этот актив должна развернуться жесткая борьба, а на его освоение требуется до $10 млрд.

Холдинг En+ Group, входящий в "Базовый элемент" Олега Дерипаски, продал 31% акций GCE (Улан-Батор), сообщил источник "Ъ", знакомый с деталями сделки. GCE владеет более чем 20 лицензиями на разведку угля в пустыне Гоби на востоке Монголии. Покупателем 21% акций стал консорциум инвестфондов, в том числе Origio Resource Partners Ltd, China Commodities Absolute Return Ltd и Origo Sino-India plc. Сообщение об этом в пятницу опубликовала Origo Sino-India. Остальные 10% по преимущественному праву досталась акционерам GCE, сказал источник Сумма сделки, исходя из данных Origo Sino-India plc — около $25 млн.

En+ купила 31% акций GCE в 2006 году. Прогнозные запасы коксующегося и энергетического угля на месторождениях GCE составляют 322 млн тонн. Сейчас завершается подготовка ТЭО двух проектов, рассказал "Ъ" источник, близкий к "Базэлу". По мнению аналитика ИФК "Метрополь" Дениса Нуштаева, продажа GCE, как и ранее "Востсибугля" (его приобрело "Иркутскэнерго" за 12 млрд руб.), связана в первую очередь с необходимостью реструктуризации долгов En+, достигающих $1 млрд.

Полностью отказываться от угольных проектов En+ не планирует. У "Базового элемента", куда входит En+, есть еще Каа-Хемский разрез в Туве, а в консорциуме с "Реновой" группа до сих пор входит в число претендентов на разработку крупнейшего в Монголии месторождения Таван-Толгой с запасами 6,5 млрд тонн каменного угля, около 40% из которых — высококалорийный коксующийся уголь. Глава En+ Владислав Соловьев через представителя подтвердил "Ъ" заинтересованность в проекте. Конкурс на 49% в месторождении, на котором Монголия рассчитывает получить $5-6 млрд, может пройти в первом полугодии 2010 года. На Таван-Толгой также претендуют BHP Billiton, индийская Jindal, бразильская Vale, американская Peabody, китайская Shenhua, южнокорейский консорциум COPEC и СП "Развитие инфраструктуры" (50% у ОАО "Российские железные дороги", по 25% — у "Эрдэнэс МГЛ" и "Монгол Темир Зам").

Таван-Толгой — крупнейшее месторождение в Азии, но оно вряд ли достанется России, считает Денис Нуштаев. После запрета на участие иностранцев в горнодобывающих компаниях Австралии Китай предложит за месторождение любые деньги, а у российских компаний свободных средств сейчас нет, полагает он. "Необходимые инвестиции — около $5 млрд, цена отпугнет российских инвесторов",— добавляет Дмитрий Смолин из "Уралсиба". Эту оценку подтверждает источник "Ъ" в одной из российских угольных компаний. К тому же Монголии удобнее работать с Китаем, так как еще пять-десять лет он останется основным потребителем сырья, добавил аналитик.

Роман Асанкин

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