Sheep Eats

Trying to get through a traditional Mongolian feast.

By Catherine Price



One afternoon in Ulaan Baatar, Otgoo invited my husband and me to a traditional Mongolian feast. Otgoo, a friend of our host family, had given us tours of little-known temples; she'd helped us bargain for belt buckles in Naran Tuul, an enormous outdoor market. Young and fashionable, she'd even brought us to her favorite nightclub—a slick bar where, at the stroke of midnight, a pair of teenagers emerged in 1950s costumes and performed a choreographed swing dance to "I've Had the Time of My Life." She was, in short, an excellent guide. So naturally we said yes.

"Good," Otgoo said, as we nodded from the back seat. "We will get a sheep."

Her phrasing—"get a sheep" instead of "buy some meat" —should have set off warning bells. But even if I'd realized what she was saying, I still would have accepted her invitation. We were in Mongolia, after all.
Several days later, Otgoo, Peter, and I set out to meet some of our host family's relatives. A driver took us to the outskirts of the city, where the concrete buildings of central Ulaan Baatur gradually gave way to dirt roads, wooden houses, and white gers—traditional round, felt tents in which many Mongolians still live. Plumes of smoke wafted upward from wood-burning stoves, and outhouses sat in many of the yards. We turned down a narrow, bumpy street and pulled onto the grass outside a home that was indistinguishable from its neighbors except for one important feature: a sheep, alone, tied to the fence, and very much alive. With a black muzzle and cute, droopy ears, it was the type of creature you might find at a petting zoo. But its frightened posture indicated that it knew this was not what its future held.

"There it is!" said Otgoo, happily. Then, in a high-pitched voice, presumably of the sheep: "Peter and Catherine, I am waiting for you!"

Now, I knew from Otgoo's original invitation that the food for the feast was not likely to come plastic-wrapped. And I think it's important to connect animal products, especially meat, to the creatures that provided them. But I'm a city dweller, not a farmer, which means that aside from a one-time experience eating road kill, I don't encounter my bacon until it's arrived at the grocery store. Standing face-to-face with the creature that would soon become my dinner made me realize that everyone has a line of how close they really want to get to their meat—and mine falls somewhere between lamb kofta and the animal that stood before us in the yard.

After welcoming us inside, the man of the house picked up his knife. It was a small knife, similar in size to what I'd use to slice a peach, and was barely noticeable in his hand as he pushed open the door and walked toward the fence. Meanwhile, the female family members disappeared into the kitchen—women don't usually witness the killing, Otgoo told me. I started to follow her, but then turned around. I felt that I needed to watch—not just out of respect for the sheep, for whose death I was indirectly responsible, but out of support for Peter. Male guests weren't just allowed to see the slaughter; they were expected to participate.

I stood in the doorway as our host dragged the sheep to the middle of the yard. With Peter holding one rear leg and the family's driver holding the other, he plopped the sheep on its haunches and ripped out tufts of fur from its stomach—a pre-surgery shave. Then he cut a deep incision just under its ribs and plunged his arm elbow-deep into its chest.

In Mongolia, blood is considered a valuable food that should not be wasted. Hence their preferred method of slaughter: cut a hole under the ribcage and, with your arm deep inside the animal's body, use a finger to sever the aorta. The heart, unaware of what's happened, continues to pump blood into the chest cavity until the animal dies. It is difficult to watch—especially if, like me, you mistakenly believe the goal is to actually pull out the heart, Temple of Doom-style, and thus feel horrified when your host's arm emerges empty-handed. But as grisly as the technique may sound, it is surprisingly efficient: Within 10 seconds, the sheep was dead.

Part of me hoped that the sheep's body would be taken somewhere out of sight for butchering, emerging hours later as part of a savory potpie. Instead, the host used the same small knife to cut up the body right there on the lawn. He started by pulling off the hide and chopping off the sheep's hooves, leaving the skin on the ground as a drop cloth to keep the meat off the grass. A neat and methodical disassembly followed, with nearly every organ carefully preserved. With the exception of our host's 2-year-old daughter (who was watching from the car), the entire family participated: The women brought out buckets of water and scrubbed the grass-filled stomach; the men used a funnel to flush out the small intestine, then coiled it into a neat bundle and tied it to itself like a climbing rope.

The effort the family put into cleaning the colon made it clear that Mongolians and Americans have very different tastes—items that seem exotic to us (sweetbreads! pork jowl!) barely qualify for the kids' menu. Whenever I asked Otgoo about what I considered an unsavory body part—the snout, for example, or the hooves—she would proclaim it to be "delicious." Heart, lungs, kidneys, all delicious. Her favorite part was the stomach; I felt like I'd given her a gift when I taught her the English word tripe.

Once the organs had been removed, our host sliced through the tissue separating the chest from the abdomen. Blood poured into the emptied cavity, which the family scooped into a painter's bucket with a plastic bowl. The process was gruesome, but impressively neat—not only was nothing wasted, but there was no mess. When the butchering was done, there was no blood on the grass, or even on anyone's clothes.

With night falling, the family lit a fire under the kitchen stove and invited us into the living room to watch basketball beneath a tapestry of Genghis Khan as they prepared dinner. (Genghis Khan may have died in the 13th century, but his name still graces everything from beer and vodka to cigars, clothing, restaurants, hotels, universities, and the country's international airport.) I was relieved that the slaughter was over, but as smells drifted toward us from the kitchen, my apprehensions returned.

***

We weren't sure what to expect for dinner, but we did know that much of traditional Mongolian cuisine is not for the faint of heart. Strongly influenced by the country's nomadic culture, it tends to be seasonal and animal-based: dairy products in the summer and lots of meat and fat in the winter. Nomads, who move their gers at least twice a year, don't usually plant crops and often view vegetables with suspicion—a food more appropriate for livestock than for people.

Up to that point, our most notable Mongolian culinary experience had been drinking a nomadic staple called airag, which translates to "fermented horse milk." We'd also tried some other nomadic treats, such as aaruul—rock-hard dried cheese curds that taste like parmesan that's done hard time in a barnyard—and Mongolian milk tea, a weak concoction of low-grade black tea, milk, and salt. (Luckily, we'd avoided boodog, a goat or marmot carcass stuffed with hot stones and then blowtorched—a bold dish for a country that has outbreaks of marmot plague, aka, Black Death.) I didn't mind Mongolian dumplings, and I actually liked öröm, clotted cream that nomads slather on deep-fried bread. But I wasn't eager to re-create any of the recipes at home.

Nevertheless, we remembered our manners and didn't alert our hosts to our squeamishness. When Otgoo emerged from the kitchen with a bowl of what looked like cheese-covered rubber, we responded with as much enthusiasm as we could muster.

"Oh wow," I said, as the mystery substance glistened in the room's overhead light. "What is that?"

"It is the liver," Otgoo replied. "And this," she said, pointing at the coating I'd hoped might be melted mozzarella, "is special fat, from the belly." She set it down on the table.

As I took a bite, the flavor that greeted me revealed another important distinction between American and Mongolian cuisine. In America, even a dish as straightforward-sounding as "Fat-Wrapped Liver Chunks" would probably include a few unnamed, yet complementary ingredients like onions, or salt. But in Mongolia, the title says it all. Like everything we ate that night, my first bite had not been salted. It contained no herbs or spice. It was exactly what I knew it was: the liver of the sheep I'd just watched die.

Next came a purple plastic bowl filled with a larger selection of boiled organs: colon, kidneys, lung. As I nibbled on the latter, Otgoo began by slicing into the bloated stomach. Skin stretched taut like a water balloon, it was filled with a dark brown, firm substance that could have been mistaken for dense chocolate cake, but was actually boiled blood. (The colon had been similarly prepared, with extra intestine stuffed inside for good measure.)

"Here," said Otgoo, as she served us both thick slices of blood-stuffed stomach, each roughly the diameter of a grapefruit. "It is delicious."

By the time I'd tried the intestine-stuffed intestine, I'd concluded that, when it comes to the question of deliciousness, Otgoo and I have no choice but to respectfully disagree. I also was getting a bit desperate, caught between my desire to be a good guest and my inability to stomach the delicacies I was being served. As family members popped in and out of the room to deliver new organs, I scanned the table for something, anything, nonvisceral to chew on. I found it among the beer bottles: a jar of pickles, which I began cramming into my mouth with a ferocity that would make a pregnant woman proud. The good part was that I could mask the organs' taste with pickle brine; the downside is that from here on out, I'll associate gherkins with sheep intestine. Worse, my enthusiasm for the pickle jar made the grandmother of the family think that I hadn't gotten enough food. She emerged from the kitchen to slide a few more slices of blood onto my plate.
By the end of the evening, I'd developed a lot of respect for the Mongolian approach to a dinner party—it embodies the connection to the land that American foodie culture preaches yet rarely practices. And yet I have to say that, having met my meat, I'd prefer never to do so again. One photograph from that night best captures my true reaction to the meal. I am sitting on a couch in front of a table covered in serving dishes and bottles of Mongolian beer. There is the bowl of ribs, the plate of blood, the box of tissues we used to wipe the mutton grease off our chins. The pickle jar rests incriminatingly beneath my elbow; on the wall hangs the tapestry of Genghis Khan. Mouth full, slightly sweaty, I am staring straight into the camera as I hold aloft the food that I, the adventurous eater, had found the most delicious: a boiled potato.

Source:www.slate.com



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Inner Mongolian herders take to the streets, four arrested

Herders Take to the Streets, Four Arrested



On the morning of May 23, 2011, hundreds of Mongolian herders from Right Ujumchin Banner of Southern (Inner) Mongolia took to the streets in the Banner capital (equivalent to the county level of government) to protest against the Chinese miners’ brutal killing of a Mongolian herder and the destruction of Mongolian herders’ grazing land. Hundreds more herders from three sums (a sum is an administrative unit one level below banner) of Right Ujumchin Banner were blocked by armed police on their way marching toward the Banner capital.


Mongolian herders marching toward the Banner Government

According to an email communication from the local Mongolian community, three herders and one student were severely beaten in front of the Banner Government building and taken away by the police. Whereabouts and current condition of the four are still unknown. Mongols who captured the protest and police brutality on their cell phones or cameras had their devices confiscated.


Mongolian herders beaten up and taken away by police


With China’s announcement that the Inner Mongolia Autonomous Region (IMAR) has become the “energy base of China,” Chinese mining companies and private miners poured into the Southern Mongolian grasslands to open up hundreds of coal mines, forcibly displacing the local herders, destroying their grazing land, and killing their livestock.


Police arresting Mongolian protesters
Frustrated herders organized to block the Chinese mining trucks from passing through their grazing land. On May 10, 2011, Mr. Mergen, one of the organizers of the Mongolian herders of Right Ujumchin Banner, was brutally killed by a Chinese truck driver while he was blocking a caravan of hundreds of Chinese coal haulers from passing through his grazing land on May 10, 2011.

Mongolian demonstrators beaten up by Chinese police

Reportedly, instead of bringing the murderer and those who violated the rights of the herders to justice in accordance with the law, the Banner Government tried to appease the family members of Mergen and local herders by giving a large sum of cash to Mergen’s widowed wife and mother. The Chinese authorities’ bribery-like handling of the case not only failed to calm the Mongolian herders but further angered them, inciting them to take to the streets to demand their rights and dignity be respected.



Fearing possible unrest among the herders, the local government mobilized more than 300 armed police to prevent any kind of protest or gathering.

“Hotels were searched at midnight by the Public Security Bureau personnel for herders possibly hiding to join any protest; Mongolian students were locked up in their schools, and campuses are heavily guarded by police,” a Mongolian blogger wrote, describing the tension between the Mongolians and the local authorities.



According to another blog article, on May 21, all principals of the schools in Right Ujumchin Banner were called to an urgent meeting by the Educational Bureau and were told to have a complete control over their teachers and students to prevent them from joining any Internet discussions about Mergen’s case.

Despite this tight control over the Internet, Mongolian bloggers are expressing their grievances and rallying the Southern Mongolians to stage a mass protest to demand their rights. A call-on paper is widely circulated through the Internet among the Southern Mongolians to organize a large-scale demonstration at the Xinhua Square in front of the IMAR Government and the Inner Mongolia TV Station in the regional capital Hohhot City to protest the government’s failure to redress Mergen’s case and the Inner Mongolia TV’s intentional inaction in covering the case. The proposed demonstration date is May 30, 2011, and the expected participants are the thousands of Mongolian students from all universities, colleges and other professional schools.
Inner Mongolian herder
Mergen hit by heavy coal truck of Chung Chen Group

Another online statement called upon all Southern Mongolians to take five minutes on May 30 to mourn Mergen’s death and mark the day as “Herders’ Rights Day” every year. The paper also urged the Chinese government to erect a memorial on the Ujumchin Grassland to honor Mergen as a “Southern Mongolian National Hero and Martyr” who sacrificed his life to defend the Mongol land from Chinese intruders.


Source:Inner Mongolian websites, www.sonin.mn








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Chinese Mongolians make rare "protest" after death of herder

BEIJING May 25 (Reuters) - A large group of ethnic Mongolians protested in front of a government building in northern China on Wednesday angered by inaction over the death of a herder, a rights group said, in a rare instance of unrest by the minority ethnic group.

The New York-based Southern Mongolian Human Rights Information Centre said that almost 2,000 students marched to the city government building in Xilinhot in China's Inner Mongolia.

They went "to urge the Chinese authorities to respect the rights and dignity of Mongolian herders" in Inner Mongolia, the group said in an emailed statement.

It was the latest in a series of protests by ethnic Mongolians in response to the "brutal" killing of a Mongolian herder by a Chinese coal truck driver, the group added.

Pictures posted on Chinese microblogging sites showed at least 100 people, many of whom appeared to be students, gathered in front of the city government.

Reuters was not able to independently verify the authenticity of the pictures or when they were taken.

The Xilinhot government did not answer repeated telephone calls seeking comment.

However, in a statement on its website (www.xlgl.gov.cn) on Wednesday, the government said police had arrested two Han Chinese for homicide.

The area around Xilinhot is home to many coal mines.

Decades of migration by the majority Han Chinese have made Chinese Mongolians a minority in their own land, officially comprising less than 20 percent of the roughly 24 million population of the Inner Mongolian Autonomous Region.

Inner Mongolia, which covers more than a tenth of China's land mass and borders Mongolia proper, is supposed to offer a high degree of self-rule. In practice, though, Mongolians say the Han run the show.

While protests in Inner Mongolia are far rarer than in Tibet or Xinjiang, two other parts of China with restive native populations, the Chinese government has still taken a tough line on Mongolians who seek greater respect of their rights.

Human rights issues in Inner Mongolia generally receive little attention, as the Mongolians lack a well-known overseas advocate like Tibet's exiled spiritual leader, the Dalai Lama. (Reporting by Ben Blanchard and Sui-Lee Wee; Editing by Nick Macfie)

Source:Reuters news wire service



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China Airlines donates 350 LCD monitors to Mongolian schools

China Airlines donated 350 used 15” LCD monitors to the Ulaanbaatar Trade and Economic Office in Taipei, Mongolia's representative office in Taiwan, at the inauguration ceremony yesterday of the Mongolia Culture, Education, Health and Economic Cooperation Association in Taiwan.

The monitors will be distributed to 33 schools and one hospital in remote regions of the Mongolia, including the South Gobi Province and Selenge Province to help promote computer literacy. The airline donated another 210 used monitors in March to Taiwanese charities such as the Garden of Hope Foundation and Syin-Lu Social Welfare Foundation, among others.

In recent years the airline has been finding new lives in social welfare for old corporate assets. In 2009, it donated cabin equipment such as seats, meal carts, toilets, oxygen masks and life jackets, to local elementary schools to build airport-themed English classrooms.

Source:www.chinapost.com



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OSCE-Mongolia Conference co-operation with Asian Partners

The FINANCIAL -- ULAANBAATAR, 23 May 2011 – Strengthening synergies between the 56 participating States of the OSCE and its Asian Partners for Co-operation in addressing transnational threats, such as illicit drug trafficking.
Advancing international economic co-operation, in particular on transport and energy security; as well as promoting human rights and fundamental freedoms in the whole OSCE area, are key topics of the OSCE-Mongolia Conference that started in Ulaanbaatar today.

The two-day meeting organized jointly by the OSCE and the Mongolian Ministry of Foreign Affairs and Trade, looks at how six Asian Partners for Co-operation – Afghanistan, Australia, Japan, Mongolia, Republic of Korea, and Thailand – can further benefit from the engagement with the OSCE.

Addressing the Conference participants, Mongolian Minister of Foreign Affairs and Trade Gombojav Zandanshatar said: “The OSCE security activities across all three dimensions – the politico-military, the economic and environmental and the human – could serve as examples for security co-operation in Northeast Asia. OSCE’s unique features, including its co-operative and comprehensive approach to security, conflict prevention instruments, well-established confidence and security-building measures, large operational network of field missions, are valuable assets to be drawn on in terms of practical application in Northeast Asia”.

He stressed the importance of enhancing transit co-operation – one of the topics on the Conference’s agenda, and called on OSCE participating States and Partners to increase financial and technical assistance to landlocked developing countries to “help them overcome the impediments of geography by improving their transit transport systems”.

Evaldas Ignatavicius, Deputy Foreign Minister of Lithuania which chairs the OSCE in 2011 said: “The Conference is an example of true partnership between the OSCE and Asian Partners in terms of sharing the know-how of OSCE commitments.”

Speaking about priorities of the OSCE Chairmanship in the co-operation with the Partners, Ignatavicius stressed Lithuania’s commitment to “strengthening the OSCE engagement with Afghanistan through concrete projects, in close co-operation and co-ordination with other international actors, as an effective way of contributing to the international efforts to bring greater stability and security to Afghanistan”. Ignatavicius said that this approach has been reiterated by the OSCE Chairperson-in-Office during his visit to the Kunduz Province of Afghanistan last week, where he encouraged his Afghan counterparts to embrace co-operation with the OSCE through “small but meaningful steps”.

In this context Ignatavicius emphasized the importance of a training course for mid-level Afghan diplomats that Mongolia proposed to host this September, as well as a discussion on capacity building of the diplomatic service of Afghanistan, which will be held today to lay ground for the course. The discussion will be held with the financial support from Kazakhstan.

Ambassador Kairat Abdrakhmanov of Kazakhstan, who chairs the Asian Contact Group, said: “Kazakhstan is determined to concretely work towards a closer and more effective co-operation with our Partners”.

”The Declaration adopted at the Astana Summit in 2010 stressed the Eurasian dimension of our security community”, Abdrakhmanov said, adding that in Astana the participating States pledged to enhance the level of interaction with the Partners for Co-operation. He emphasized the practical value of the ongoing project funded through the Partnership Fund on the placement of young diplomats from the Partner countries in the OSCE executive structures.

Paul Fritch, Director of the OSCE Secretary General’s Office, stressed the importance of the OSCE Partnership for exchanging best practices and lessons learned, and mentioned in this regard a planned activity in Thailand with Afghan participation on fighting the roots of drug trafficking by stopping drugs cultivation and fostering socio-economic development.

Speaking about economic and environmental aspects of security, he underlined that the OSCE is a “unique platform for political dialogue and facilitation of regional co-operation, matched with first-hand local knowledge,” which can contribute to co-operation on transport, border crossing facilitation, and trade promotion across the Eurasian region. Fritch also said that the Conference will explore ways to promote co-operation, including with OSCE Partners, “to identify mutually beneficial solutions for managing interdependency and strengthening energy security”.

Exchange of experience and best practices in the promotion of democratic governance, human rights, fundamental freedoms and the rule of law is another important component of the event, which will “surely consolidate and expand our common security”, he added.

Annual conferences with Asian Partners for Co-operation, hosted by a Partner country on a rotation basis, are the key forum for the OSCE’s co-operation with its Asian Partners providing an opportunity to exchange views on security in the OSCE region and in Asia. Similar annual conferences are also conducted with Mediterranean Partners for Co-operation.

Source:finchannel.com

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Hunnu Coal Buys Majority Stake In Mongolia Coking Coal Project

MELBOURNE -(Dow Jones)- Hunnu Coal Ltd. (HUN.AU) said Monday it has bought Rio Tinto PLC's (RIO) controlling 70% interest in the Altai Nuurs coal joint venture project in southwestern Mongolia for a A$23 million cash payment on signing of the deal and a further A$17 million in deferred payments.

MAIN FACTS:

- The Altai Nuurs project is located in the south western Gobi Altai province of Mongolia, about 250 kilometers by road to the Burgastai border crossing point into China and 550 kilometers to the China rail network.

- The project comprises six licenses exploration licenses totalling 46,212 ha and four mining licenses totalling 202 ha, with an exploration target of between 250 million metric tons and 500 million tons.

- Preliminary test work indicate the coking coal parameters compare favorably with similar coking coal projects elsewhere in the world.

- Hunnu said it intends to continue its exploration and acquisition efforts and, with the support of its strategic partner Banpu PCL, move from exploration to mine development and then into production all within this year.

Read more: http://www.foxbusiness.com/markets/2011/05/22/hunnu-coal-buys-majority-stake-mongolia-coking-coal-project/#ixzz1N8oseeQr


Source:Dow Jones, news wire





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Australian engineers enable lights on at benchmark coal wash plant

By Kevin Gomez on 23 May 2011

A benchmark coal wash plant in the new mining hotspot of Mongolia has hit its critical ‘lights on’ date with the help of nine Australian electrical engineers.

Located in the South Gobi region near the Mongolian/Chinese border, the Uhkaa Khudag mine is the first large-scale coal mine in Mongolia to be developed and operated to international mining standards and practices. Owned by an international consortium called Energy Resources, the mine’s output of 800 tonnes of coal per hour is destined for the Chinese market.

Project supervisors from Australian electrical installation solutions provider, O’Donnell Griffin, gave up their Christmas and New Year holidays to travel to Mongolia to help supervise the electrical installation at the brand new facility. They ensured quality and safety standards were upheld and trained the local workers on the job.

The O’Donnell Griffin team, headed by project manager, Stephen Jago, was subcontracted to Sedgman Limited, the plant’s Australian designer and builder.

“We’ve done many coal wash plant installations with Sedgman in the past and we have a very strong working relationship,” said Jago.

“They knew the quality of our work was high and they knew we could immediately provide the level of human resources required, so they came straight to us to run this project. Reaching the ‘lights on’ stage is significant because it means the high voltage reticulation is complete, the structure is in place, and power has been introduced into the main switchboard.”

O’Donnell Griffin’s role was to supervise and train the local tradesmen, ensuring the design specifications and quality standards were adhered to strictly.

“Mongolia is a new mining hotspot and the local tradesmen don’t quite have the necessary specialised skills yet,” explained Jago.

“Our engineers helped guide the local workers in their day-to-day tasks, giving them the skills and advice they needed to keep the project running smoothly. The plant is Australian-designed and needed to be built according to stringent specifications, so we needed to show the locals how to rig and wire the installation correctly.”


While O’Donnell Griffin has managed many remote and overseas projects, this one presented particular challenges because of unpredictable and extreme weather conditions as well as language and cultural barriers.

“The first two staff members to go to Mongolia were Mark Withers and Jacob O’Brien. They both gave up their Christmas and New Year holidays with their families to go from a sweltering Queensland summer to a freezing Mongolian winter,” said Jago.

“Temperatures fell to around minus 27 degrees C. Meanwhile, the guys were living in tiny huts heated by pot belly stoves. The food was unfamiliar and there were only a few English-speaking locals. There were days the guys couldn’t work at all because of blizzards or sandstorms.

“Maintaining morale was a definite concern, so we tried to make their working conditions as flexible as possible. They worked 28-day shifts followed by a 10-day holiday back home in Australia.

"It was a challenge, but all nine guys maintained a positive attitude – they were there to get the job done and they did that job safely and effectively. There were no injuries or other problems on site even though the weather conditions were so treacherous.”

Mark Withers and Jacob O’Brien were chosen to be the first to travel to Mongolia because of their highly specialised skills as engineers and supervisors. They were followed by an additional seven engineers. All nine workers have now returned to Australia.

“This was a $10 million installation. Each of our engineers supervised between 30 and 40 local tradespeople. It was an Australian design being installed to Australian specifications with Australian quality standards.

"Those standards were very different to what the local workers were used to. For example, while the Australians are used to bringing lots of heavy equipment like cranes and winches to get the job done, the Mongolians are more used to relying on pure manpower,” said Jago.

O’Donnell Griffin would normally use its own tradespeople on a job like this, but part of the project involved training the locals.

“There are a few key concepts that are second nature to O’Donnell Griffin employees but were less familiar to the local tradespeople,” said Jago.

“Safety was the first one. Our guys are used to examining situations, then quickly and effectively determining the safest way to proceed. They don’t take risks and they don’t get hurt.

"The second concept was quality. Doing it properly and getting it right, even if it takes a few seconds longer. Rigorously testing the system and maintaining quality assurance.

“It was a challenge to communicate those concepts through the language barrier because the vast majority of the local tradies didn’t speak English. We used interpreters and English-speaking supervisors where possible. It was a big challenge but our guys really pulled it off and the local workers proved they were more than up to the job.

“We recruited the team both internally and externally to make sure we got the right mix of skills, experience and attitude. We have a large pool of talent that we can call on to ramp up for jobs when we need them,” said Jago.

Since the fall of communism in 1991, Mongolia has seen the beginnings of a potentially huge mining boom. Australian companies are getting in on the ground floor and the geographical and population similarities between the two countries have seen natural synergies develop to the benefit of both nations.


Source: www.pacetoday.com.au


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Mongolia’s future as commodities exporter

By Leslie Hook in Ulan Bator

Mongolia is going to be a major future supplier of commodities from coal through gold to copper – and maybe even crude oil. But how soon will this landlocked country with a population of 3m really begin delivering these resources to the world in a significant, market-moving way?

After spending a week in the Mongolian capital and speaking with everyone from the prime minister to coal miners, my sense is that no one is in any rush to boost exports of natural resources.


Although Mongolia is located right next to its biggest customer, China, their history of rivalry makes Mongolia suspicious of its southern neighbour. And capricious politics – parliament has tried to oust Dashdorj Zorigt, minister for mineral resources and energy, twice this year – mean that economic logic is sometimes subordinate to politics or nationalism.

Take the development of Tavan Tolgoi, by some calculations the world’s second-largest coal deposit. The government recently scrapped plans to build a railway directly to the border, less than 300km away, even after feasibility studies and initial permits for the line had been granted. Instead a new line will go east, connecting the mines to the Trans Mongolian Railway that leads to both Russia and China, albeit by a longer route.

Politicians from both sides of support the decision. It will help develop Mongolia’s domestic processing industry, they say, pointing to plans for an industrial park in Sainshand, where the railroad from Tavan Tolgoi will connect to the trans-Mongolian line. And with coal-washing plants in place, Mongolia’s minerals can fetch a higher price. (Word on the street in Ulan Bator, the capital city, has it that Chinese traders are offering as little as $150 per tonne for unwashed coking coal – yes, coking coal – at the border town of Gashuun Sukhait, where coal from South Gobi province is trucked out along a dirt track.)

The new rail line will also allow Mongolia to play China and Russia off each other to see who can offer the better price, and it is understood that Mongolia is negotiating for port access via the Chinese rail system, ideally allowing exports of coking coal to anywhere in the world. And if the politicians are right, companies will be lining up to get a piece of the action in Sainshand. According to one banker, engineering group Bechtel is bidding for a role in the planning and development of the industrial zone.

This approach is part of a broader strategy: politicians seem focused on developing the resources sector in a way that gives Mongolia the best deal.

There will be a general election in about 12 months and everyone wants to able to tell their constituents that they are defending Mongolia’s national interest, particularly in terms of China. There’s something of a rush for the government to complete the planned IPO of part of the Tavan Tolgoi deposit before the elections take place, a process that would give 10 per cent of the shares to every man, woman and child in Mongolia. But there is much less urgency on developing the infrastructure to get the coal to market.

There are some exceptions to this pattern: the Oyu Tolgoi mine, which is co-owned by Rio Tinto, Ivanhoe and the Mongolian government, is ahead of schedule and will come online next year. The copper and gold produced there will be shipped out by truck, posing fewer logistical difficulties than the bulky coal. But still, the investment agreement governing the mine took more than five years to negotiate and remains a source of intense political debate.

This caution may not be a bad thing for Mongolia: already the currency is straining under the influx of foreign investment. But it is certainly a frustration in Beijing, where state-owned mining companies can be heard waxing eloquent about their northern neighbour. Not to mention the fact record prices for thermal coal have caused power outages in some Chinese provinces. China may have to wait a little longer though, before Mongolia really comes online.

Source:Financial Times newspaper


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Khan Resources stranded in the bitter Mongolian cold

BY JEFF GRAY — LAW REPORTER

Underneath the endless brown steppe in the remote northeastern corner of Mongolia, known as Dornod, lies a vast store of uranium.

It’s a four-hour drive on a dirt track from Mongolia’s capital, Ulan Bator, to what is now just a collection of yurts. Six security guards, employees of Canadian junior miner Khan Resources Inc., (KRI-T0.29-0.01-3.33%) are stationed there.

“If you stand on the hill that’s right beside the deposit, you look one way, you can see China,” said Grant Edey, Khan’s chief executive officer. “You look the other way, you see Russia.”

That proximity to Russia has come to haunt Mr. Edey’s company. In 2009, Mongolia revoked Khan’s mining licences and announced a joint venture with Russian state-owned uranium miner Atomredmetzoloto JSC (ARMZ) to develop the Dornod site. Khan, which says it is has spent up to $40-million since 2005 on feasibility studies and exploration, was left out in the bitter Mongolian cold.

The dispute has sparked legal battles in Ontario and Mongolian courts, and is headed for international arbitration. Legal experts call it a cautionary tale for companies doing business in Mongolia or other developing countries, or with large state-owned enterprises.

Mongolia is a popular place with Canadian mining firms, with scores setting up shop there in recent years and Ivanhoe Mines involved in a massive copper-gold joint venture.

Last September, Khan launched a lawsuit in Ontario against ARMZ, one of the world’s largest uranium miners. In a statement of claim for $700-million in damages, Khan alleges that the Russian firm wrongly excluded the Canadian company from the Dornod project and waged a campaign to discredit it.

Earlier this year, Mr. Edey said, ARMZ, as an arm of the Russian government, refused to be served with the Ontario lawsuit, invoking the Hague Convention and calling it an issue of “national security,” raising questions about whether such entities can try to use sovereign immunity as a tactic to delay or avoid Canadian courts.

Robert Frank, a Toronto lawyer with McLeod Dixon LLP acting for ARMZ, said he could not comment on the case.

A court date last month to hear the issue was postponed for settlement talks between the two sides in London, but no agreement was reached. Mr. Edey expects a judge to hear the issue some time in June.

Larry Herman, a former diplomat and a lawyer with Cassels Brock & Blackwell LLP who specializes in international arbitration, said the dispute shows how vulnerable Canadian investors are in countries without an investment-protection treaty with Canada.

Such treaties, similar to a provision in the North American free-trade agreement, allow disputes between investors and foreign countries to be referred to international arbitration directly, without first having to duke it out in the country’s local courts. (Canada and Mongolia have such a treaty in the works but it has not been finalized.) “When there is no bilateral investment-protection agreement, companies don’t get access to all of the safeguards,” said Mr. Herman, who is not involved in the case.

Andrew McDougall, a lawyer and veteran of international arbitration with Ottawa firm Perley-Robertson, Hill & McDougall LLP, said stories such as that of Khan Resources are a warning for Canadian companies operating in developing countries.

More companies need to plan strategically, he said, perhaps by setting up a company in a third country with a strong investment-protection treaty with the country where the investment is going.

“When you’re company that’s going to invest in these sorts of places in the world, you want to think in advance: How do we set this up to give us the maximum protection if something goes wrong?” said Mr. McDougall, who is not involved in the case.

Mongolia has a long history of Russian, and Chinese, domination. The Dornod project once belonged to Russia, in the 1990s. With uranium prices in the basement, the Russians abandoned it, Mr. Edey said. But they still retained a 21-per-cent interest in the dormant venture. Mongolia also maintained a 21-per-cent interest.

Uranium prices started to rise as the world began to look again to nuclear power as a cleaner energy source. In 2005, Khan – listed on the Toronto Stock Exchange and set up to develop the site – bought the remaining 58-per-cent stake, and also acquired the property next door.

As a result, Mr. Edey said, his company held about 70 per cent of the estimated uranium believed to be underground, with the total cache worth up to $2.5-billion (U.S.) at today’s prices.

The plan was to develop the site as a joint venture. Mr. Edey said the Russians showed little interest until early 2009, when President Dmitry Medvedev paid a visit to the remote site, along with Mongolia’s then-prime minister, Sanjaagiin Bayar.

Meanwhile, Mongolia was reconsidering the rules of the game. In 2009, it issued a new nuclear energy law that demanded an up-front, 51-per-cent government stake in most major uranium projects. It also suspended Khan’s mining licences and said the company had failed to submit its reserve estimates, which Khan denies. Russia and Mongolia then announced their joint venture to develop Dornod, leaving Khan out of the picture.

In late 2009, ARMZ launched a hostile takeover bid for Khan, whose share price had plummeted because of the uncertainty about the Mongolian project. Khan sought a white-knight investor in the form of CNNC Overseas Uranium Holding Ltd., a Chinese state-owned company, and ARMZ then withdrew its bid.

In its statement of claim, Khan accuses ARMZ of interfering with the Chinese bid and making “misstatements” about the company. The Chinese bid ultimately fell through when the Chinese government failed to approve it.

Mr. Edey said he doesn’t believe Khan can ever reclaim the Dornod mine, but he is trying to get some compensation for his shareholders, and has shifted his sights to a stake in a uranium venture in Peru.

He said Khan’s trials should be a warning to other Canadian firms and investors: “Political risk is real in a lot of countries. And it is alive and well in Mongolia.”

Source:www.theglobeandmail.com



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Computer Models Help To Improve The Drinking Water For Mongolia

Mongolia is a country of contrasts - in summer boiling hot, in winter freezing cold; in the north damp, in the south bone dry. One million of its three million inhabitants live tightly packed together in the capital Ulaanbaatar, while the rest of the huge country is largely populated by nomads and their cattle.

Providing a clean supply of drinking water across the entire country is a difficult challenge - beginning with the need to lay freeze-proof water pipes over an area of 1.5 million square kilometers. The people in the countryside therefore use water from rivers, or from wells that they dig themselves. But these traditional ways of obtaining water are reaching the limits of their capacity.

In recent decades the periods of rain during the summer months which replenish the reserves of groundwater have become infrequent. They have been replaced by heavy storms unleashing torrents of rain that runs off rapidly without soaking into the ground. At the same time, demand for water has risen with the rapid growth in the country's population. "Providing a supply of drinking water is becoming more and more difficult. To create a reliable supply in the long term you have to take many different factors into account and find out how they influence each other," explains Dr. Buren Scharaw from the Fraunhofer Application Center System Technology AST in Ilmenau. Born in Mongolia, he has been working for many years on the a project entitled "Integrated Water Resources Management for Central Asia: Model Region Mongolia", known also as MoMo. Project partners include the universities of Heidelberg and Kassel, Bauhaus University Weimar, the Helmholtz Center for Environmental Research, the Leibniz Institute for Freshwater Ecology and Inland Fisheries and various private-sector enterprises. The model region under study by the research scientists is the catchment area for the Kharaa River and Darkhan, a city of 100,000 inhabitants.

Since the start of the project, in 2006, Scharaw has traveled back to his homeland several times. He has examined the quality of the water from public and private wells along with the distribution network, measured the energy consumption of pumps, and investigated the effectiveness of the sewage system. All of the data he has meanwhile collected has been fed into the computer models developed at Fraunhofer AST. "Our HydroDyn water management solution makes it possible for the first time to visualize the quality as well as the quantity of water resources and to model their future development," the scientist explains. There is plenty of scope for improvement: the water pumps consume lots of energy, the water pipes are in need of repair and nearly half of the drinking water is lost on its way to the consumer because of leaks. Many yurts have their own wells, but the water is often contaminated with bacteria from latrines. What can be done? "Having collected data and produced models we are now preparing proposals that make sense in economical and ecological terms", says Scharaw. His team has developed a software program for the purpose which can determine how the water supply can be sustainably secured using less energy.

To minimize the losses in the drinking water distribution network, the Fraunhofer research scientists have also developed a measuring system for locating leaks. Small sensors detect any drop in pressure in the pipes, enabling leakes to be localized with relatively high precision. Once the leak has been found, that section of the pipe can be repaired. To reduce contamination in the water supply, and to increase the efficiency of the sewage system, the MoMo scientists are now building a test sewage plant which contains microorganisms in high concentration: "We expect this test facility to deliver good results also during the cold season when the microorganisms are less active. The findings can then be transferred to a future full-scale plant." In three years' time, when the MoMo project has been completed, the experts intend to present the government administration in Darkhan with a catalogue of measures which will show how the water supply and sewage system can be efficiently and cost-effectively secured. Scharaw regards it as one of his major successes that he prompted the Mongolian authorities to discontinue mining operations in some regions of the Kharaa catchment area - an achievement that extends far beyond improving the drinking water supply in Darkhan.

Source:
Dr. Buren Scharaw
Fraunhofer-Gesellschaft
www.medicalnewstoday.com




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Mongolia Targets $700 Million in Debut Domestic Bond Sales From This Month

Mongolia’s newly created development lender is aiming to sell $700 million of domestic-currency bonds in 2011, with sales scheduled to begin this month, the bank’s chairman said.

Investors will be offered tugrik-denominated bonds due in five, 10, and 15 years in several sales from the end of this month to around September, Chuluundorj Khashchuluun, the Ulan Bator-based chairman of the Development Bank of Mongolia, said in a telephone interview yesterday. The bonds will be backed by the government, which has approved the sales, he said.

“In a week or two we will have another meeting with investors to make more concrete plans” to set terms for the initial sale, Khashchuluun said. The central bank and finance ministry are involved in “extensive consultations” on the sales, he said.

It will be the first sovereign offerings by the resource- rich nation that needs to quadruple the size of its rail network, add power and water plants, and build more roads before it can increase metal and mineral exports. New transport projects would also help Mongolia ease its economic reliance on its neighbor China, which took nearly 80 percent of shipments last year, according to official data.

The bonds will be offered via the stock exchange and the central bank, with a private placement also possible, Khashchuluun said. The size of the offering may be adjusted to reflect market demand and also bring in a wide range of investors with the number of sales not yet decided, he said. Domestic banks and international investors have shown interest in the debt and yields are being discussed, Khashchuluun said.
Surging Tugrik

Moody’s Investors Service rates Mongolian sovereign debt B1, four levels below investment grade, while Standard & Poor’s rates the North Asian nation BB-, three levels below investment grade. Moody’s rates Mongolia the same as Sri Lanka, which sold 10-year bonds to yield 6.25 percent in September last year.

“The bank’s lending can’t be very costly, because it is policy-based financing,” Khashchuluun said. Although, rates have to be high enough to attract investors, he said. “So it demands a balance.”

The tugrik has strengthened 18.2 percent against the dollar since the beginning of last year, the second-best performance among all currencies tracked by Bloomberg after the Australian dollar.

The government has tasked Development Bank of Mongolia, which opened yesterday, to help finance rail, road and other infrastructure projects as well as the building of an industrial park. The bank is in a hurry to start the sales so that it can access funding before construction stops due to freezing temperatures in the winter months, Khashchuluun said. Lack of infrastructure is holding back economic development across the economy, he said.

To contact the reporters on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net;

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

Source:Bloomberg news wire service



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China locks up family of Mongolian activist: rights groups

hinese authorities have threatened to jail the wife and son of a Mongolian activist, according to human rights groups, in a sign that the net around dissenters is widening.

Over the past few months scores of activists, Christians and human rights lawyers have been detained or threatened in an ugly spate of hardline repression by the Chinese authorities.

In the most notable case of the current campaign, the internationally-famous artist Ai Weiwei went missing on April 3 and has not been heard from since.

Hada, who like many Mongolians goes by one name, should have completed his sentence last December but has still not been released.
Meanwhile, the Southern Mongolian Human Rights Information Centre said wife Xinna and son Uiles, who have protested his continued detention, were arrested in December in Hohhot city in Inner Mongolia and later charged respectively with "illegal business practices" and "drug possession".

Both have denied the charges and maintained their innocence. They have also refused to sign documents admitting to the allegations and to drop their protests in exchange for their freedom, the group said.

One of China's longest-jailed prisoners of conscience, Hada fell foul of authorities through writings in which he called for Mongol autonomy, and after organising peaceful demonstrations as head of the underground Southern Mongolian Democracy Alliance.

According to transcripts of a May 4 phone conversation with Xinna's sister Naraa posted on the group's website, police have also placed Hada's other relatives under strict surveillance, confiscating their phones and computers and warning them against talking about the case.

Police have brought relatives to visit Hada - being held separately from his family - to try to convince him to end repeated hunger strikes carried out in protest at his continued imprisonment, Naraa said.

Hada, who is in his mid-50s, is in poor health due to the hunger strikes, she added. He has also adamantly refused to acknowledge any guilt stemming from his conviction in the 1990s.

Telephone calls to Hohhot police departments went unanswered Tuesday.

"Chinese authorities have made it clear to Hada and his relatives that they will not be freed until they sign an undertaking to abandon their human rights activities," the Paris-based Reporters Without Borders (RSF) said in a statement. "Until now, they have refused to do this."

RSF strongly condemned what it called "trumped-up charges" brought against Hada's wife and son and called for the trio's "immediate and unconditional release".

Many of China's six million ethnic Mongols, who have cultural and ethnic ties with Mongolia, complain of political and cultural repression by China. Some refer to Inner Mongolia as "Southern Mongolia”.

Source:AP news agency

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Mineral-rich Mongolia plans to issue first sovereign bonds

By Leslie Hook in Ulan Bator

Published: May 11 2011 18:58 | Last updated: May 11 2011 18:58

Mongolia plans to issue its first sovereign bonds this month, marking a milestone for capital markets in this resource-rich democracy.

The newly created Development Bank of Mongolia will issue $700m in sovereign bonds to fund lending programmes, Chuluundorj Khashchuluun, chairman of the national development and innovation committee, has told the Financial Times.



Mr Khashchuluun said the issuance would take place in tranches beginning this month, with the first slice likely to be $100m. The bond will be in tugrik, the Mongolian currency, which has appreciated by 1.6 per cent against the dollar since January.

The Development Bank of Mongolia is set to be inaugurated on Thursday and has a mandate to do policy loans in areas that include infrastructure, industry, energy and roads.

“With the launch of the Development Bank we hope the investment system will be modernised,” said Mr Khashchuluun. “Policy loans have not been done for a long time in Mongolia and commercial banks cannot support these needs.”

Mongolia houses some of the world’s largest untapped mineral deposits and investment in the mining sector has soared in the past two years along with global commodities prices.

Government revenues from the mining sector are set to jump next year as the Oyu Tolgoi copper and gold mine comes online, and politicians in Ulan Bator are looking for ways to manage the coming influx into state coffers.

The Development Bank is being set up with training from the Korean Development Bank and the Development Bank of Japan. Two bankers in Ulan Bator voiced scepticism about the timing of the issuance, which has been under discussion for several months.

“It’s great for putting Mongolia on the map in terms of developing the capital markets here,” said Eric Zurrin of Rescap, a corporate finance advisory firm. “However, I struggle to see how it will happen so soon.”

He added that yields on the bonds could be quite low, perhaps 6-8 per cent.

The Development Bank may be the first Mongolian entity to issue bonds with sovereign guarantees, but it is not the only one. Politicians in Ulan Bator have talked about issuing bonds to support a variety of industries, including for a cashmere subsidy fund.

Mongolian sovereign debt has a B1 non-investment grade rating from Moody’s, the credit rating agency. “Mongolia’s rating has been constrained by susceptibility to destabilising boom-bust cycles,” noted Moody’s in its annual report on the country.

Source:Financial Times, newspaper



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Mongolia Denies Talks with Japan, US to Store Nuke Waste

Mongolian government officials on Wednesday denied Japanese media reports that the country is considering setting up a nuclear waste storage facility for Japan and the United States.

"A report in Japanese newspaper Mainichi about Mongolia storing nuclear waste of Japan and U.S. is incorrect," Agvaanluvsan Undraa, Mongolian nuclear physicist and special advisor to Foreign Minister Gombojav Zandanshatar, said at a press conference.

As "third neighbors," Japan and the U.S. both signed a memorandum of understanding with Mongolia on peaceful use of nuclear energy, Undraa added.

"We are working on an official letter to Mainichi to correct this report," Undraa said.

The Japanese newspaper Mainichi reported Monday that Japan and the U.S. are negotiating with Mongolia on the construction of a nuclear waste storage facility in the landlocked country.

The news caused strong opposition in Mongolia and Mongolian officials had to rush to deny it.

"Mongolian government did not enter any talks with Japanese and the U.S. government about storing nuclear waste materials in Mongolia." Foreign Minister Zandanshatar said, "According to Mongolia's nuclear energy law and nuclear-related policies, it is impossible to transport nuclear waste into Mongolia. We have asked Mongolian embassy in Japan to find out more about why this kind of false report appeared in the media."

The head of Mongolia's Nuclear Energy Agency S.Enkhbat also asserted that the agency has not talked to anyone, adding "who wants to keep others' waste, especially nuclear waste?"

It was not the first time media reporting about possible nuclear waste storage facility building in Mongolia.

A U.S. based global nuclear movement monitoring website in March reported similar discussions between Mongolia and the U.S., quoting Richard Stratford, director of the Office of Nuclear Energy with the U.S. State Department.

Meanwhile, worried Mongolians have set up an online petition against any nuclear dumps.

Source:Xinhua News Agency of China



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Currency swap deal with China to stabilize Mongolia's tugrik: official

ULAN BATOR, May 6 (Xinhua) -- Mongolia's central banker said Friday that a currency swap deal with China would help stabilize Mongolia's currency tugrik against the yuan.

The 5-billion-yuan (about 769 million U.S. dollars) deal, signed by presidents of the two countries' central banks, will last three years and is extendable by mutual consent, the People's Bank of China said in a statement.

L. Purevdorj, president of Mongol Bank, the country's central bank, said at the signing ceremony Friday that the deal would help stabilize the tugrik against the yuan by allowing the yuan into Mongolia's foreign market in emergency situations.

Chinese central banker Zhou Xiaochuan said the deal would contribute to the financial stability in both countries and promote bilateral trade and investment.

Chinese yuan is currently the second actively traded currency in Mongolia's foreign exchange market, Purevdorj said, adding that Mongolia has a strong demand for the yuan as bilateral ties in trade, economy and investment become closer.

Related:

China signs currency swap deal with Mongolia

BEIJING, May 6 (Xinhua) -- The People's Bank of China (PBOC), the country's central bank, said Friday that it has signed a 5-billion-yuan (about 769 million U.S. dollars) currency swap agreement with the Central Bank of the People's Republic of Mongolia.

The agreement will last for three years and is extendable by mutual consent, according to a statement posted on the PBOC's website. Full story
Editor: Mo Hong'e

Xinhua, news agency of China


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China signs currency swap deal with Mongolia

BEIJING, May 6 (Xinhua) -- The People's Bank of China (PBOC), the country's central bank, said Friday that it has signed a 5-billion-yuan (about 769 million U.S. dollars) currency swap agreement with the Central Bank of the People's Republic of Mongolia.

The agreement will last for three years and is extendable by mutual consent, according to a statement posted on the PBOC's website.

The swap is aimed at promoting bilateral trade and offering short-term liquidity to the two countries' financial systems, it said.

Since the onset of the world financial crisis in late 2008, China has signed currency swap agreements with 11 countries and regions with a combined value of 834.2 billion yuan.

Analysts said the moves will be of great significance in promoting cross-border trade settlements and investment using the yuan, China's currency.

Editor: An

Source:Xinhua, news agency




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Mongolia: riskier than Belarus?

Mongolia may be the darling of the mining world and a hotspot for investors in developing Asian economies. However as far as the credit markets are concerned, it might as well be a Greece or a Belarus. That’s according to Moody’s, which outlined the risks facing this young, resource-rich democracy in its recent annual report.

In some ways Mongolia’s finances would be the envy of many countries in the West: government gross debt was 43 per cent of GDP in 2010 and according to the International Monetary Fund this will fall to 20 per cent of GDP by 2015. But Mongolian sovereign debt is still risky because the country is so vulnerable global commodities prices.

“The key thing about Mongolia is that it is subject to these boom and bust cycles,” explains Tom Byrne, senior vice president at Moody’s in Singapore and the author of the report. “In the last cycle a couple years ago we saw reserves being run down, there was runaway inflation, a loss of confidence in the system and Mongolians fleeing the tugrik [local currency]. This was very destabilizing.”

The prospect of falling copper prices would be particularly damaging to the economy, according to Moody’s. Extremely harsh winters, known as “dzud” also pose economic risk.

Then there is the question of governance. While Mongolia has seen several successful transitions of power since it became a democracy in 1990, there are concerns that governance may be deteriorating. Moody’s notes:

The World Bank’s governance indicators. . . had previously placed Mongolia in a relatively favorable position for a country undergoing a transition from socialism and poverty. However, these indicators have deteriorated in past years and continue to trend downwards. These factors, along with other considerations, support our assessment of Mongolia’s institutional strength at low. . . . the country’s institutional development has not kept pace with its rapid economic growth in recent years.

Mongolia’s economy is still set to grow strongly this year, with Moody’s forecasting GDP growth at 9-10 per cent in 2011 and 2012. But that’s not to say that it will always be smooth sailing as Moody’s decision to maintain its B1 rating on the government’s bonds suggests.

Source:http://www.ft.com/home/asia




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Key political risks to watch in Mongolia

By David Stanway

BEIJING May 3 (Reuters) - Remote and landlocked Mongolia sits on vast quantities of untapped mineral wealth, and foreign investment in a number of gigantic mining properties is expected to transform its tiny economy in the next decade.

Analysts say it could become one of the world's fastest growing economies and it is already a key investment target for resources giants like Rio Tinto and Peabody Energy .

Mongolia aims to become a major force in the regional coal market by developing the billion-dollar Tavan Tolgoi or "Five Hills" mine, the world's biggest untapped deposit of its kind.

Erdenes MGL, the mine's state-owned operator, has chosen banks to list the eastern part of property in the first half of next year, and a shortlist of investors for the western section has also been drawn up, including consortia from Japan and South Korea as well as Peabody, Xstrata and ArcelorMittal . [ID:nL3E7E70CI]

The $6 billion Oyu Tolgoi project, jointly owned by Toronto-listed Ivanhoe Mines , Rio Tinto and the Mongolian government, will be the world's biggest copper mine outside top producer Chile once full operation starts in 2013.

To read a multimedia special report on the Oyu Tolgoi copper and gold deposit, click here: r.reuters.com/nas97p

After decades on the remote fringes of the Soviet bloc, Mongolia is developing its economy almost from scratch, and foreign investors are watching to see whether the country's democratic government can maintain stability, build infrastructure, improve the rule of law and negotiate its way through the geopolitical pressures exerted by its two large neighbours, Russia to the north and China to the south.

Following is a summary of key Mongolia risks to watch:

POLITICAL INSTABILITY

The capricious nature of Mongolia's democratic government can complicate foreign investment projects. The five-year negotiations on the Oyu Tolgoi property were conducted against a backdrop of damaging political and legal uncertainties, including local ownership requirements and a windfall tax on mining profits that was only rescinded in 2008.

The frequent replacement of key personnel at the top levels of Mongolia's government has also caused concern, with the changes often accompanied by nationalist rhetoric and populist promises to secure more control over the country's assets.

Analysts also complain about the weakness of Mongolia's political parties and its poor regulatory capacity.

Corruption may also prove to be a long-term problem. Transparency International rated Mongolia 116th in its 2010 corruption perception index, up from 120th in 2009 but down from 102nd in 2008.

Mining is set to transform the Mongolian economy, with investment in the Oyu Tolgoi project set to reach $2.3 billion in 2011, but there has been frustration about how the dividends are spent, as well as the impact of mining on the environment.

Around 200 herdsmen pitched tents in Ulan Bator's central square on April 19 and called on the government to resign for "betraying national interests in mining deals".

Public anger about the way the Oyu Tolgoi project was sold has had an impact on its handling of Tavan Tolgoi. While stakes in the western block of the project will eventually be transferred directly to foreign investors, Mongolia aims to keep half of the eastern block, with 30 percent listed on an overseas stock exchange, and 20 percent handed out to local enterprises and residents.

What to watch:

-- How Mongolia uses the proceeds from its mining projects. It has set up education and fiscal stabilisation funds, but it has also promised direct dividends for Mongolian citizens.

-- How it deals with rapid economic change as foreign investment transforms the country's mainly rural economy. Overall investment in Oyu Tolgoi alone will stand at roughly the equivalent of the country's entire GDP in 2009.

-- Whether Tavan Tolgoi provides the ownership model for other "strategic resource" projects, or Mongolia sells other properties outright.

REGULATORY RISK

Last April, Mongolia's president ordered a halt to the issuance and transfer of mineral exploitation licences until the government enacts stricter environmental laws.

President Tsakhia Elbegdorj's proposed amendments were discussed by Mongolia's parliament last June, but a final decision has not yet been announced. The move is unlikely to affect major projects already agreed, but raises the risk levels of doing business in Mongolia.

In November, the Ministry for Energy and Mineral Resources said it would suspend a further 254 gold mining licenses and review another 1,700 believed to contravene the country's Water and Forest Law.

What to watch:

-- Hints on the shape of the new law.

-- How the government handles populist pressures to maintain greater control over the country's strategic assets.

DEPENDENCE ON CHINA, ROLE OF RUSSIA

China already dominates Mongolia's economy, buying 84 percent of the country's exports last year, adding to the perennial sense of unease in Ulan Bator about the intentions of its giant southern neighbour.

In mid-April. Mongolia it blocked coal deliveries to China from its South Gobi region, some say in retaliation against the temporary closure of the border crossing at Zamyn Uuud. [ID:nL3E7FK0LO]

Sparsely populated Mongolia recently announced new policies to manage the flow of migrant labour into the country as it embarks upon a massive construction programme, but many Mongolians fear an influx of Chinese workers. [ID:nTOE65G05P]

Mongolia has for years sought to carefully balance the interests of its neighbours China and Russia.

This has already had an impact on the development of the Tavan Tolgoi mine. China offers a guaranteed market for Mongolian coal, but instead of building a direct rail route south to Chinese markets, Ulan Bator will deliver coal east to a processing centre still under construction in Sainshand, where it can then be dispatched to Russia's far eastern Pacific coast. Analysts have questioned the economic feasibility of the plans.

What to watch:

-- The growing dominance of China in Mongolia's economy has prompted many of Mongolia's elite to lean further towards Russia, but China is unlikely to step aside. China dominates Mongolia's foreign trade and economics, and will have much to say on where and how Mongolia builds its roads and railways. (Editing by Daniel Magnowski)

Source:Reuters news wire service




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The Mongolian Government Wins the Lawsuit Against Altandornod Mongol LLC

Written by P.Shinebayar

The Government of Mongolia wins a dispute filed by Russian invested “Altandornod Mongol” LLC at an International Court of Arbitration, the Mongolia’s Ministry of Justice says.

Altandornod Mongol filed case against the Government of Mongolia and demanded US$1.6 billion, claiming that the Government of Mongolia imposed 68% windfall tax based on discriminatory basis, breaching an intergovernmental agreement between Mongolia and Russia.

“The Arbitration Court made a decision 100 percent in favor of Mongolia” said Nyamdorj, Minister of Justice and Internal Affairs.

The Court decided that Mongolia have the right to collect all taxes from Altandornod including US$65 million for mining nearly 2,5 tons of gold and US$2 million as security of its contract obligations , pursuant to Mongolian laws.

“We hope the decision can be a good signal for foreign companies and investors operating in Mongolia that they must obey Mongolian laws and regulations and that any dispute can be solved as per Mongolia’s own legislations” said Nyamdorj.

Altandornod mined 2,5 tons of gold and sold them without paying windfall tax of 68%.

It also avoided payingUS$2 million as the security of its obligation. The case lasted three years between the Government of Mongolia and “Altandornod Mongol”.

Source:UB Post newspaper


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GE Opens Office in Mongolia and Signs Healthcare Distribution Agreement with Newcom

Ulan Bator, Mongolia, May 2, 2011 – General Electric Company (GE) today opened a representative office in Ulan Bator, capital of Mongolia, to further explore business opportunities in one of the fastest growing and resource-rich markets in Asia.

The new GE office is co-located in the headquarters of GE’s Mongolian partner, Newcom Group (Newcom), one of the largest private enterprises in the country with a diversified portfolio of businesses in telecommunications, airline, real estate and clean energy industries.

GE and Newcom also signed a distribution agreement to supply a full range of GE healthcare products and solutions and introduce healthcare information technologies to the Mongolian market.

Mr. D. Zorigt, Minister of Mineral Resources and Energy of Mongolia, US Ambassador to Mongolia Mr. Jonathan Addleton, and Mr. B. Bold, CEO of Newcom were present for the office opening ceremony.

GE was represented at the office opening by Mark Hutchinson and Jack Wen, Vice Presidents of GE and Mr. Ts. Tumentsogt who will become the Chief Representative of the Mongolia office.

The events follow the signing of a Memorandum of Understanding (MOU) between GE and Newcom last September in which GE and Newcom agreed to explore a sustained partnership in key areas including power, water, mining, aviation, railway, lighting and healthcare.

Mark Hutchinson, Vice President of GE, said: "We are excited about this milestone and the expansion of our collaboration with Newcom. GE’s technology and expertise are well aligned with Mongolia’s growth needs. We look forward to building a win-win strategy for the benefits of the Mongolian people, our customers and partners as well as GE. ”

Mr. B. Bold, Newcom’s CEO, welcoming its partner’s permanent representation in Mongolia, stressed the importance of the intangible values and merits GE was bringing into Mongolia – innovation, green technologies and smart solutions for business pursuits to lead to a meaningful engagement with Mongolia.

“GE is one of the world’s most renowned brands of innovation, creativity, efficiency and modernity, producing a wide variety of products and technologies ranging from daily consumables to the most advanced technological solutions. I am glad that GE with its most efficient locomotives, wind turbines, state-of-art diagnostic imaging equipment comes to shoulder Mongolia in its challenging endeavors to build a knowledge based economy. It’s clear in my mind that GE’s partnership with Mongolia will mark yet another story of lasting and fruitful cooperation” – noted Mr. Bold.

Mongolia is home to some of the world’s largest coal and copper deposits and has vast wind energy potential. Located in Northern Asia between China and Russia, Mongolia is the fifth largest country in Asia with fewer than three million people. Mongolia’s economy is heavily influenced by rapidly expanding demand for energy and mineral resources and its GDP is expected to expand six times in the next ten years.

* * *

GE (NYSE: GE) is a diversified infrastructure, finance and media company taking on the world’s toughest challenges. From aircraft engines and power generation to financial services, health care solutions and television programming, GE (www.ge.com) operates in more than 100 countries and employs about 300,000 people worldwide.

Newcom Group, founded in 1993, is a long term investor committed to bringing global expertise and innovation to Mongolia. Newcom Group (www.newcom.mn) employs about 1,700 people and has a successful track record and portfolio of investments across telecommunications, information technology, airline, financial services, real estate and clean energy industries. The company’s headquarters are in Ulaanbaatar, Mongolia.
PRESS CONTACTS
Geoff Li
GE Corporate - China
+86 21 3877 7888 ext3046
+86 1391 818 9557 (mobile)
geoff.li@geahk.ge.com

Source:General Electric



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