South Korean foundations set TB aid in Mongolia

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SEOUL, Sept. 22 (Yonhap) — South Korea’s national tuberculosis association and two other foundations have begun a partnership program in Mongolia aimed at fighting and treating the pulmonary disease.

The Korean National Tuberculosis Association, the Chung Mong-Koo Foundation, and the Seegene Medical Foundation held a launch ceremony at the Mongolian University of Science and Technology in the country’s capitol Ulaanbaatar on Monday.

“STOP-TB Partnership Korea,” established in December 2012, is aimed at eliminating TB as a public health problem. Its partner organizations include the government, nongovernmental and governmental organizations, as well as patient groups.

The three organizations will provide a total of 1.35 billion won (US$1.14 million) annually for state-of-the-art X-rays to detect TB infections and to coordinate the provision of anti-TB medication to the community.

Also, local medical personnel will be sent to Mongolia to train medical doctors and researchers there for TB treatment and prevention.

Mongolia is one of seven countries with a high prevalence of TB in the Western Pacific region, with the mortality rate for TB at 7.2 people per 100,000.

khj@yna.co.kr

(END)

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Divided Mongolias find unity in common ancestor Kublai

ULAN, BATOR – Eight centuries after the ruler of the greatest land empire in human history was born, the mighty Mongol Kublai Khan’s descendants are a people divided between his homeland and the China he conquered, with both claiming him as their own.

With Kublai Khan’s 800th birthday coming up Wednesday, Mongolia will launch commemorations in Ulan Bator while China will mark the date near the site of one of his capitals after he founded the Yuan dynasty in 1271.

Under Kublai — a grandson of Genghis Khan, who first began the Mongols’ epic expansions — the realm reached its greatest extent, stretching from Eastern Europe to the Korean Peninsula, the largest contiguous land domain ever.

But the Yuan emperors ruled China for less than a century, and after they fell, the roles were reversed, with the Chinese later reigning over Mongolia.

Geopolitical earthquakes in the 20th century, such as the collapse of China’s Qing dynasty and the rise of the Soviet Union finally saw Mongolia break away as an independent country, only to quickly fall under the sway of Moscow.

“Kublai Khan, being a Mongol, would have had great difficulty establishing control over China, so he had to make himself a Chinese emperor and thus found the Yuan dynasty,” said John Man, an author and authority on Mongol history.

“It’s one of the world’s greatest historical ironies that modern China gets most of its borders, minus Mongolia, from a barbarian from the North, from Kublai Khan who was a Mongol, not a Chinese at all.”

Nonetheless China proclaims itself as the world’s oldest civilization and has a tendency to coopt successful invaders, declaring them Chinese.

Modern Mongolia has a population of just 3 million, the vast majority ethnic Mongols. But almost twice as many — nearly 6 million people— live in the People’s Republic of China, where they are one of dozens of minorities.

Some divided nations have re-unified, such as West and East Germany, but despite some Mongolian nationalists’ fantasies, the country’s geopolitical weakness and economic dependence on China make a single Mongol state impossible, says D. Shurkhuu of the Institute of International Affairs in Ulan Bator.

“This is a very sensitive issue in political terms, especially for politicians in Mongolia,” he said.

On both sides Mongols agree on the glory of their shared history.

“Genghis Khan is the ancestor of ethnic Mongols and Mongolians,” said Baigali, a guide who goes by one name at a complex in China’s Inner Mongolia region billed as the mausoleum of Kublai’s grandfather.

Foreign historians reject the claim, though the site of Genghis’ grave has never been identified and remains one of the world’s great unsolved historical mysteries.

Baigali said the two peoples are essentially the same, although those in China use traditional vertical Mongolian script, while Mongolians write in the horizontal Cyrillic alphabet inherited from the Soviet Union.

“And they think they are superior to us because they are pure Mongolian and we are Sinicized,” she added, hinting at underlying tensions.

Hada, an ethnic Mongol dissident who also goes by one name and who spent almost 20 years behind bars in China before being freed last December, says his people have been marginalized by communist authorities and “downgraded …to an ‘ethnic minority.’ ”

“It is an undeniable fact that they are the indigenous people of a great nation,” he wrote of China’s Mongols in an article published online this month by the U.S.-based monitoring group Southern Mongolian Human Rights Information Center.

“It serves a political agenda of the Chinese to belittle the Mongolian nation, diminish national self-confidence and cause them to abandon any aspirations of self-determination,” he continued.

Beijing denies accusations it oppresses minority groups and counters it has delivered economic development and raised living standards.

Mongol herders in China sporadically demonstrate against their resource-rich pastures being infringed upon by developers and coal miners — one named Tumur hanged himself in protest earlier this year — drawing attention and support from activists in Mongolia.

“There are many Tumur in Inner Mongolia and many herders are trying to keep their land away from the Chinese government,” campaigner Munkhbayar Chuluundorj said in Ulan Bator while holding a sign reading “Je Suis Tumur,” referring to the “Je Suis Charlie (I am Charlie)” movement that followed shootings by Islamic militants at French satirical magazine Charlie Hebdo.

The impossibility of political unification did not preclude cultural connection, Munkhbayar said, invoking Kublai’s grandfather.

“Genghis Khan is the only way because all Mongolians abroad believe they are proud of Genghis Khan,” he said. “They want to say they are descendants of Genghis Khan.”

Source:AFP-JIJI

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Oyu Tolgoi is symbol on Mongolia's rise

Khanbogd, Mongolia

Ulaanbaatar city centre, in Mongolia Photo: Philip Wen

In the centre of Ulaanbaatar, the rough and pulsating capital of Mongolia, sleek new skyscrapers share the skyline with the concrete shells of stalled, half-built office towers.

The city, home to half of the country's three million people, has been transformed by an old-fashioned mining boom. The economy of Mongolia, a landlocked country wedged between Russia and China, has doubled in the space of a decade, with the young democracy's transition from a socialist command economy to a free market sparking a global rush to exploit its rich copper, coal and gold deposits beneath the earth's surface.

The biggest of Mongolia's mega-projects is the Rio Tinto-controlled Oyu Tolgoi copper-gold mine, deep in the south of the Gobi desert, 80 kilometres north of the Chinese border.

The above-ground open-pit copper mine at Oyu Tolgoi. Photo: Philip Wen

Oyu Tolgoi is already producing copper concentrate from an open-cut mine, but the true riches – 80 per cent of the mine's value – are nestled a kilometre underground.

Breakthrough

A key breakthrough in May saw Rio Tinto and the Mongolian government settle disputes over terms of the project that had seen Oyu Tolgoi's crucial underground expansion delayed for more than two years. When complete, the fully operating mine will account for as much as one-third of Mongolia's economic output.

The compound at the Oyu Tolgoi mine appears out of nowhere in the desert. Photo: Philip Wen

"Without a doubt it is a huge impact and I think it does cause nervousness in [Mongolian] people in a sense," Munkhsukh Sukbaatar, Rio Tinto's country director in Mongolia, says of the project's size.

"But the other part of it is that what people recognise is that it's 30 per cent [of Mongolian GDP] that didn't exist before."

In the dry and dusty expanses of the southern Gobi, the bright blue buildings of Oyu Tolgoi's camp appear almost out of nowhere amid the desolation.

Inside one of Oyu Tolgoi's mine shafts which extend 1.3 kilometres underground. Some 80 per cent of the copper mine's value lies in the underground expansion. Photo: Philip Wen

There is a renewed sense of anticipation after the lengthy delays. Rio Tinto expects to finalise $US4.2 billion ($5.8 billion) of project finance with its consortium of banks by November, and then obtain outstanding permits.

Rio Tinto has declared Oyu Tolgoi its single best project despite steep falls in the copper price.

The price of copper has fallen sharply.

A worker at Rio Tinto's Oyu Tolgoi mine, one of the world's richest copper deposits. Photo: Supplied

The underground expansion will take between five and seven years to complete and require tremendous feats of engineering.

Reaching the underground ore body will require five mine shafts each approaching 1.3 kilometres in depth.

That will provide access for workers, service carriages and heavy machinery, as well as ventilation, to set up huge underground workshops and proceed to dig around 200 kilometres of tunnels – longer than the underground network of the London tube. Regulated air will be pumped through the tunnel to help insulate against the wild climate above ground – here, it reaches 40 degrees Celsius in the summer and minus-40 degrees in the winter.

Symbol of struggle

Oyu Tolgoi, though, has been symbolic of the Mongolian government's struggle to get to grips with a slumping economy heavily reliant on commodity prices and foreign investment.

Mongolia's government had promised to use its vast untapped mineral reserves to develop its tiny, landlocked economy, but flagship projects have been delayed and foreign investment deterred by political disputes and regulatory uncertainties.

Opposition parties have seized on public concerns that Mongolia will lose its identity and become overly dependent on mining. The shutdown of initial underground operations at Oyu Tolgoi had a devastating effect on Mongolia's economy.

In the first half of this year, Mongolia's gross domestic output expanded by 3 per cent, compared to 8 per cent in the same period last year; and a far cry from the 17.3 per cent growth in 2012.

"We had booming years of very high growth around 2010, 2011," says Batsaihan Jamichoi, director and co-founder of the Mongolia Opportunities Fund, a fund aimed at institutional investors.

"But starting in the second half of 2012 the economic growth has been slowing down very significantly. We are having some issues partly caused by the global commodities cycle, and partially it is home-made mistakes."

Political turmoil

Mongolia's parliament appointed Chimed Saikhanbileg​ as prime minister in November after ousting his predecessor in a no-confidence motion. While seen as a moderniser, the political turmoil has persisted, with Saikhanbileg replacing six members of his cabinet ahead of an expected election next year, a move the president said could further deter foreign investors worried about political stability.

The Toronto-listed Centerra Gold is awaiting a decision from parliament on the stake size the government will take in the Gatsuurt gold mine it hopes to put into production.

Parliament must also vote on a proposed investment agreement with a private consortium led by China's Shenhua Energy to develop and mine the huge Tavan Tolgoi coal mine.

Amarjargal Khenchbish, a Mongolian-born lawyer and executive now with the copper and coal group in Rio Tinto's London office, says it stemmed from the country's relative inexperience as an open-market economy, having only begun its transition from a socialist command economy with five-year plans in the 1990s.

"So initially there's a lot of misunderstanding and frustration," she says. "The public sentiment was different but now people especially in the past two or three years they understand how big the impact Oyu Tolgoi can be to Mongolia and also foreign direct investment into Mongolia."

"People say that Mongolians are fiercely independent and proud; I think that's probably an understatement. One pattern you'll see emerging again and again is pride, it's a huge thing," Sukbaatar says.

"People felt foreigners came in a bit too quickly and it affected their pride and it felt like their space was being marginalised."

Opportunities abroad

That pride has also seen waves of urbane, foreign-educated young Mongolians return home, excited about the economic opportunities and a desire to contribute to the country's fledgling development. Sukbaatar himself returned after more than a decade in the United States, eschewing the predictability of a lucrative career in financial services for the untapped potential back home.

"It's very common," he says. "You have Mongolians living abroad, you very frequently hear them wanting to come back here and do something more, come back to contribute after learning skill sets."

The confluence of a series of droughts and harsh winters and the growth of the country's mining industry has seen the population of Ulaanbaatar more than triple since 2000.

But most live on the fringes of the city in districts of gers, the circular canvas tents which nomadic herders have lived in since the time of Genghis Khan. With no running water or central heating, sanitation is poor and the burning of coal for heat sees the capital cloaked with thick smog during the winter.

Not unlike Australia, the challenge for the Mongolian government is to recalibrate its economy onto a sustainable footing after the heady heights of the global commodities supercycle, and to demonstrate the windfall from big mining can be evenly spread.

By 

Philip Wen

China correspondent for Fairfax Media

The reporter travelled to Oyu Tolgoi as a guest of Rio Tinto

Source:http://www.smh.com.au/

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As rivals blink, Rio Tinto plans to expand Mongolia copper mine

Rio Tinto said it is committed to expanding its Oyu Tolgoi copper mine in Mongolia based on a positive outlook for the metal and confidence that low production costs can buoy profits even as competitors cut output.

The miner wants to lock in up to $4.2 billion in project financing by November to build more than 200 km of tunnels to access higher-quality ores at the deposit over the next five to seven years, Craig Kinnell, Rio's chief development officer for copper and coal, said during a media tour of the mine this week.

The expansion should extend the mine's lifespan past 2100 and open up 80 percent of the resources available, making it the world's third-largest mine for copper and gold.

With new project approvals slowing elsewhere, Kinnell said he was confident demand would hold up, particularly in China.

"I can't see anything to reconsider given the quality of our resource," he said. "Our commitment is to bring this on as soon as possible".

Oyu Tolgoi is expected to produce 175,000 to 195,000 tonnes of copper in 2015 and has a key role in Rio Tinto's strategy to ease its dependence on iron ore, but there have been concerns that its expansion is coming at the wrong time.

"Rio Tinto has to develop the mine as it is a core copper asset to the company," said Yang Changhua, senior analyst at state-backed research firm Antaike in Beijing.

"But expected additional copper from the Oyu Tolgoi mine would pile pressure on the global copper market, which is not likely to improve strongly in the coming two years," he said.

However, Kinnell said that while the expansion of Oyu Tolgoi would raise ore production, there were no plans to expand concentrator capacity at the project.

He added that low production costs meant the project would be a "bedrock" for the firm, and that he remained bullish on the long-term fundamentals for copper.

While Rio plans to expand operations its four key copper assets - Oyu Tolgoi, Kennecott, Escondida and Grasberg - rival Glencore said it would cut supplies by 400,000 tonnes.

Rio is also looking for new supplies with plans to get online the Resolution project in the United States and La Granja in Peru, raising concerns that the industry will be hit by the sort of glut now affecting iron ore.

"The market is aware that supply cuts such as those by Glencore can only lay the basis for a tightening of the market," said Carsten Menke, commodities research analyst at Julius Baer.

"This is different to 2009, when for example copper demand collapsed because we had a global recession. This time the oversupply in the copper market is due to the expansion of mine production over the last few years." (Additional reporting by Polly Yam in HONG KONG and Pratima Desai in LONDON; Editing by Ed Davies)

Source:Reuters

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World Bank urges welfare reform in Mongolia

The World Bank has urged Mongolia to reform its welfare system by consolidating different benefits and targeting assistance better in order to improve the efficiency of spending.

In the country, the top 40% of the population by income receive 28% of total welfare transfers, while the poorest 40% receive 56% of welfare, the bank’s Review of Program Design and Beneficiary Profiles of Social Welfare Programs in Mongolia said.

Costs also outstrip the average for other emerging and developing countries. In 2013, Mongolia spent 2.78% of gross domestic product on welfare compared with 1.6% in other emerging and developing countries.

“As an institution devoted to ending extreme poverty, the World Bank strives to understand the drivers of poverty reduction and the factors affecting how prosperity is shared among the population,” said James Anderson, World Bank country manager for Mongolia.

“We hope that this review provides the evidence needed for Mongolia’s leaders to create a more effective and efficient social welfare system, one that puts Mongolia’s poor and vulnerable first.”

The report notes that not all welfare entitlements were linked to need. It urged the Mongolian government to eliminate or reduce benefits for wealthier citizens through means testing.

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Mongolia’s Rural Communities to Play Greater Role

The FINANCIAL -- Rural residents in Mongolia will benefit from a $34.1 million program funded by World Bank and Swiss Agency for Development and Cooperation (SDC) that aims to make the government funding process more transparent and more responsive to community needs.

The program, the third phase of the Sustainable Livelihoods Project, was officially launched on September 17 in Ulaanbaatar with a workshop organized by the Ministry of Finance and the World Bank. The three-year program aims to help Mongolia implement the 2011 budget law, which gives rural communities a greater role in the government funding process.

“The project will empower rural communities by providing a transparent mechanism for funding to be transferred to support local development initiatives,” said James Anderson, World Bank Country Manager for Mongolia.

The program will build on the success of the first two phases of the project, which have helped set up community development funds financing more than 6,000 projects, mostly investing in education and health. It will build local government’s capacity for financing investments in infrastructure and services. Based on the budget law, funding allocations are decided each year through robust community participation, according to the World Bank.

“The Sustainable Livelihood Project has played an important role in developing rural areas in Mongolia through community participation. The Government of Mongolia and World Bank have worked together since 2002 to implement the project and increase the flow of public and private investment to herders’ communities,” said Kh. Gantsogt, State Secretary of the Ministry of Finance.

The project will also support local economic development by promoting investments for private sector growth in the more than 300 soums – or local administrative districts – throughout the country.

It will focus on financing based on governance performance, which awards additional funding for local development investments to local government entities that adopt participatory processes to reflect local needs and priorities in their planning, budgeting, implementation, monitoring and evaluation processes.

“The new phase of the project will ensure that the budget available at local level, especially Local Development Funds, will be managed and used effectively and efficiently, responding to the needs of local people. Strengthening capacities of local governments in rural areas will be key to achieving this goal,” said Markus Waldvogel, Director of Cooperation of Swiss Agency for Development and Cooperation.

The program is funded with a $22.7 million credit from the International Development Association (IDA), the Bank’s fund for the low-income countries and a $11.4 million grant from the Swiss Agency for Development and Cooperation.

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Mongolian President, Parliament Chairman open OSCE Parliamentary Assembly Autumn Meeting

ULAANBAATAR, Mongolia, September 17, 2015 – Mongolian President Elbegdorj Tsakhia and Parliament Chairman Enkhbold Zandaakhuu yesterday, September 16,  opened the OSCE Parliamentary Assembly’s 2015 Autumn Meeting, which has brought together nearly 200 parliamentarians from across the OSCE’s 57 participating States in Ulaanbaatar.

Hosted by the State Great Hural (Parliament) of Mongolia, the Meeting is focusing on continuing and emerging security concerns for the OSCE area and the role of parliamentarians in fostering co-operation to address those concerns. 

Topics to be addressed in presentations and parliamentary debate include the situation in and around Ukraine, refugee crises and human trafficking, counter-terrorism, food and water security, the development of democratic institutions and human rights issues.

In his opening address to parliamentarians, President Tsakhia said that despite acute challenges to Eurasian security, including the Ukrainian and refugee crises, there is cause for hope:

“Humankind still possesses the means and the opportunities to solve any emerging challenge… We [also] have the Organization for Security and Co-operation in Europe. Some of the challenges are spilling over the boundaries of one continent and this necessitates creating security and open co-operation mechanisms that cross [wide areas]. I am confident that the OSCE can serve as the best model for engagement and dialogue and cross-continental co-operation and shall be a leader in finding the solutions to the most pressing issues,” he said.

Parliament Chairman Zandaakhuu noted that the 2015 Autumn Meeting coincides with the 25th anniversary of Mongolia’s first democratic elections, which led to the establishment of a permanent parliamentary system in the country. The Parliament’s decision to host the Autumn Meeting is a testament to its belief in democratic dialogue, he said:

“Today countless complicated issues still exist in many corners of the world. This calls for improved coherence and communication among international organizations, the furthering of close co-operation and the necessity to comply with decisions and recommendations… Honorable parliamentarians, the representatives of your people, I have full confidence in you all to reach a common consensus through thorough discussions and multiple approaches to the given issues,” the Chairman said.

OSCE PA President Ilkka Kanerva also addressed the Assembly’s opening session, offering wide-ranging remarks on pressing security issues that parliamentarians will discuss in the coming days.

“Regarding the crisis in and around Ukraine, our dialogue must also be in support of the Minsk Agreements, which are the only viable solution. I welcome the fact that the ceasefire in eastern Ukraine has largely held in the past several weeks. I look forward to the day when local elections can be held throughout all of Ukraine. And I look forward to the restoration of Ukraine’s territorial integrity,” President Kanerva said.

“There is another crisis now raging in the OSCE area, and it is also one that urgently requires constructive dialogue: That is the migrant and refugee crisis…Europe can and simply must do more to respond, and do so with solidarity and compassion,” he said.

President Kanerva also congratulated Mongolia on its landmark anniversary and urged fellow OSCE participating States to learn from the country’s swift adoption of democratic standards.

Russian Duma Speaker Sergey Naryshkin, Ukrainian OSCE PA Delegation Head Artur Gerasymov and Deputy Speaker of the Afghan Parliament Mohammad Nazir Ahmadzai were among parliamentarians from more than a dozen countries to participate in an opening general debate.

Later on 16 September, President Kanerva and OSCE PA Secretary General Spencer Oliver met with Speaker Naryshkin and other members of the Russian Delegation to the OSCE PA. 

The President indicated that he remains supportive of EU sanctions in response to Russia’s actions in the context of the Ukraine crisis. He also informed Speaker Naryshkin of his efforts to ensure that sanctions against individuals do not inhibit parliamentary dialogue.

President Kanerva also hosted a separate meeting with members of the Russian and Ukrainian Delegations.

The sides held a constructive discussion regarding potential mechanisms for the parliamentary side to support implementation of the Minsk Agreements.

The 2015 Autumn Meeting will also consider trends and issues of particular relevance to countries in the eastern part of the OSCE area. A special roundtable on Central Asia featuring the Heads of OSCE field presences in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan is also scheduled for today.

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Intersections: Discovering a taste of Los Angeles in Mongolia

By Liana Aghajanian

September 16, 2015 | 1:42 p.m.

It was midnight when I landed in Mongolia. The ice cold breeze coming through the airport doors from the outside world were a welcome and soothing relief from the Los Angeles heat, but “soothing” wouldn't exactly be the way a Mongolian would describe it.

Ulaanbaatar, the city's capital, is the coldest in the world, a place where temperatures reach minus-40 degrees Fahrenheit and below in the winter, a cold so severe that I, an Angeleno through and through, couldn't begin to understand.

I had left L.A. behind to embark on a monthlong reporting fellowship to Mongolia to report on pollution and its impact on maternal health. In addition to having the coldest capital, Mongolia not only has the lowest population density in the world, but is also one of the most polluted.

As hundreds of thousands of nomads have moved to the capital looking for jobs, the city has been enveloped in a thick cloud of smoke during winter. The pollution comes from the coal-burning stoves they use in their yurts, or “gers” which surround the city. As more and more people move to the capital every year, the pollution increases and has an impact on the population, especially women who are pregnant, as well as their children.

All of this sounds very far away from life in the U.S., but as soon as I got to Ulaanbaatar, I couldn't help but notice how much L.A. was trailing me in one of the most remote places in the world.

For one thing, my taxi driver turned out to have lived in Santa Monica for months. He told me his favorite thing about the city was Chipotle. “So much meat!” he said leaning from the front seat, a nod to just how incredibly rich the Mongolian diet is with meat and more meat.

When we pulled up to the center of the city, a glowing sign in the darkness announced the location of “Los Angeles Restaurant,” complete with a cocktail lounge.

The next day, I walked into a cafe to get some lunch, and the owner, it turned out, had traveled all across Los Angeles, eventually staying in Long Beach for three months before heading back home to Mongolia. In the two words of Mongolian that I know, and the little English that she knew, we managed to establish how many cities in the L.A. area she had visited.

When I met with a woman for an interview soon after, she told me she had previously visited friends in La Cañada Flintridge.

It was very strange, having come all the way to the other side of the world, only to be reminded of Los Angeles in peculiar ways. But really, it was just a reminder of what a truly global world we're living in now, that even in the most far away locales, we have reached a place where we are more connected than ever before.

Los Angeles, for its part, seems to be returning the favor. I just learned of a U.S. restaurant chain called “Mongolian Hot Pot,” which has opened locations in places like Pasadena and Torrance.

When I get back in a month from an experience I will likely end up treasuring for a lifetime, trying a bit of Mongolia in Los Angeles will be truly special.

--

Source:http://www.glendalenewspress.com/

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Mongolia hit hard by China’s economic slowdown

Mongolia has been greatly affected by China’s economic slowdown. How have falling commodity prices and a devaluation of Mongolia’s currency affected the country?

Surpassing the US as the world’s largest trading nation in 2013, the impact of China’s economic slowdown has been felt all over the world, proving particularly challenging for a number of low-income and lower-middle-income economies, including Mongolia, that have depended on exports to China.

Dependence on natural resources

Mongolia, classified as an upper-middle-income economy by the World Bank, has enjoyed high growth rates over the past several years due to its wealth of natural resources. Rents from minerals, coal, oil and forestry accounted for over a quarter of GDP in 2013.

In 2014, Mongolia was one of the fastest growing economies in the world, with an estimated real GDP growth rate of 9.1% and China as its biggest trading partner. 90% of Mongolian exports went to China in 2013.

However, consisting almost entirely of coal, copper, iron ore, and crude oil, Mongolian exports have been hit incredibly hard by the drop in Chinese industrial demand. Coinciding with this slowdown, worldwide prices of commodities used in construction have dropped dramatically. As a result, Mongolia’s GDP growth rate is estimated to fall to 4.2% in 2016, compared with 18% in 2011.

Tugrik under pressure

The fall in commodity prices has put pressure on Mongolia’s currency, the Tugrik. Compared to the US dollar, it reached a record lows in March of this year, only to recover slightly before falling again by 4.9% between June and July 2015.

Comparing the Tugrik to the Chinese Yuan shows an even more alarming trend – The Tugrik has depreciated by 40% since 2011 relative to the currency of China, its biggest trading partner. Since Mongolia imports many consumer goods, including textiles, the exchange rate has directly impacted Mongolians’ purchasing power.

In addition, the expected price increases of imported goods, together with the Mongolian government’s loose fiscal and monetary policies, are likely to drive up inflation. As a response to persistently high inflation rates, which averaged 12.3% over the past eight years, the IMF has warned that Mongolia requires strong fiscal and monetary reforms to bring inflation back under control.

Has China’s slowdown also caused a decrease in Chinese FDI in Mongolia?

While Mongolian exports continue to suffer, Chinese FDI into Mongolia has continued to rise. In 2012, FDI from China accounted for 8.8% of Mongolia’s GDP, further illustrating Mongolia’s reliance on its southern neighbor. Between 2012 and 2013 total FDI in Mongolia fell by half, raising questions about the impact of a Chinese slowdown.

However, World Bank data illustrates that between 2012 and 2013 China’s net FDI outflows as a percent of GDP actually increased from 1.4% to 1.7%. Instead, the decrease in FDI in Mongolia was primarily driven by the adoption of the Strategic Entities Foreign Investment Law, which limits foreign ownership in a number of sectors, including mining.

Source:http://globalriskinsights.com/

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Mongolia unlikely to seal $4 bn coal mine deal: Minister

ULAANBAATAR: A delayed $4 billion deal aimed at spurring development of Mongolia's enormous Tavan Tolgoi coal mine has only a slim chance of going ahead, partly due to China's slowing growth, one of the country's chief negotiators said on Thursday. 

A plan for a consortium of Mongolian Mining Corp, China's Shenhua Energy and Japan's Sumitomo Corp to take over the operations of state-owned Erdenes Tavan Tolgoi was blocked by Mongolia's parliament speaker in April, leaving the future of  of the deal in the hands of lawmakers. 

Minister Mendsaikhan Enkhsaikhan, who led the Mongolia's negotiations with the consortium, told an investor conference in Ulaanbaatar he was pessimistic on the prospects of lawmakers clearing the deal. 

"When we submitted the proposed agreement for the Tavan Tolgoi coal mine project, I said there was a 50-50 chance for approval," said Enkhsaikhan, the minister in charge of Mongolia's so-called "mega projects". 

"At this moment, it's less than 10 percent that it will be approved  parliament and will be implemented," he said. 

In addition to indecision by the government, the deal was threatened by economic troubles in China. 

"It's not only because of parliament, but also because of the Chinese situation," he said, noting the volatility experienced in Chinese markets. 

Mongolia relies on China to buy nearly all of its minerals and petroleum, which made up 86 percent of exports in the first six months of 2015. 

Slowing growth in China amid expanding supply worldwide has driven prices sharply lower for most of Mongolia's chief exports, such as coal and copper, to more than six-year lows. 

Enkhsaikhan asked investors to be patient, despite growing frustration among those who have waited three years for the government to decide on a strategic partnership for the mine. 

Plans and agreements for mega projects like Tavan Tolgoi needed time to be approved because of the huge impact they have on Mongolia's tiny $12 billion economy, he said. 

"Speed kills mega projects," he said, pointing to the impact of data mistakes during the early stages of development. 

"When we look to the documents and we see there were some mistakes with the basic data, those mistakes can ruin the projects at any stage of development." 

Source:Reuters

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Mongolia in for double whammy: drought now, 'dzud' next

Balchig Baljinnyam, a small-time farmer in central Mongolia, is busy building a shelter for his dairy cows ahead of what is expected to be the most brutal winter in years. A summer drought has already cut traditional sources of fodder for his herd.

It will be a double whammy for Mongolia this year. Its mining sector, which accounts for 17 percent of the economy, is in shambles due to weak commodity prices. Now the farm sector is in trouble. The drought has wiped out up to 80 percent of its wheat crop and up next could be the worst winter in six years.

Mass animal deaths due to a freezing winter, locally known as a "dzud", in a predominantly pastoral country would only make a bad situation worse. In 2009-2010, Mongolia lost 20 percent of its livestock to the dzud, the World Bank estimates.

"It's not a drought, it's a catastrophe," said Davjigbold Ariunbold, the owner of a farm around 110 kilometers (68 miles) southwest of the capital, Ulaanbaatar, near Baljinnyam's setup.

At least 40 percent of the wheat crop on the farm has died, but the extent of the damage will be clear during the September harvest, added Ariunbold, pointing to his fields where the crop was limping at about ankle high. His next worry is the dzud.

Usually, a dzud is likely to occur when a harsh winter follows a very dry summer.

Erdene-Ochir Badarch, an operations officer at the World Bank in Ulaanbaatar, said there was a high chance of a dzud after the severe drought this year. "In the north and east there is a high possibility," he said.

The Mongolian government has promised to ban wheat and meat exports from September before winter sets in to ensure domestic supplies. It has also said it will import wheat from Russia for flour and animal fodder.

These efforts, however, may not be enough to offset the damage to grazing pastures, forcing some herders to cull their livestock or risk not having enough fodder to feed the animals.

"They're ready to face a harsh winter. Some of them will choose to slaughter," Badarch said. 

AT THE MERCY OF CLIMATE CHANGE

Mongolia blames the severe disruption in its weather on climate change caused by high global greenhouse gas emissions.

Despite being a low emitter, the landlocked country has seen temperatures rise 2.14 degrees Celsius over the last seven decades, according to the United Nations Environmental Programme, three times faster than the global average.

Home to tens of thousands of semi-nomadic people, Mongolia said in a submission to the United Nations in 2010 that climate change would have "a direct and dramatic effect on almost all sectors of the national economy and all spheres of social life".

This year, locals, already reeling from crop damage and a drop in mining profits given lower copper and coal prices, are worried that a oversupply of meat due to dzud would drive down prices and further cripple their incomes.

"Financially, it's getting really hard for the farmers," said the farmer Baljinnyam. "They have to build a shelter for their cattle but can't do so themselves."

Many farmers are counting on the government to prevent disruptions in wheat supply and to buy meat for the reserves it keeps for when prices get too high on tight supply.

"A dzud is not just only a natural hazard; it's a natural and socio-economic hazard," said Sodov Khudulmur, interim director at the Information and Research Institute of Meteorology, Hydrology and Environment.

Source:Reuters

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