Mongolian debt to chalco stalling USD 4 billion Tavan Tolgoi deal

Mr Enkhsaikhan Mendsaikhan, Mongolian minister, said that Mongolia’s accord with a group planning to develop its largest coking coal deposit for USD 4 billion is being stalled by the government’s USD 150 million debt to a Chinese state-owned company.

Mr Enkhsaikhan said by phone from Ulaanbaatar that “Basically one issue is left. Unfortunately, solving this issue depends not only on us, but also the Chinese side.”

Erdenes Tavan Tolgoi, the state-owned company that holds the license to the deposit, was saddled with the debt to Aluminum Corp. of China, or Chalco, in 2011 after Mongolia used a USD 350 million loan to provide cash handouts to citizens. While Erdenes has repaid a portion of the debt with coal shipments, an interest of more than 10% has inflated the amount outstanding.

Tavan Tolgoi, located 270 kilometers (168 miles) north of the Chinese border in the Gobi Desert, is one of several large scale mineral deposits that Mongolia expects will stimulate the economy. The country’s pace of economic growth was 7.8% last year after three straight years of double-digit expansion.

In December, a group comprising Energy Resources LLC, China Shenhua Energy Co. and Sumitomo Corp. won the permit to develop a portion of the Tavan Tolgoi deposits, beating a bid from US mining company Peabody Energy Corp.

Mr Enkhsaikhan said that Mongolia, which will retain full ownership of the Tavan Tolgoi deposit, has set a requirement that the debt be paid by the consortium. While Aluminum Corp. of China, or Chalco, didn’t participate in the bids, the presence of another state-owned Chinese company, Shenhua, in the group has come in the way of talks.

He said that “Chalco and Shenhua have to meet each other and try to resolve this problem. If necessary, I hope the governments will be involved.”

Mr Enkhsaikhan said that Mr Battsengel Gotov CEO of Energy Resources is responsible for negotiating on behalf of the consortium. Battsengel can’t comment because of a media “blackout period,” spokeswoman Ariunaa Baldandorj said.

He said that while a target date to conclude negotiations has yet to be set, results are expected within this month.

Another key issue between Mongolia and the consortium is the construction of a railway network to transport coal from the mine to the Chinese border. The railway line will be built on a Build-Own-Operate-Transfer agreement with 51% of the shares to be transferred to Mongolia after 30 years.

He added that “We have almost reached an agreement on the railway, but it is still an open issue. Maybe we need to talk a little more, once the Chalco debt issue is resolved.”

Source – Bloomberg

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Mongolia’s ‘third neighbor’

BY NOBURO IWATA AND MICHAEL SUTTON

SPECIAL TO THE JAPAN TIMES

On Feb. 10, Japan and Mongolia signed an Economic Partnership Agreement that will come into effect this spring. Trade between the two countries is small — accounting for less than 1 percent of Japanese trade. The agreement is, however, of strategic importance as Japan seeks to negotiate closer economic ties with countries in the region. Mongolian mineral resources such as its coal deposits are increasingly important for Japan as it contemplates the appropriate energy mix at a time when it is considering how to reduce its dependence on nuclear power.

Japan, Mongolia, China and Russia exist alongside the United States within the World Trade Organization (WTO) system as equal members. This system has at its core, a set of mutually agreed principles on the operation of international trade in goods, services, agriculture and other areas.

The casual observer could be forgiven for thinking that this system had fallen into disuse since the late 1990s. Nothing could be further from the truth.

The turning point was the failed 1999 WTO Ministerial held in Seattle that prompted a few small Asia-Pacific countries to begin a pattern of negotiating bilateral trade agreements according to the model originally found in Article 24 of the General Agreement on Tariffs and Trade (GATT). These countries such as Singapore and New Zealand, because they were smaller countries, felt more keenly the cold wind of anxiety as the U.S. and Europe were bogged down in multilateral trade negotiations.

In hindsight, the trade system was deadlocked and little has changed in 15 years. Up to this point, Japan had placed faith and confidence exclusively in a nondiscriminatory trade policy that didn’t entertain even the notion of a free trade agreement. After careful evaluation, credible evidence emerged that failure to negotiate bilaterally would undermine Japan’s competitive advantage. This remains Japan’s view.

At the time, existing free trade agreements were conferring preferential treatment to other countries, discriminating against Japanese companies operating abroad. Some in the government also believed that such agreements would have a positive flow-on effect on the Japanese economy.

What Japan adopted was the pattern of negotiating bilateral agreements that while originally intended to focus on “free trade” became wider in scope, leading to the framing of “strategic economic partnership agreements” or EPAs. Currently Japan has 13 agreements in force and one regional agreement, and is negotiating with a further three nations and five regions.

Receiving media attention these days has been the Trans-Pacific Partnership (TPP), partly because of the involvement with the U.S. All agreements both in force and under negotiation are of importance to Japan.

In the 1990s there was some discussion of so-called strategic trade policy. This was tied to the idea of using protectionism to promote certain domestic industries. The use of the term in the context of an EPA is quite different.

An EPA usually focuses on the liberalization of trade, clarification and stabilization of rules of commerce and paves the way for an expansion of trade and investment only among some trading partners. Since the turn of the century, most countries in the region have been negotiating various types of similar trade agreements with many of their trading partners.

It is true that the Japan-Mongolia EPA is not the TPP. But the Mongolia-Japan EPA is of strategic importance for both countries. At the Japan-Mongolian Summit in Tokyo on Feb. 10, Mongolian Prime Minister Chimed Saikhanbileg affirmed Japan as Mongolia’s “third neighbor,” alongside Russia and China. This idea encompasses a growing cultural, educational, social as well as economic integration between the two countries.

In economic terms, Mongolia’s rich mineral deposits are increasingly important for Japan. Mongolia is rich in iron ore, gold, coal and crude oil. Japan is a resource-poor country and needs to import such materials to sustain economic well-being.

At the current time, China is the principal importers of Mongolian mineral resources, but Chinese dominance is expected to be challenged under this agreement.

In recent years there has been growing concern in Mongolia and elsewhere over China’s economic growth and implications for the future political integrity of this landlocked nation.

Critics allege that coal prices are suppressed by China’s dominant influence. Others critics argue that this has led to national anxiety over China’s intentions for Mongolia. Not surprisingly, as China grows exponentially, its appetite for raw materials and minerals such as coal is a consequence of that growth.

China remains Mongolia’s largest destination of coal.

The EPA with Mongolia however is expected to facilitate greater Japanese investment in the Mongolian resources market, to compete with other foreign companies already operating in the country. Provisions in the treaty guarantee national treatment as well as giving both parties the right to take measures against anti-competitive behavior. These rules will contribute to greater stability and clarity.

The WTO celebrates competition and free markets within a system of mutually agreed rules. Japan, China and Mongolia rely upon these rules to safeguard the massive economic growth in the region in recent years. Any trade with Mongolia relies upon the transportation of trade resources across Chinese territory.

Japan also needs to adapt to the energy realities after the tragic March 11, 2011, earthquake and tsunami. Before this catastrophe, Japan’s electrical power was driven largely by nuclear energy but in the current climate, other sources of power are desirable.

It is in this context that Mongolian mineral resources are of growing importance for Japan as the nation seeks the right path for “An agreeable energy mix” as suggested in the Feb. 27 editorial of The Japan Times.

Mongolia is part of a vital regional economy that relies upon continual economic expansion and stability. Japan’s future is also dependent upon the WTO system, a system that has informed and underpinned the growth and development of China and East Asia.

Noburo Iwata is the director of the WTO Research Center at Aoyama Gakuin University. Michael Sutton is a visiting research fellow
.

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Talks drawn out over Mongolia’s largest coal mine

Mongolia’s previous attempt to find investment for Tavan Tolgoi ended in failure.

Terrence Edwards (Reuters) | 11 March 2015 10:58

Talks to allow a consortium led by China’s Shenhua Energy to take over Mongolia’s largest coal mine have yet to be completed, with the project still paying off debts to another Chinese state miner, an official said on Tuesday.

Mongolia is desperate to kick-start a deal expected to be worth as much as $4 billion, with foreign investment into the country falling 74 percent last year, largely because of disputes between companies and the government.

Last year, China’s top coal firm Shenhua formed a consortium with Japan’s Sumitomo Corp and Energy Resources LLC, a wholly-owned unit of the Mongolian Mining Corp, to take over the management of the Mongolian state-owned firm in charge of the huge Tavan Tolgoi coal deposit.

The mining project in the country’s southern Gobi region includes the East and West Tsankhi blocks.

Negotiations with Shenhua were due to be completed before Mongolia’s lunar new year in February, but have already missed the deadline, according to Mongolian Minister Mendsaikhan Enkhsaikhan, who oversees Tavan Tolgoi and other giant mining projects.

One challenge is how to handle debts owed to China’s Chalco Group by Erdenes Tavan Tolgoi, the Mongolian state-owned firm in charge of the project.

Erdenes Tavan Tolgoi borrowed $350 million from Chalco in 2011 and agreed to pay back the debt in the form of coal deliveries from its East Tsankhi block. It still owes about $150 million to the company, as well as other commitments.

The government used most of the funds it borrowed from Chalco to finance a short-lived social welfare programme that distributed about $15 to every citizen each month.

“After the repayment of outstanding loans to Chalco, Erdenes Tavan Tolgoi still has an obligation to sell 80 percent of its coal (to Chalco) from the East Tsankhi mine for five years,” said Enkhbaatar Myagmarulzii, a project manager working under the minister.

Mongolia has set up a working group to lead negotiations with the consortium, which will be entrusted with developing and managing both the East and West Tsankhi blocks, which hold a combined 1.8 billion tons of coking coal.

The Tavan Tolgoi project has attracted the attention of dozens of foreign investment banks and mining conglomerates, but its progress has stalled as a result of financial strains and interference from the government.

Mongolia’s previous attempt to find investment for Tavan Tolgoi ended in failure, when its decision to award the project to a consortium consisting of Shenhua, Peabody Energy and a team of Russian and Mongolian firms was criticised by Japanese and South Korean rivals and subsequently annulled.

Erdenes Tavan Tolgoi is also still in dispute with MacMahon Holdings, which was contracted to develop the mine’s east block. MacMahon claims it is owed about $30 million.

“It’s a complicated issue, but the working group and consortium are seeking to reach a win-win solution now,” said Myagmarulzii.

Source:Reuters

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Mongolia desperate to kick-start deal

Talks to allow a consortium led by China's Shenhua Energy to take over Mongolia's largest coal mine have yet to be completed, with the project still paying off debts to another Chinese state miner, an official has said.

Mongolia is desperate to kick-start a deal expected to be worth as much as US$4 billion, with foreign investment into the country falling 74% last year, largely because of disputes between companies and the government.

Last year, China's top coal firm Shenhua formed a consortium with Japan's Sumitomo Corp and Energy Resources LLC, a wholly-owned unit of the Mongolian Mining Corp, to take over the management of the Mongolian state-owned firm in charge of the huge Tavan Tolgoi coal deposit.

The mining project in the country's southern Gobi region includes the East and West Tsankhi blocks.

Negotiations with Shenhua were due to be completed before Mongolia's lunar new year in February, but have already missed the deadline, according to Mongolian Minister Mendsaikhan Enkhsaikhan, who oversees Tavan Tolgoi and other giant mining projects.

One challenge is how to handle debts owed to China's Chalco Group by Erdenes Tavan Tolgoi, the Mongolian state-owned firm in charge of the project.

Erdenes Tavan Tolgoi borrowed US$350 million from Chalco in 2011 and agreed to pay back the debt in the form of coal deliveries from its East Tsankhi block. It still owes about US$150 million to the company, as well as other commitments.

The government used most of the funds it borrowed from Chalco to finance a short-lived social welfare programme that distributed about US$15 to every citizen each month.

"After the repayment of outstanding loans to Chalco, Erdenes Tavan Tolgoi still has an obligation to sell 80% of its coal (to Chalco) from the East Tsankhi mine for five years," said Enkhbaatar Myagmarulzii, a project manager working under the minister.

Mongolia has set up a working group to lead negotiations with the consortium, which will be entrusted with developing and managing both the East and West Tsankhi blocks, which hold a combined 1.8 billion t of coking coal.

The Tavan Tolgoi project has attracted the attention of dozens of foreign investment banks and mining conglomerates, but its progress has stalled as a result of financial strains and interference from the government.

Mongolia's previous attempt to find investment for Tavan Tolgoi ended in failure, when its decision to award the project to a consortium consisting of Shenhua, Peabody Energy and a team of Russian and Mongolian firms was criticised by Japanese and South Korean rivals and subsequently annulled.

Erdenes Tavan Tolgoi is also still in dispute with MacMahon Holdings, which was contracted to develop the mine's east block. MacMahon claims it is owed about US$30 million.

"It's a complicated issue, but the working group and consortium are seeking to reach a win-win solution now," said Myagmarulzii.

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EBRD know-how helps export Mongolian 'Artichoke'

The FINANCIAL -- Tugsuu Tseepil, Vice Director of Mongolian canning company Gazar Shim (official name GBT Trading), is a woman with an unusual passion: artichokes. The coordinator of the Mongolian Artichoke Association and the Artichoke in Mongolia Project, her company has recently become the first in Mongolia to sell an artichoke-based health drink, called, appropriately, “Artichoke”.

“My background is in food analysis. We wanted to produce a healthy drink and artichokes are very good for the kidneys,” said Ms Tseepil. “At first, it was a hobby and my focus was on improving the taste.  But now, it’s certified, patented and released onto the market.”

Having opened a new automated production line only last year, Gazar Shim sold more than 1 million bottles of Artichoke in 2014 – both the original and the new sugar-free version. The artichokes themselves are grown in Mongolia, in greenhouses. The main drink is high-end, best served hot and produced in glass bottles. It’s often taken for medicinal reasons.

Gazar Shim’s main business is canned fruits and vegetables, of which they produce over 30 varieties, from peppers to pickles, tomatoes or compotes and jams, according to EBRD.

“When we started in 1999, it was the transition period in Mongolia and there was a real lack of commodities – everything had to be imported,” she explained. “My brother and I saw an opportunity and started the business. Then, we produced 20,000 jars a year. Now, we can do that in a day.”

In 2013, the business first worked with the EBRD’s Small Business Support team in Mongolia  who connected them with a local consultant to help them introduce professional accounting software. Then, with an ambitious expansion plan in the works, they worked with a local consultant on developing a business plan for a new factory in a project with a strong market research component.

“We learned that we are competing well in the salads segment, but that we need to develop our compotes segment more,” she said. “We need to refine our production methods to improve productivity.”

Thanks to donor funding from the Early Transition Countries Fund, Gazar Shim is now working with an international adviser from the Netherlands under the Advice for Agribusiness programme, which links EBRD potential and existing banking clients in the Agribusiness sector with business advice through international industry experts.

“This is a perfect example of how the EBRD can take an integrated approach to supporting small and medium-sized enterprises”, said Matthieu Le Blan, EBRD Head of Office in Ulaanbaatar. “The advice and the financing are complementary, providing the tools businesses like Gazar Shim need to grow.”

“Kees Koeleman, our international adviser, is very professional and very helpful,” said Ms Tseepil. “He is the fourth generation in his family to run a vegetable canning business.”

“He has been very involved in everything, helping us select the right equipment to improve our production line, advising on how to improve the quality and taste of our products and how to design better storage for our new facility. He’s also linked us to a European ingredient supplier, which has changed our mixed pickle product for the better.”

The company has just begun exporting to Russia for the first time in January 2015, exporting 20 tons of products from Artichoke to different kinds of salads to over 50 shops through a Russian chain. They are now looking at raising the investment needed for the new factory.

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Sas Carey's New Documentary Explores Mongolian Rites

Among the many unusual features of Sas Carey's résumé is the small section about the languages she speaks: English, French, Swedish and "beginning Mongolian." Sure enough, on a bookshelf in Carey's Middlebury home sits a binder for a Mongolian-language audio course.

That binder is in good company. Carey's home is packed with artwork from and about Mongolia, and crafts, photographs and souvenirs from her many trips to the country. But the most recent manifestation of Carey's longtime fascination is one that she produced herself. Her documentary Ceremony, which evolved over more than 10 years of travel to Mongolia, finally premieres this week at Middlebury's Town Hall Theater.

Carey, 70, has a nursing degree as well as a passion for nonclinical treatments; she says her abiding goal is to "harmonize" the two. On her website, she calls herself a "private healer and spiritual guide," offering services such as "energy healing" and "spiritual readings."

She's equally invested in sharing her interest in Mongolia, which she's been visiting regularly since 1994. That passion has produced one book, Reindeer Herders in My Heart, and more than half a dozen films. Carey founded and directs a charitable organization called Nomadicare, which is devoted to preserving and sustaining the unique culture of nomadic Mongolians.

A former potter and masseuse, among other occupations, Carey gives credit for her polymathic tendencies to her Quaker upbringing. "As a Quaker, you listen for your calling for what you're supposed to do," she says, "and it's a changing kind of thing. You do a thing 'til you're done with it; then you do the next thing 'til you're done with it."

Carey gathered hundreds of hours of footage for Ceremony, her documentary about traditional Mongolian shamanic practices. One of her greatest difficulties, she says, was turning that raw material into a story that would convey her ideas about her subject. She initially wanted to include neither footage of herself nor a voiceover track in the film. But Carey eventually realized that including herself in the movie was the key to its structure, with the help of a story consultant who told her, "You really need some glue to put this together, and you're the glue," she says.

Carey's decision to incorporate her own guiding presence is a boon to the film's audience, since the shamanic practices it depicts would otherwise be inscrutable to most viewers. Mongolian shamans, for instance, consider epilepsy an indication of the sufferer's putative healing powers. As Carey learns about this culture, she brings viewers along into a world of surpassing unfamiliarity.

Shooting video in remotest Mongolia would be a challenge even for seasoned directors, but filmmaking autodidact Carey prevailed over the harsh conditions on the steppes. With no electrical grid to rely on, she had to power her gear with batteries and solar panels and to trek to shooting locations riding a horse — or a reindeer.

Ceremony's 45 minutes condense a great deal of Carey's own experience. Not only were its 125 hours of footage shot over the span of a decade, but the director's access to Mongolian healing ceremonies was anything but immediate. She had to earn her subjects' trust — not an easy task, despite having worked on the project since 2003. "It took some years until [the shamans] let me see a ceremony, and then a little bit more until they let me shoot the ceremony," Carey says.

Certain of these rituals are traditionally held only in darkened yurts, a setting where it is difficult to obtain a readable image. And visibility was only half the problem, Carey says. On the voiceover track of Ceremony, she comments on a ceremony that she witnessed and filmed while in the dark: "It's not until the next year, when I show the footage to the ... shamans for them to explain, that I understand what I'm seeing."

When Carey speaks of the ceremonies she witnessed, it's clear that she was strongly impressed by their visceral force. "Their system is thousands and thousands of years old," she says. "It's very powerful. They just allow their souls to leave their bodies. They're just like shells that are accepting their ancestors' spirits, and they start acting like something else. In the movie, [a shaman named] Nergui starts howling like a wolf. It's like the energy of the wolf is in his body."

Medical doctors might not be impressed by such techniques, but Carey is sincere in her awe for the millennia-old healing traditions — a sincerity that comes through clearly in her latest film.

The original print version of this article was headlined "A Vermonter's Film Explores Mongolia's Shamanic Rites"

Source:http://www.sevendaysvt.com/

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Valley Center Peace Corps volunteer organizes Mongolia Special Olympics games

James Busacca stands in back of some of his Mongolian Special Olympics organizers and kids.photo by Courtesy image.

March 11, 2015

Good morning, Ulan Bator, Mongolia. The pride of Lilac Road, Valley Center, California, James Busacca, is in the house.

A Peace Corps volunteer in Mongolia, Busacca is a man on a mission. "There is a lack of public dialogue around intellectual disabilities in Mongolia," he said, "which can lead to stigmas and misconceptions."

	Let the Ulan Bator Special Olympics games begin.photo by Courtesy image.

The man with a plan, Busacca helped organize Mongolia's inaugural Special Olympics. That's a national competition for more than 150 children and adults with intellectual disabilities -- 14 of whom will represent Mongolia at the 2015 Special Olympics World Summer Games in Los Angeles, said Erin Durney, a Peace Corps public affairs specialist.

Busacca worked with Special Olympics Mongolia and four local special needs schools to give the athletes an opportunity to discover new strengths and abilities while increasing awareness. "The competition allowed the athletes to compete and have fun but was also an educational opportunity for the general public," he said.

Following graduation from the University of California, Santa Cruz, the Valley Center High School graduate in 2012 joined the Peace Corps, created by President John F. Kennedy in 1961. The Peace Corps has allowed 220,000 Americans to serve in 140 countries worldwide.

Special Olympics Mongolia

The Special Olympics Mongolia program was established in 2013 and the National Competition was the first opportunity for Mongolians to compete in an official Special Olympics event as an accredited program, Durney said. Busacca began working with Special Olympics Mongolia last fall to help plan the three-day competition, which included events in track and field, judo and table tennis, she added.

"Special Olympics Mongolia has been a great organization to work with because we get to offer amazing experiences to Mongolians with disabilities and their families," Busacca said. "We also get a chance to educate a wide audience throughout the country through high-profile events like the Special Olympics World Summer Games."

The Peace Corps has had a long-standing relationship with Special Olympics since the organization was founded in 1968 by Eunice Kennedy Shriver. In 2011, the Peace Corps signed a Memorandum of Understanding with Special Olympics that increases opportunities globally to support people with intellectual disabilities through innovative programs that promote peace, friendship, acceptance, and mutual understanding.

"I'm very excited for the athletes going to the World Summer Games and for those who had the opportunity to participate in the National Competition," Busacca said. "My favorite memory from the competition was getting to talk to the athletes and see their excitement and enthusiasm. We've already heard from their families and the event organizers that they plan to make the competition an annual event."

The athletes who qualified for the summer games in Los Angeles will join more than 7,000 athletes and 3,000 coaches from nearly 180 countries around the world to compete. The opening ceremony, to be held July 25 at the Los Angeles Memorial Coliseum, is expected to attract 80,000 people.

Source:http://www.valleycenter.com/

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Negotiations drawn out over Mongolia's largest coal mine

By Terrence Edwards

ULAN BATOR, March 10 (Reuters) - Talks to allow a consortium led by China's Shenhua Energy to take over Mongolia's largest coal mine have yet to be completed, with the project still paying off debts to another Chinese state miner, an official said on Tuesday.

Mongolia is desperate to kick-start a deal expected to be worth as much as $4 billion, with foreign investment into the country falling 74 percent last year, largely because of disputes between companies and the government.

Last year, China's top coal firm Shenhua formed a consortium with Japan's Sumitomo Corp and Energy Resources LLC, a wholly-owned unit of the Mongolian Mining Corp, to take over the management of the Mongolian state-owned firm in charge of the huge Tavan Tolgoi coal deposit.

The mining project in the country's southern Gobi region includes the East and West Tsankhi blocks.

Negotiations with Shenhua were due to be completed before Mongolia's lunar new year in February, but have already missed the deadline, according to Mongolian Minister Mendsaikhan Enkhsaikhan, who oversees Tavan Tolgoi and other giant mining projects.

One challenge is how to handle debts owed to China's Chalco Group by Erdenes Tavan Tolgoi, the Mongolian state-owned firm in charge of the project.

Erdenes Tavan Tolgoi borrowed $350 million from Chalco in 2011 and agreed to pay back the debt in the form of coal deliveries from its East Tsankhi block. It still owes about $150 million to the company, as well as other commitments.

The government used most of the funds it borrowed from Chalco to finance a short-lived social welfare programme that distributed about $15 to every citizen each month.

"After the repayment of outstanding loans to Chalco, Erdenes Tavan Tolgoi still has an obligation to sell 80 percent of its coal (to Chalco) from the East Tsankhi mine for five years," said Enkhbaatar Myagmarulzii, a project manager working under the minister.

Mongolia has set up a working group to lead negotiations with the consortium, which will be entrusted with developing and managing both the East and West Tsankhi blocks, which hold a combined 1.8 billion tons of coking coal.

The Tavan Tolgoi project has attracted the attention of dozens of foreign investment banks and mining conglomerates, but its progress has stalled as a result of financial strains and interference from the government.

Mongolia's previous attempt to find investment for Tavan Tolgoi ended in failure, when its decision to award the project to a consortium consisting of Shenhua, Peabody Energy and a team of Russian and Mongolian firms was criticised by Japanese and South Korean rivals and subsequently annulled.

Erdenes Tavan Tolgoi is also still in dispute with MacMahon Holdings, which was contracted to develop the mine's east block. MacMahon claims it is owed about $30 million.

"It's a complicated issue, but the working group and consortium are seeking to reach a win-win solution now," said Myagmarulzii. (Editing by David Stanway and Pravin Char)

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Mongolia’s Mining Troubles: Opportunity or Calamity?

Several years ago, Mongolia was touted as a hot investment locale for mining companies, given its rich mineral resources – particularly gold, copper, uranium, and coal – and the previously low level of exploration and development.

In 2015, that outlook looks slightly more gloomy.

Throughout 2014, the Mongolian government has been battling with Rio Tinto over the massive Oyu Tolgoi gold and copper mine, with Mongolian officials demanding Rio Tinto pay $30 million in taxes. Rio suspended construction work at the mine in July 2014.

As a result, foreign direct investment in the country declined in 2014 by 81% compared to 2013, according to the Central Bank of Mongolia.

The very public dispute between Ulaan Bataar and a major mining corporation is not the only entanglement Mongolia has had with foreign mining firms.

Khan Resources, a Canadian firm looking to mine uranium in the country, took the Mongolian government to international arbitration in 2011 after the government canceled its licenses to mine the Durnod uranium project in 2009.

Earlier this week, the international arbitration body decided in favour of the Canadian firm, and ordered the Mongolian government to pay $100 million for compensation. The company had initially submitted a claim to recover $354 million in compensation.

The indemnity will be an additional stress for the Mongolian economy, already reeling from the precipitous drop in FDI and crashing commodity prices. Mining accounts for nearly 20% of the country’s gross domestic product.

Silver lining?

But the CEO of Mongolia-based market intelligence firm Cover Mongolia sees reason for optimism on the mining front.

“I think that the verdict that came out is good for Mongolia’s reputation,” Badral Munkhdul told Silk Road Reporters on March 5.

“This shows that investors can have a dispute with the government and it can be settled, and that the government of Mongolia can be held accountable.”

Munkhdul said that the new government of Prime Minister Chimed Saikhanbileg is eager to reverse the missteps made by his predecessor in regards to unpopular changes to the overall mining regime and the cancellation of mining licenses.

Repairing the relationship with Rio Tinto appears to be a top priority of the new government, in power since November 2014. PM Saikhan told a question-and-answer session at the American Chamber of Commerce in Mongolia on March 4 that he would like to have the Rio Tinto/Oyu Tolgoi issue resolved by the end of this month.

The downtick in mining-related investment might also push the diversification of the Mongolian economy ahead at a quicker pace, Munkhdul said.

“What this crisis has taught us is that we need to diversify, or else we’ll be in the same economic cycle that we are in right now,” he said. More focus should be placed on small and medium enterprises, domestic manufacturing, and import-substituting manufacturers.

There is also real potential in Mongolia’s meat exporting industry, he said.

“In Soviet times, Mongolia was a big exporter of meat to Russia, but in the 1990s, Russia stopped buying and we never recovered as a meat exporter,” he said. “No one doubts that there’s a huge potential here. Mongolia has a huge advantage for the whole organic movement to produce non-farmed meat, which I’m sure there will be a huge market for. We could even export to Korea and Japan, but of course I think the biggest customers will be Russia and China.”

Jax Jacobsen is a Montreal-based freelance journalist who reports on Central Asia, mining, and foreign affairs. She has been published in the Montreal Gazette, The Guardian, The New Statesman, and elsewhere. She can be found on Twitter @jaxjacobsen.

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'When I was herding I had a plentiful life. Now I am working for another and have lost my independence'

A new report reveals the often devastating impact of big development projects on local communities. Sukhgerel Dugersuren interviewed the nomads in Mongolia being displaced by mines.

In 2014 the International Accountability Project asked their global advocacy team to look at eight projects funded by the World Bank and other development banks around the world. This month they publish findings from the Philippines, Burma, Panama, Mongolia, Egypt, Zimbabwe, Pakistan and Cambodia in ‘Back to development: A call for what development could be’. Here we publish an extract from the Mongolia report by Sukhgerel Dugersuren, who worked for many years with the US Agency for International Development.

In the past decade, Mongolia’s South Gobi Desert has experienced an enormous mining boom. In 2000, we had only a couple of large active mines. Today, there are dozens of large-scale mines with many more being planned. 

I formed a research team with members of the communities being affected by two particular developments: Oyu Tolgoi mine, a US$12bn project owned and operated by Rio Tinto and funded by the World Bank among other organisations, Mongolia’s largest ever foreign direct investment, and Tayan Nuur iron mine, in south-western Mongolia, which is being financed by the European Bank for Reconstruction and Development. Together we interviewed 100 people, most of whom have spent their entire lives as nomadic herders until recently, while others were residents of the local towns or staff at the local government office. 

According to the World Bank, mining has led to rapid economic growth in Mongolia. But the reality for people living near the mines is different. Pollution has had an impact on everyone, but the people who have suffered the greatest impoverishment are the nomadic herder communities. Their life-sustaining pastures, water springs and seasonal camps are being lost to open-pit mines and the road building, waste dumping and water extraction that come along with this industry.

Resettlement programmes have already begun at both mining sites, although some of the people we interviewed were excluded from the programmes. Instead, families were displaced when their pastures were taken and their water sources became polluted. Many families have left their lands and are “going around begging pasture access from others,” in the words of one person we interviewed.

Other families moved to nearby towns but have struggled to earn a living away from their traditional nomadic lifestyle. A person relocated by the Tayan Nuur mine told us: “We used to live with our children, herding animals and benefiting from sales of wool cashmere, milk and dairies. But now we are forced to operate a small shop to survive. We had 600 to 700 animals before and a successful life, but a company with empty promises came to dig our land and cause damages that bring big emotional stress on us.”

At both mines some of the displaced families were excluded from compensation and resettlement programs. Of the people surveyed who are being displaced by the Oyu Tolgoi project, 34% said that they did not receive any compensation. With the Tayan Nuur project, 74% said they received no compensation.

The loss of pastures and water made it impossible for many nomadic herder families to earn a livelihood. One person displaced by the Oyu Tolgoi mine explained: “Without pasture we are forced to move and look for other pastures. There are no other options left.” Another said: “I was not resettled by [Oyu Tolgoi], but I am one of many who had to move without compensation, because of no water.”

Pollution also drove a number of families from their homes. One family who are being displaced by the Tayan Nuur project said: “There is a lot of noise and dust. Grass stopped growing in our pasture. It is not possible to herd animals here any more.” Another person described the costly impacts of pollution, saying: “We moved after five of our goats died of suffocation from swallowing dust from the quarries.”

Nomadic people are not considered indigenous

Of the 100 people who we surveyed, 88% identified themselves as belonging to an indigenous community. However, neither the government nor the mines’ investors consider nomadic herders to be eligible for protection under the indigenous people’s safeguards of the development finance institutions. This lack of recognition means that project developers have not been required to carefully study and respect customary land uses in the affected areas. Much of the area impacted by the mines is being treated simply as “state land” rather than as areas where indigenous people live and have complex land management systems.

This meant that the developers of the Oyu Tolgoi mine did not recognise areas considered sacred by the affected communities. The subsequent destruction of sacred sites has caused grave cultural and psychological impacts. As one displaced person explained: “This mine has taken away our land and water, destroyed our sacred Bor-Ovoo Mountain, which has always been a mountain we worship. It has brought us many damages.” Similar complaints were made about sacred rivers and springs. 

The psychological toll of the displacement has been severe. A man who was displaced by Tayan Nuur said: “When I was herding, I had a plentiful life. Now I am working for another and lost my independence, and I have no support promised by the company, not even gloves or toilet paper.”

Several of the families that we interviewed did receive some form of compensation. Both mining companies paid cash to some families and provided temporary, manual labor jobs at the project sites. People affected by the Tayan Nuur mine also reported that a few students received scholarships.

However, the vast majority of displaced people who participated in the survey (71% at Oyu Tolgoi and 82% at Tayan Nuur) reported that they received no livelihood assistance. A family that was displaced by the Tayan Nuur mine told us: “We had a 60-year land use certificate for the winter/spring camp land. The fence, animal shelter, building for canteen and storage have been valued at 20m MNT (£7,000) but the community relations officer came and voided it, claiming that the valuation was done by a non-expert, that 5 million MNT (£1,600) should be adequate.”

Among those displaced by the Oyu Tolgoi project, 50% reported that they were never consulted. For the Tayan Nuur project, 63% said they were never consulted. When asked whether they had the information necessary to make informed decisions about the project, only 2% responded positively. 

A World Bank of trouble?

 

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On several occasions, community members approached the developers of Oyu Tolgoi and Tayan Nuur to address their grievances. In both cases, the developers were unresponsive. A woman displaced by the Tayan Nuur mine described her experience: “We lived in the mine impact zone, asking for compensation for four years. They will not let us in when we come with petitions for assistance.”

Force and coercion were also experienced during the relocation process. Some 13% reported that the project developers “used coercion and intimidation, such as saying we would not get compensation, would lose our job or experience another such consequence”. Similarly, 12% reported that “they used bulldozers, intentional flooding or explosions, or other means to scare us into moving”. Another 10% reported that “they threatened us with force and violence to scare us to move”.

Overall, the people we interviewed believe that the mines have brought more harm than benefits to their communities: 68% said that their lives have become worse or much worse. Only 17% believe their quality of life has remained the same. A few people were more optimistic: 10% believe their quality of life will improve when they are resettled, but only 2% reported that their quality of life has improved so far.

Much harm could have been prevented if local expertise and ideas were included in the design of these two projects. In Mongolia, only the herder communities themselves understand how the land is used, where seasonal camps are located, and when springs freeze. The government does not track this type of information or protect the customary use rights and patterns. Quite literally, the only source of this information comes from sitting down and talking with local people. For this reason, it is important for communities to have the opportunity to map the ways that the mines will affect their livelihoods. 

You can access the rest of IAP’s report here. Sukhgerel Dugersuren is founder of OT Watch, an NGO that monitors the Oyu Tolgoi mine, and she is also part of IAP’s global advocacy team. Follow @4accountability on Twitter.

Source:http://www.theguardian.com/

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FORGET WHAT YOU KNOW ABOUT MONGOLIAN FOOD IN L.A.

Khorkhog

Forget what you know about Mongolian restaurants. The choose-your-own-ingredient places cooking stir-fry noodle dishes in oversized woks across L.A. are actually a Taiwanese invention. But with chef Ganbat Damba's Golden Mongolian Restaurant, Angelenos have an opportunity to experience true Mongolian cuisine.

Damba was born in Ulan Bator, Mongolia's capital. His restaurant, right down Wilshire Boulevard from Southwestern Law School, is graced with framed photos of his homeland on purple walls and shelves of memorabilia including tiny models of morin khuur, the two-stringed bowed instrument, and figurines of Mongolians in native dress. A map of the Mongol Empire hangs behind the register. The only out-of-place decoration is a painting of Audrey Hepburn that hangs in the restroom. Maybe she was a fan of khorkhog?

Khorkhog ($35 for 2 people), pronounced “har-hook,” is composed of tender hacks of bone-in lamb breast, potato and carrots, all of which are draped with dough and cooked with a pair of hot stones in a stone pot. A bit of lamb broth pools at the base of the pot and thickens thanks to the potato’s starch. Golden Mongolian’s signature dish comes with what amounts to a Mongolian take on Korean banchan: kimchi, crunchy slaw folded with mayo and garnished with cherry tomatoes, and niislel, a mayo-based Mongolian potato salad.

My server, who is also of Mongolian descent, instructed us to reach into the pot, retrieve the stones and wipe them down. Passing the hot stones between your palms is supposed to increase blood circulation.

Unlike most Mongolian places in town, Golden Mongolian makes their own noodles in-house, by hand, which serve as the foundation for soups and stir-fries. Tsuivan ($8.95) features flat, irregularly shaped noodles tossed with strands of beef, peppers and little more. The dish is rustic and simple, but comforting.

Buuz Dumpling

Dumplings form their own menu category at Golden Mongolian. Buuz ($5.50) — steamed beef dumplings with meatball-like cores — have thick skins and tiny holes up top to let off steam. A sextet arrives in a stainless steel steamer with a dish of creamy cole slaw in the middle. Khuushuur ($5.95) resemble empanadas, but are actually a trio of pan-fried Mongolian flat dumplings filled with minced beef and onion and served with tangy julienne carrot and cabbage.

If you’re interested in sampling authentic Mongolian cuisine, Golden Mongolian is a great place to start.

Golden Mongolian Restaurant, 3012 Wilshire Blvd., Los Angels, 90010; open daily 11 a.m.-10 p.m.; (213) 263-2141

oshua Lurie is the L.A. based founder of Food GPS. Follow him on Instagram and Twitter.  Want more Squid Ink? Follow us on Twitter or like us on Facebook.  

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