Mongolian Views

Propane tank explodes in Darkhan apartment, residents evacuated

2012-01-28T16:59:00.003+08:00

Propane tank explodes in Darkhan apartment, residents evacuated

On the evening of January 21, a propane tank exploded in an apartment on the 7th floor in Darkhan city, causing three people to suffer injuries and two of them seriously injured. From the explosion, 62 windows of the apartment block and all windows of the post office located 40 meters away from the apartment were broken. Fortunately, windows on 2nd floor of the apartment were not broken. The fire-fighting department of Darkhan-Uul Aimag received the emergency call at 9:25 pm and extinguished the fire by 10 pm. In the process of extinguishing the fire, residents of the 7th floor fled their homes. Presently, Darkhan Soum administration is taking immediate measures to shelter the residents in the preschool #22 building which is located near the apartment.

Mr. Oyunsuren, Deputy Head of the Emergency Commission of Darkhan-Uul Aimag said that a parent of the family where the propane tank exploded bought 5 liters of gas from Dashvanjil Company that day. The new propane tank exploded when he was using the old one to prepare foods.

Three people of the family suffered injuries from the explosion and the host is currently under treatment at central hospital of the aimag. The hostess and another woman were urgently transferred to the Burn Hospital in Ulaanbaatar. Burns covered 48 percent of 48-year old woman’s body and she was diagnosed to have probability to have kidney failure. A 22-year old woman suffered burns to 30 percent of her body and her current health state is very bad.

After extinguishing the fire, the Emergency Commission of the aimag called an urgent meeting at which an ordinance of the aimag’s Governor was issued and a working group responsible for eliminating the disastrous condition was set up. Regarding the accident, State Emergency Commission head M.Enkhbold called a meeting and gave relevant instructions. Professional teams from the General Agency of Specialized Inspections and National Emergency Management Agency were dispatched to Darkhan-Uul Aimag. Also, relevant organizations were instructed to eliminate the consequence of the accident and make a professional conclusion.

The apartment block has a total of 220 citizens of 72 families. Due to the explosion, ceilings and walls of two apartments fell in, 63 windows were broken, walls of 10 families were cracked, 11 doors were broken and furniture and possessions of the family that suffered the explosion were entirely burnt to ash.

Emergency workers satisfied security of the 6-8th floors of the apartment and took measures against freezing. According to recommendations and resolutions of the working group, 113 people of 32 families were evacuated.

The aimag’s Specialized Inspections Department, Emergency Department and Police Office are working to determine cause and losses.

Source: THE MONGOL MESSENGER

IMF Rep blames fiscal policy for Mongolia’s inflation

2012-01-28T16:53:00.000+08:00

IMF Rep blames fiscal policy for Mongolia’s inflation

Mongol Bank’s actions defended

Mr. Steven Barnett, the IMF Representative for Mongolia, shared his views on the recent developments around the exchange rate.

-On January 2, 2012 petroleum importers raised retail prices by Tog 300 per liter, relating their decision to the exchange rate depreciation. Have you looked at this issue and would you agree to the petroleum importers’ explanation?

-We have not looked specifically at the petroleum market in Mongolia, so I would rather not comment on that.

However, I would like to make a general point. The cost of petroleum in a country depends on the international price of oil—typically quoted in US$—and the country’s exchange rate. So, it is natural for the price, which of course should be linked to the cost, to move with changes in global oil prices and the exchange rate.

-Many businessmen and economists believe that the BOM should be held responsible for the increase in petroleum prices. What do you think?

-I disagree completely. In fact, we have consistently applauded the BOM—and continue to do so—for their management of the flexible exchange rate regime. Indeed, the tightly managed exchange rate in 2008 was a key factor behind the last economic crisis. Therefore, we see the continuation of the flexible exchange rate regime as a critical line of defense for preventing another crisis.

This is especially important because of the irresponsible fiscal policy that has been put in place by the government. The extraordinary growth in spending is overheating the economy, leading to high inflation, rapid growth in imports due to excessive domestic demand, and macroeconomic uncertainty—and these factors are influencing the exchange rate. The BOM is doing the right thing by allowing the exchange rate to move in line with the evolving market conditions.

-The Bank of Mongolia has informed that it is doing intervention on the FX market to reverse the recent depreciation. Is it sufficient?

-We support intervention to smooth excess volatility in the foreign exchange market but not to resist depreciation (or appreciation) pressure. Smoothing excess volatility is fundamentally different than intervention aimed at targeting a specific exchange rate or preventing depreciation. In particular, under a flexible exchange rate regime the market guides the exchange rate up or down based on evolving conditions.

Intervention takes place only to smooth out the impact of say a particularly large transaction or other short- term disturbance in the market.

-Mongolia’s international reserves now stand at over US$ 2 billion. How sufficient are they by international standards?

-The level of reserves is adequate to comfortably support the existing flexible exchange rate regime. Indeed,

that is one of the big benefits of the current flexible exchange rate system. In this regard, it is worth recalling how the fixed exchange rate policy in place previously was a key contributor to the last crisis. Specifically, the BOM was running out of international reserves in a destined-to-fail attempt to defend the exchange rate and the crisis came to a head as the BOM came close to running out of reserves.

The bottom-line, therefore, is that the flexible exchange rate regime in place now is critical for avoiding a repeat of that crisis. Especially critical given that fiscal policy has returned to the boom-bust ways of 2006-8.

-What are the reasons for the US$ appreciation in Mongolia? In contrast, globally, the US$ and Euro are depreciating. Is this related to a crisis?

-As a general rule, economists are not very good at forecasting shortrun (less than a year) changes in the

exchange rate. Or, put differently, short-run fluctuations in the exchange rate are inherently difficult to understand, as they reflect evolving market conditions and sentiment. Having said that, many factors could be behind the recent moves, including external considerations (such as an increase in global risk aversion which has tended to cause the U.S. dollar to appreciate and the euro to depreciate in 2011) and domestic factors (such as concerns over macroeconomic stability related to the government’s fiscal policy which has tended to put downward pressure on Mongolia’s currency).

-Down the road, what policies and measures are needed to appreciate the exchange rate and thereby bring down prices of goods?

-No policies are needed, as the

BOM should not try to appreciate the exchange rate. The flexible exchange rate regime currently in place is the best policy for Mongolia. And, a flexible exchange rate regime means that the central bank does not try to appreciate nor depreciate the rate. The best way to control inflation is to have a more responsible fiscal

policy. The extraordinary increase in government spending in 2011 and planned for under the 2012 budget are the key drivers of rising prices of goods. The public’s well-placed concern about rising cost of living should be addressed, therefore, towards fiscal policy and not the BOM.

Source: THE MONGOL MESSENGER

President Ts.Elbegdorj visits South Gobi mine sites and soums

2012-01-28T16:41:00.002+08:00

President Ts.Elbegdorj visits South Gobi mine sites and soums

President Ts.Elbegdorj meets with soum citizens to answer questions of local concern

On January 19-21, President Ts.Elbegdorj made a working trip to Omnogobi Aimag. First, the President saw operations of the ‘Tavant Tolgoi’ Company located in Tsogttsetsii Soum. The company is locally owned with 51 percent of shares owned by Mongolia and 49 percent by about 170 shareholders. Later, the President went to the ‘Erdenes Tavantolgoi’ company that was established on December 23, 2010. It employs a total of 262 workers. According to the company’s director L.Enebish, greater constructional works are planned to construct a concentrating plant, water system, paved road and residential town for 1,000 people. He added that the company started exporting coal on August 4, 2011 and has extracted one million tonnes of coal so far. “The main difficulty is the transportation issue. It necessitates starting railway construction and urgently laying a paved road. Also the border checkpoint should have many gates because loaded coal truck waste much time in a long queue at the border check-point. In collaboration with other companies, we have made some efforts to make it have more gates,” he said.

Minerals and Energy Minister D. Zorigt said, “Even when more roads are constructed, there will still be problems of transportation. Therefore, we need to start construction of a railway as soon as possible.”

President Elbegdorj said that they need to resolve infrastructure issues quickly. In particular, construction of an auto road and railroad, along with intensifying operations of mining companies rely on the Tavan Tolgoi deposit. The transportation-related issue was touched upon most during the working trip to Tsogttsetsii and Khanbogd soums of Omnogobi Aimag. Last year, Energy Resource LLC constructed a 245km paved road from its mine to the Gashuun Sukhait border check-point. It contributed much to ease the transportation of coal. However, the road is unable to bear all capacity and they need to construct more paved roads and a railroad as soon as possible.

The president was critical about the construction process of the railroad. “When I asked about it in 2009, I was told that construction would be started after 2 years. However, there is no rail here. By using the reason of raising funds, it is taking too much time and causes economical and natural losses.” A passage way for animals should be planned while constructing both the railroad and auto road, said the President. The same day, President Elbegdorj got acquainted with activities of the Ukhaa Khudag mine of the ‘Energy Resource’ LLC. The mine started operations in 2009, put its coal processing plant into operation, made an IPO on the Hong Kong Stock Exchange, constructed an 18 megawatt electrical power plant, and implemented many construction works. The coal processing plant is capable to process 5 million tonnes annually and has the technology to recycle 94 percent of its used water. Construction of the 18 megawatt electrical power plant not only ensures the supply of energy for the mining operations, but also for citizens of Tsogttsetsii Soum. The President was introduced to the coal processing plant, office buildings of the mine, the ‘Tsetsii’ apartment town and ‘Gallery’ town for workers.

So far, Energy Resource Company has invested about Tgs600 billion on auxiliary projects of the mine and infrastructure projects. It paid Tgs13 billion to the State Budget in 2009, and increased to Tgs120 billion in 2011.

Afterwards, the President held a meeting with local citizens of Tsogttsetsii Soum. To begin the meeting, the President briefly introduced five main directions of his activities as State Head.

On Friday, January 21 the President and accompanying officials came to the Oyu Tolgoi deposit. “At the coldest period of winter, great constructional works are underway here,” said G. Batsukh, Chairman of the Board of Directors of the Oyu Tolgoi Company. The Oyu Tolgoi Project is under the construction process. As a result of the project which is expected to be hugest mining construction in the world, Mongolia’s economy will grow by 36 percent in 2019. It is expected to invest Tgs7.7 trillion before the start of extraction. The concentrating plant will come into operation in the 3rd quarter of 2013 and it is now under the assembling process.

According to company authorities, the construction works attracted 65 companies from 38 countries as assistant executors; some 15 thousand workers are employed and 10 thousand of them are Mongolians.
Also, a contract was built for over 1,000 national suppliers, purchasing goods and services worth Tgs1.3 trillion. There are 12 infrastructure projects being implemented in the aimag and five of them are being executed by Mongolian companies. The Company made an investment worth Tgs110 billion in a training program that establishes vocational training and production centers and mining institutes in Dalanzadgad, Khanbogd, Darkhan and Ulaanbaatar. It also sponsors 200 students studying in domestic universities and 30
students studying abroad.

The authorities also introduced that natural rehabilitation will be made according to international standards. Its environmental policy completely conforms to the World Bank standard. The project is to introduce technology that demands the least amount of water consumption.
For infrastructure, 100km paved road to the southern border is being constructed and 220kwatt electrical lines are being erected. According to international standards, the airport and water pipe are being constructed. Also, a sport hall and cultural complex worth Tgs2.6 billion are being built in the aimag center for citizens. A sport complex is being built in Bayan-Ovoo Soum with an investment of Tgs775 million.
The President highly spoke about the running construction and then asked the company to augment salaries of Mongolian workers and involve them in various trainings. Advising the Cabinet to pay attention to Mongolian workers, the President said the working schedule of Mongolians should consider providing them with comfortable living conditions. “It is important to erect an apartments’ campus for the workers,” he added.
The President also asked the company to study an opportunity to gather more national enterprisers who supply products to the OT Company.

The President and accompanying officials saw the construction process of a concentrating plant, the project field, open pit and shaft #2 from the observation stand, and a heavy load assembling workshop and settlement for workers.
Later, the President held a meeting with Khanbogd Soum citizens. Along with implementation of big mining projects and construction works, the population in the soum is increasing, which causes many problems to occur regarding mutual understanding between environment and infrastructure project implementers and local citizens. Therefore, citizens had words and queries for the President.

First, the focus of the discussion was the issue about the outlook for energy. As G. Batsukh, Chairman of the Board of Directors of the Oyu Tolgoi Project said, erection of electrical lines linking Oyu Tolgoi to Khanbogd Soum will be completed by next autumn and Tgs5.9 billion has been preliminarily budgeted. Minerals and Energy Minister D. Zorigt said, “A 220 Mega Watt electrical line is running from Mandalgobi to Tavan Tolgoi. From there, a line will be stretched to Oyu Tolgoi. A 300 megawatt electrical power station will be built in both Tavan Tolgoi and Oyu Tolgoi. The average term for building the station is 2 years. As it is needed to receive energy before the completion of the construction of power station, energy will be received from China.
The energy issue will be resolved this year if an electrical line is stretched here regardless of whether it comes from Ulaanbaatar or China.”

Citizen Batmonkh said, “I’m not saying that the Oyu Tolgoi project is wrong, but the state policy on mineral resources should be determined with a far-sight of 100 years at least. Rivers and streams are drying out and nature is deteriorating. With the current situation, it is very doubtful about the future existence of Khanbogd Soum. Pasturing and animal husbandry is devastated. There may be not any pasture area or even herders. There may be no one who herds animals 20 years from now. I can’t understand how mining is to be developed without resolving infrasture. The situation in Gobi is very hard. You looked at the soum center; it looks greenless. We need an auto road.

Senior citizen Tserenkhuu said, “Implementation of the Oyu Tolgoi Project is not fruitful for herders. State officials need to hear the words of herders and citizens. I think the meeting in the soum center will not give positive results. Look how life is there; livestock has become unhealthy and gold processing activities were made so close to our soum. I think you know how poisonous that is. Families living near the road can’t eat the meat of their livestock.”

Khanbogd citizens criticized and gave suggestions related to the Oyu Tolgoi project. They criticized that the Oyu Tolgoi project does not care about the health state of Mongolian workers, pays little to Mongolians, but higher to foreigners and apartments for workers are not built.
Officials gave relevant responses to the questions.

Source: THE MONGOL MESSENGER

The Mongolian Sandwich

2012-01-27T18:10:00.000+08:00

The Mongolian Sandwich

By Elaine Xiang

Mongolia has two neighbours, China and Russia. Both of these countries are huge and have dominated Mongolia for several centuries, despite Mongolia being a sovereign republic. Mongolia is rich in natural resources such as copper, coal, gold and other minerals, which are providing new paths for success and prosperity. Its biggest market is China, while to the north, Russia forms an alternate route to other markets. However, many Mongolians believe that the possession of natural resources could lead to greater dependence rather than independence, as its commercial success may come to rely solely on either neighboring country’s economic stability.

Sandwiched Between Two Great Neighbours

Mongolian State Secretary Tsogtbaatar Damdin announced that his country has a good relationship with its giant neighbors. Sandwiched between China and Russia, Mongolia maintains peace like many other countries, though it now finds itself looking further outward. It might be said that this nation wishes to make further friendships with other parts of the world.

Mongolia’s Disenchantment with China

Mongolians are neither motivated nor ebullient about China or the Chinese. Even at a governmental level, Mongolia does not have basic human rights for Chinese workers in place. Some Chinese professionals pretend they are Koreans when doing business in Mongolia, as this is a more welcome ethnic group.

This seems to be a form of historical retribution. According to historical records, during the rule of ethnic-Manchu Qing dynasty, China ruled Mongolia rather inhumanly. One sixth of the population is Mongolian along the area of China bordering Mongolia, and there is continuous conflict there.

When the Dalai Lama visited Mongolia, China simply closed the border. This sort of behavior has led many Mongolians to fear for their future with China as a neighbor. Mongolia is a sparsely-populated vast and poor country, whereas the neighbouring countries are overly populated and economically booming. Eighty percent of the exports of Mongolia are bought by China and half of the imports are from China. To fulfill the demands of China, hundreds of small mines have been developed in Mongolia. Two big copper and gold mines have practically transformed this country.

The production of copper and gold in the mines at Oyu Tolgoi is expected to start in 2013 and at the same time, the coal production is expected to increase from 16 million tonnes a year to 240 million tonnes in 2014. Both these mines are in the province of South Gobi bordering China, which appears to be increasingly integrating into China. All necessary supplies have to pass across this border. To improve the marketing strategy and to have access to South Korea and Japan, plans are being laid out to build railways, not only to China but also into Russia and eastern Mongolia.

Mongolia’s relationship with Russia, on the other hand, has improved in the recent past. Russia has at least helped preserve Mongolian independence. Yet the relationship is not a perfect one. On a logistical note, Mongolia was importing diesel from Russia until the latter nation was unable to supply the required fuel amount. This led to a shortage of domestic supply in the summer.

For this and many other reasons, Mongolia needs to pursue a third neighbor policy and cannot afford to remain sandwiched between the two giants of China and Russia. Mongolia is a strong Western ally. It contributed troops to America during the war with Iraq and Afghanistan. Look for this nation to increasingly reach out to the world in the near future, perhaps starting with the West.

Source: http://www.biztechreport.com

An American Capitalist in Mongolia - Part 2

2012-01-26T09:21:00.003+08:00

We left off before the 4th of July holiday last Thursday with Chris and Carlos speaking to Harris Kupperman, a successful hedge fund manager and now CEO of a Mongolia-focused venture. Today we’ll talk more about his company and his plans for investing in Mongolia.

Chris: Harris, you’ve said that you wanted to invest in Mongolia but couldn’t find a suitable vehicle to do so. Like a true capitalist, you created your own! For our readers benefit, please tell us more about Mongolia Growth Group(Editors note: Mongolia Growth Group is traded on the Canadian exchange under the ticker symbol “YAK“. Investors in the US can find it listed over the counter as “MNGGF“).

Harris: We’re a company focused on real estate and financial services. Those are the two sectors that should be most leveraged to the growth of the economy and GDP. From a historical perspective, real estate in the downtown of the capital city of a country seeing a boom has always gone parabolic.

We think a similar thing will happen here. We were recently granted an insurance license and are now the best capitalized insurance company in Mongolia. Finally, we are actively investigating other sectors of the financial services market to enter.

Chris: Investing privately is one thing, but you went the public vehicle route, which is a bit more complex at best. How did you go about creating the company?

Harris: When I first visited Mongolia, I saw the opportunity, but like you say, I couldn’t find a way to get appropriate exposure. I also couldn’t get comfortable with corporate governance and the accounting at the various public companies. I figured that my only viable alternative was to build it myself.

I built MGG because I wanted to invest my own money in Mongolia, as did some friends. Management and the board have now invested over $7 million in the company and I’m about half of that amount. No matter what happens in our business we can be confident that our accounting is done right. I couldn’t invest the sort of money that I’ve invested without that knowledge.

Chris: Mongolia Growth Group is a bit different from most other public companies in terms of compensation. Can you explain?

Harris: The company started with me asking friends to invest alongside me in Mongolia. I wanted a diversified company that would have adequate exposure to the Mongolian economy. I simply didn’t have the resources to do that myself. I felt funny asking my friends to invest in my company and then tell them that I was going to take a salary and dilute them through stock options or any other scheme like that. Instead, I have decided to take no salary, stock options, performance allocation, bonus or anything else. I’m here in Mongolia because I’ve invested my own money in the company. My Co-Pilot in this venture, Jordan Calonego feels the same way. Besides, we’ve been investors for over a decade now and have been disgusted to learn that the CEO always seems to do better than the shareholders. Now that our roles are reversed and we are management, it would be wrong of us to do what we have always criticized. Investors need to think of this company as a business created by a bunch of very successful hedge fund guys who want to invest their own money in Mongolia. Minority shareholders can come along for the ride if they want without any of the onerous fees normally associated with hedge funds. It is the only company that I know of like this. I hope we can use this as a template for the next time that I complain that some Management team is overpaid, but that’s a different story!

Chris: Investing in foreign emerging markets entails a certain amount of risk for us “foreign devils.” Tell me about your local partners in Mongolia and how you’re mitigating risk by partnering locally.

Harris: I think you have an inaccurate impression about Mongolia. People are very happy to have us investing in the country and helping the economy to grow. A stronger country means they can stand up to the Chinese better. Of course, our foreign partners help us navigate business relationships and that is critical. Think of it this way, I’m from New York. If I moved to Boston, I could do business just fine. Of course it helps if you have friends in Boston, but you’d do just fine without any relationships. That’s how Mongolia appears to me. That said, we have amazing partners and they have made everything significantly more successful for us at MGG. We couldn’t have gotten this far this fast without them.

Carlos: Even though you are focusing on the FIRE sectors (Finance, Insurance, & Real Estate), was this driven by a natural resource thesis? [i.e. in the context of economic growth derived from the natural resource sectors?]

Harris: Yes. We want leverage to the growth of Mongolia. These three sectors are very closely tied to economic growth which we think is about to significantly accelerate as new mines come online.

Carlos: For our readers benefit can you tell us what minerals and resources are found in Mongolia?

Harris: We are learning that Mongolia has everything. Just a few months ago, we learned that Mongolia may also be a significant oil exporter. They’ve already found coal, copper, iron ore, gold, uranium, rare earth elements and pretty much everything else.

Carlos: We all remember the Levi Strauss story back from the California Gold Rush. Along those lines have you thought of jumping into the mining camp support business?

Harris: We are looking at everything. However, for now at least, we see the biggest opportunities in real estate. There are hundreds of millions being raised for Mongolia focused real estate funds. Prices will go simply nutty as they try to put that capital to work, and we want to get positioned before that happens.

Chris: Regulations, taxes and other such government ‘ahem… initiatives can, and often do, make enormous differences to investments. Currently agriculture is favored and doesn’t pay VAT or import taxes on farming equipment and supplies. This is because the Mongolian government wants food costs low. Normally this would allow fatter margins for farmers. Is this something of interest, and do you see any other opportunities arising due to government mandates and tax incentives/breaks?

Harris: We have looked at agriculture and have a joint venture with a Mongolian to finance the expansion of his potato patch; however this is quite small in terms of our company. In general, we want to focus on businesses tied to the growth of the broader economy and agriculture doesn’t fit that bill, at least for now.

Chris: You and I have previously discussed infrastructure in Asia, and agreed as to why neither of us would invest in early stage infrastructure. At the same time we both know that infrastructure is absolutely critical to growth. Where do you think Mongolia is at with the critical infrastructure that is being built now, and needs building to enable the sustainable growth we expect?

Harris: Infrastructure is the main thing holding back the economy. As soon as you build a railroad, all these stranded mineral assets suddenly become economic. The same goes for road infrastructure, power, and water transport. Really everything needs investment, that’s the reason that I feel so confident that the government won’t do anything to hurt foreign investors, it would simply derail growth.

Chris: Here’s a problem I’ve been thinking of lately. It’s fair to say that since listing its shares publicly, MGG has experienced periods where the market clearly overvalued the company. This should be obvious to any investor performing some back of the napkin math. When insiders of a company see the market value of their company trading below their best estimates of fair market value they buy back stock. When the opposite happens it’s natural to offload stock. This is easy for me as a pure capital provider, and one not involved in strategic decisions or management. But, I wonder how I’d deal with this situation where it’s my own company I’m running. How do you deal with this conundrum, given that I think we’re likely to see some extreme over-valuations at some point as the Mongolia story begins to unfold and the world wakes up to the opportunities?

Harris: I’m a long term investor. I have absolutely no intention of selling any of my shares. NONE. If our shares are undervalued, it would be great to be able to buy back shares. If we are overvalued, we just ignore it. Remember, that when an economy grows as fast as Mongolia’s, it’s very easy for our company to simply grow into the valuation. For instance, in the past four months, real estate prices are up between 20 and 50%. It doesn’t take many more months like that for a business to grow into and then exceed a current valuation.

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Mark again… Harris is as sharp as they come in our opinion. We believe in him so much in fact that we participated in all three rounds of the MGG private placements. So for purposes of full disclosure, Chris and I own shares. You can figure out what we paid by looking at the SEDAR filings. We also encourage anyone that is interested to review the Company’s website at: http://www.MongoliaGrowthGroup.com.

We’ll have more from Mongolia over the coming weeks. Chris knows a few more intrepid capitalists that have made Mongolia an important part of their investment activities. Stay tuned, and let us know if you have any comments or questions. Just post ‘em below and we’ll respond asap.

“With Heaven’s aid I have conquered for you a huge empire. But my life was too short to achieve the conquest of the world. That task is left for you.”
- Genghis Khan, to his sons at the end of his life.

Source:http://www.stockhouse.com

Canada's Man in Mongolia Has Fond Atlanta Memories

2012-01-25T09:24:00.003+08:00

his story is part of an upcoming special report on Mongolia, the second country to be featured in our Emerging Market Series.

It's been six years since he left Atlanta, but Greg Goldhawk still faithfully contributes to WABE, the local public radio affiliate.

He must really believe in the mission, since the Canadian diplomat is now posted far out of the station's range.

"I suspect I may be the contributor furthest away from the broadcast tower," said Mr. Goldhawk, who became Canada's ambassador to Mongolia in 2010.

Mr. Goldhawk was a senior commercial officer from 2002-06 at the Canadian Consulate General in Atlanta before heading off for a four-year stint at the embassy in Bangkok.

In August 2010, he left Thailand's tropical heat for Ulaanbaatar, the world's coldest capital.

Mongolia and Atlanta share few similarities, but lessons on diplomacy learned in Georgia have translated well to his first ambassadorial posting.

"It's about building networks of confidence and understanding between businesspeople and officials in two different locations, be it Canada and the U.S. or Canada and Mongolia," he said. "And the process about how you do that is kind of the same everywhere you go."

Atlanta also gave him a sense of what it's like to work in a dynamic economy.

"Being in Atlanta sort of prepared me for a place that is on the move and moving quickly," he said.

While friends back home often can't find it on the map, Mr. Goldhawk said Mongolia's reputation as a remote Asian backwater is quickly changing.

With 3 million people (fewer than metro Atlanta) Mongolia's economy is tiny. In 2011, gross domestic product was up 6.4 percent to $6.2 billion, according to the World Bank. But more investment is coming, as anticipated by gleaming new buildings Mr. Goldhawk can see from the embassy's office. Various forecasters project growth this year of up to 15 percent as companies continue to invest in huge mining projects in the South Gobi province. Growth during the next decade could top 40 percent.

Canada, with its strong natural resources sector, is a major contributor. Just the pre-production costs of the Oyu Tolgoi gold and copper mines, a joint project between Canadian mining firm Ivanhoe and global giant Rio Tinto, is bringing in more than $4 billion.

"I feel enormously privileged, honestly, to be here at this point in time because the place is evolving so fast, you feel like if you blink you're going miss something really important," Mr. Goldhawk said.

But Mr. Goldhawk is not just an observer. Especially in a small country like Mongolia, diplomats can open commercial and political doors, benefiting both their home and host countries, he said.

"You can actually go home and at the end of a day and say, 'I made something really good and useful and helpful happen today,'" he said. "That, as a personal feeling; it's enormously satisfying. I would say it's the same kind of feeling I had in Atlanta."

Mr. Goldhawk is flattered that Mongolia has looked to resource-rich Canada as an example of what it would like to become - a stable democracy where wealth is distributed equitably. Still, many worry that the country could catch "Dutch disease," a scenario played out in many African countries in which mineral wealth becomes a curse by broadening the gap between the rich and poor.

Policy makers understand this danger and are doing their best to address it, though governance remains one of the top challenges to Mongolia's sustained growth, Mr. Goldhawk said.

"If they don't get that stuff right, all the money in the world isn't going to make this country a better place, and they get that," he said.

On that point and on many others, Mr. Goldhawk echoes his American counterpart, Jonathan Addleton, who has family roots in middle Georgia.

They live in the same Ulaanbaatar neighborhood and often work side-by-side, whether it's pounding nails in a Habitat for Humanity home or ironing out commercial issues.

Though he represents Canada, it's common for Mr. Goldhawk to be working with Mongolian authorities to smooth the way for projects involving American firms.

"Those kinds of supply-chain collaborations are there even in a place as remote as Mongolia might seem," he said.

Visit http://www.canadainternational.gc.ca/mongolia-mongolie/index.aspx?lang=eng&view=d for more information.

The podcast above features a Skype interview with Mr. Goldhawk conducted from Atlanta.

Source:http://www.globalatlanta.com

Rio Tinto gains majority stake in Ivanhoe

2012-01-25T09:23:00.000+08:00

The Anglo-Australian mining giant Rio Tinto says it now holds a majority stake in Ivanhoe Mines, further extending its control over immense Mongolian gold and copper deposits.

Rio Tinto raised its stake in the Canadian mining group to 51 per cent by purchasing an additional two per cent of its outstanding shares, before "a very important phase in the development of the Oly Tolgoi project" in Mongolia, a statement released on Tuesday said.

Construction of the mine - which currently employs 9,000 Mongolian workers - is about 70 per cent complete and production is expected to begin late next year, Rio Tinto noted.

The mining group said that in the last few days it had bought 15.1 million shares of Ivanhoe for a total of 302 million Canadian dollars ($A283.71 million).

Rio Tinto was able to raise its stake following mediation last month in its long running conflict with Ivanhoe, which had tried to block the Anglo-Australian giant from getting a majority of shares.

The multi-billion-dollar Oyu Tolgoi project has been billed as one of the biggest investments in Mongolia since the former Soviet satellite took a capitalist route more than two decades ago.

Ivanhoe owns two-thirds of the shares in Oyu Tolgoi while the Mongolian government holds a 32 per cent stake.

Sale of copper from the mine should begin in the first half of 2013, Rio Tinto said.

Source:http://news.ninemsn.com.au

No exploration licenses to be issued in 2012

2012-01-22T16:57:00.003+08:00

No exploration licenses to be issued in 2012

Veto on license issuance extended for third time

License administration is as much of a concern as environmental degradation

On January 12, the first discussion of a Bill to amend the law on banning the issuance of new exploration licenses was held in parliament. During the first discussion, the Bill was adopted with support of 80 percent of MPs who attended the plenary meeting. By doing so, the term of banning issuing new exploration licenses was extended to December 31, 2012.

The law on banning the issuance of new licenses for minerals exploration was initiated by the President and adopted by parliament in 2010. The issuing of exploration licenses ceased from May, 2010 to December 31, 2010. As proposed by the President, it was re-extended until April 30, 2011 and December 31, 2011.

License-related relations caused by the disorderly issuance of great number of minerals licenses became an issue connected to the common interest of Mongolia and national security. To arrest the situation, Ts. Elbegdorj held the position that exploration license issuance should be ceased until a new law is made to regulate relations in mining sector, however parliament set the term to effect the veto.

D. Battulga, head of the Presidential Office, said that a new Mining Bill will be submitted to parliament in the near future. During the discussion of the Bill to amend the law on banning issuance of new exploration licenses, MPs touched on the issue of how to eliminate illegal acts of selling existing mining and exploration licenses rather than extending the veto term. For instance, MP N. Ganbyamba said that it is necessary to ban on-selling of licenses, rather than banning the issuance of licenses.

MP D. Gankhuyag cited that the act of selling licenses was intensifying. MP R. Bud suggested selling exploration and mining licenses through the Stock Exchange in order to limit millions of US dollars worth trading of the licenses by individuals and companies. D. Zorigt, head of the Standing Committee on Economy, said “There are groups of people who want to profit by selling the licenses rather than doing exploration. Generally, primary explorations are carried-out by small companies. There is a common practice that conducting certain explorations require huge sums of money, the license is transferred to big companies. Compared to earlier periods, control is tightening for mining license holders. They are required to give complete reports of fiscal year explorations and thus many mining sites are being controlled.”

Some MPs had a proposal to include a clause on banning the transfer of licenses in the Bill; however, polling on this issue was not carried out at the meeting of the standing committee. Therefore, the proposal was not supported. D. Battulga, head of the Presidential Office, said that in the Bill on Mining Law currently being worked-out, there would not be an issue on transferring the license. If the new Bill on Mining law is adopted earlier than the expiry date of the veto in effect, the veto will immediately be annulled.

Source: THE MONGOL MESSENGER

MPP nominates six new ministers

2012-01-22T16:49:00.002+08:00

MPP nominates six new ministers

President expresses concern over nominations

President Ts.Elbegdorj meets with Prime Minister S.Batbold and the ministerial nominees to assure government priorities are met

As reported, the DP decided to quit the joint government. This decision was discussed and supported at the NCC meeting. On January 12, six DP ministers who worked in the government presented Prime Minister S.Batbold with their request to be released from their present positions. MPP is the majority in parliament and faces the task of appointing new ministers to form the cabinet. In order to save time and proceed with work normally, the Prime Minister and leader of the MPP S.Batbold urgently introduced the question of appointing new cabinet ministers to the Governing Council of MPP.

The Governing Council of the MPP decided to appoint half of the ministers from parliament and the other half from outside. Under this circumstance, the MPP group in parliament met on January 16 to introduce the following three nominations for ministerial posts from within parliament. Ch.Ulaan, S.Byambatsogt and D.Hayanhyarvaa were nominated for the post of Finance Minister. With a majority voice, candidature D.Hayanhyarvaa was supported. Ts.Dashdorj, N.Ganbyamba, R.Bud, H.Badamsuren and H.Badelham were named for the post of Road, Transportation, Construction and Urban Development Minister. Ts. Dashdorj won the nomination. Competing for the post of Defense Minister were Ts.Batbayar and J.Enkhbayar. As they got equal votes in the MPP group in parliament, nomination to this post was reconsidered at the MPP Governing Council, with more support to J.Enkhbayar The PM’s proposal of candidates to the post of First Deputy Premier, Health Minister and Minister of Nature, Environment and Tourism was supported by the MPP Governing Council. Proposed for the First Deputy PM was MPP General Secretary, U.Hurelsukh; for Health Minister, state secretary N.Khurelbaatar; and for Minister of Nature, Environment and Tourism former state secretary the of foreign ministry, D.Tsogtbaatar.

On January 13, President Ts.Elbegdorj received the Prime Minister to express his position regarding the replacement of the six outgoing DP ministers in the cabinet and to give instructions on some urgent issues. “The posts of the First Deputy Prime Minister and deputy ministers are not necessary.

Cutting these posts will save money and staff. More than once we talked about the need to appoint ministers from outside Parliament rather than from among the MPs. We must hear and accept claims and criticism that the parliament’s mechanism on government responsibility is losing. The Constitution rejects the possibility for one subject enjoying double power – executive and legislative” declared President Ts.Elbejdorj.

On January 17, Prime Minister S.Batbold submitted his proposals on the new appointments to the President. Meeting with journalists, he also explained his position to keep the cabinet structure intact. The PM reassured his intention to fulfill the duties facing the MPP regardless of the Democratic Party leaving the joint

government. “From the beginning, Parliament approved the structure and the staff that was agreed to for implementing the targets forwarded in the program. These targets remained and the MPP will work to implement them. We are facing the most responsible period for implementation of our goals; and therefore, the cabinet structure should not be changed,” said the Prime Minister. “This time we decided not to touch staff reduction, this could be done after the election when new goals and new tasks are faced”, said the Prime Minister.

The Prime Minister was confident in the candidates who were promoted to the positions. He characterized them as experienced and best MPP personnel. He supported the naming of the MPP general secretary for the First Deputy Prime Minister because state and government activity is a keynote goal and MPP personnel must not be mobilized for party activity, but for state and government activities. “This was the reason for my choice”, said S.Batbold. “Appointing the party’s best personnel, including the MPP General Secretary into the government is very important. The people who were nominated to ministerial posts have served the state for 12-25 years; these are people experienced and skillful in administrative, political, professional fields”, he added.

On January 18, the President met with the six outgoing ministers, with the new candidates, and the Prime Minister. The outgoing ministers must report about their work and the question of releasing them from their posts must be resolved in parliament. Only then can the appointment of new ministers be discussed, said the President.

President Elbegdorj said that everybody knows how the joint government was formed and this is why the ministers who are leaving the cabinet need to report to people about what they accomplished. The President requested the PM to explain the appointment of three ministers from parliament despite talks to not appoint MPs to the cabinet. He said it would be an important step to correct the supervising mechanism of parliament over government activity which is not perfectly working today.

“There is no more important power than legislating power, said the President. MPs must do their jobs drafting and passing laws and must not be mixed with the double executive duties of cabinet members. It is not banned by law, but it needs to be practiced in life, said President Ts.Elbegdorj.

The President ended the meeting saying that on January 19-23, he plans to have a working visit to the Oyu Tolgoi and Tavan Tolgoi mines and suggested Parliament to discuss and make its decission on the issue of releasing the six DP ministers while his absence. The President underlined that appointment of new ministers must be discussed after DP ministers’ release had finalized according to relevant laws.

On the evening of 19 January, Government submitted a draft resolution to Parliament on releasing the six ministers from their posts.

Source: THE MONGOL MESSENGER

Lunar New Year celebrations reflect Bay Area diversity

2012-01-21T20:15:00.001+08:00

Lunar New Year celebrations reflect Bay Area diversity

By Matt O'Brien

Instructor Batzorig Dorj, top, leads a group of seven- and eight-year-old girls through an intricate choreography as they practice a traditional Mongolian folk dance, Thursday, Jan. 19, 2012 in Oakland, Calif., in preparation for Lunar New Year festivities next week. (D. Ross Cameron/Staff)

Amid the profusion of Lunar New Year celebrations signaled by Monday's new moon, Ariuntuul Avirmed thinks you might not have heard of her festival, Tsagaan Sar.

Mongolian families joyously celebrate the new year each winter with food, prayer, dancing, gifts and enough fermented horse milk to make everyone merry.

"If you have a good feast, a rich feast, your whole year will be good," Avirmed said.

Oakland Chinatown has its predominantly Chinese New Year's Bazaar this weekend, a precursor to San Francisco Chinatown's big parade Feb. 11.

Also this weekend is San Jose's Vietnamese Tet Festival, a destination event for Bay Area Vietnamese-Americans since it launched 30 years ago.

Instructor Batzorig Dorj, left, offers some words of encouragement to seven-year-old Helen Samba as they practice a traditional Mongolian folk dance, Thursday, Jan. 19, 2012 in Oakland, Calif., in preparation for Lunar New Year festivities next week. (D. Ross Cameron/Staff)

But as the Bay Area's Asian-American population approaches 2 million, its cultural diversity has grown.

Each coming of the Lunar New Year brings new festivities to homes, community centers and banquet halls across the region.

"It's the only time we have the chance to meet all the relatives, the chance to show our kids what we do, the food we eat," said Berkeley resident Gana Nasam, who moved to California from Mongolia a little more than a decade ago.

Tsagaan Sar, which means White Moon, won't actually begin until February, a month later than the Chinese New Year, but Nasam's family is getting ready.

Her 7-year-old daughter, Helen, was pirouetting to a throaty Mongolian tune Thursday night to prepare for a dance performance at the Oakland Asian Cultural Center.

Although the Bay Area will abound with New Year celebrations in the coming weeks and months, the center is one of the few organizations that tries to incorporate the disparate traditions into one event.

Mongolian youth dancers, Korean drummers, Japanese Butoh performers and others are participating in the Feb. 4 event in the heart of Oakland Chinatown.

"If we're pan-Asian, and we kind of collaborate, we have strength in that," said Herna Cruz-Louie, the event's organizer. "There's definitely been a greater mix of families moving into the downtown area."

The working-class district has bucked the trend of other urban American Chinatowns that are losing Chinese immigrants to the suburbs. At the same time, the city's Asian-majority districts have expanded and diversified.

The city's Korean-American population nearly doubled in the past decade, according to the census, and neighborhoods just southeast of Oakland Chinatown are home to large numbers of immigrant families from Vietnam, Laos, Cambodia and Myanmar, all with their own New Year traditions that begin between now and April.

While many holiday events cater to elder immigrants who miss the traditions they grew up with, Cruz-Louie said her event, now in its eighth year, tries to engage Asian-American teenagers and young adults who were born in the U.S.

"The kids realize they actually like doing it. It's a connection," she said. "The young people actually want to learn it, partly because they have such a separation from the homeland."

People of all faiths celebrate the New Year using a lunar calendar, but many of the traditions are rooted in Buddhism, said Jian Ying, abbot of Sunnyvale's Chung Tai Zen Center.

He said he has "invited everyone" and expects Buddhist adherents of Chinese, Vietnamese, Korean, Singaporean, Malaysian and non-Asian descent to attend a ceremony Monday morning.

"It's a spirit of sharing, to give what we have, to share what we have," he said. "That's the Buddhist way. It's not just within the cultural boundaries."

Another connection that the Bay Area's first round of Lunar New Year celebrations will share this weekend: They all can expect rain. Not to worry, say organizers of Oakland Chinatown's outdoor festival.

"Rain is a good sign," said Jennie Ong, director of the Oakland Chinatown Chamber of Commerce. "It means abundance for the year."

Source: http://www.mercurynews.com

Mongolia Aims for Tavan Tolgoi IPO by June

2012-01-21T20:07:00.000+08:00

Mongolia Aims for Tavan Tolgoi IPO by June

By PR VENKAT And NISHA GOPALAN

HONG KONG--The Mongolian government is looking to launch a multibillion dollar initial public offering of a mega coal deposit ahead of parliamentary elections in June, with plans to list state-owned Erdenes-Tavan Tolgoi Co. in London and Mongolia, people familiar with the situation said.

One of the people said that an eventual secondary Hong Kong listing of the company, which controls the world's largest coking-coal deposit in the South Gobi Desert near China's northern border, is also probable.

"We are trying to go for the IPO before the elections," a senior Mongolian government official said, adding that a ministerial reshuffle is likely next week, after which a task force would be set up to look into the IPO process.

Another person said that getting certain financial terms translated into Mongolian is taking a long time, and the fact that every Mongolian born before March 2010 stands to get shares in the IPO is tough to administer.

The plan to list Tavan Tolgoi in Hong Kong at the same time as in London and Ulan Bator was dropped because Mongolia isn't among the overseas markets from which Hong Kong approves listings, and Hong Kong isn't likely to give special dispensation to allow the Mongolian-incorporated company to list ahead of the elections, one of the people said. U.K. rules allow listings from any country.

The company plans to list in London by issuing global depositary receipts, which are easier to get approval for but tend to have lower liquidity than primary shares.

"The company is focused on listing in London, which is a resource hub and also has close links with the Mongolian exchange," one of the people familiar with the situation said. "What's difficult is getting a primary listing in London, which is only possible for U.K.-domiciled firms, but can't be done by the June time frame."

A company is able to raise funds by listing in the form of global depositary receipts, which would normally be issued by a depositary in a single location such as London or Luxembourg.

The government plans to sell as much as a 30% stake in Tavan Tolgoi to international investors as well as another 10% to local companies. It also plans to give 10% to Mongolian citizens and the government would hold about 50%.

A $2 billion-$3 billion fund raising could value Tavan Tolgoi at around $10 billion and double the market capitalization of Ulan Bator's stock exchange.

Goldman Sachs Group Inc., Deutsche Bank AG, BNP Paribas SA and Macquarie GroupLtd. are handling the Tavan TolgoiIPO.

Source: http://online.wsj.com

Nomadism in Mongolia-The - best place - last

2012-01-20T09:19:00.004+08:00

This piece was writing exactly 10 year and appeared in the Economist as Christmas Special. Quiet interesting read.

Nomadism in Mongolia

The - best place - last

As Mongolia shows, nomadic pastoralism and private land just don't mix

Dec 19th 2002 | SUMBER, DORNOD | from the print edition

IT IS what is underfoot that counts. Very roughly, between the Ural mountains in the west and the Amur river on the Sino-Russian border, and between the latitudes of Lake Baikal in the north and the Chang Tang plateau of Tibet to the south, lies a land too arid usually for forest or even field. Some of it is mountain and much is desert, but most of it is steppe: the vast grasslands of Inner Asia.

The foot or so of soil below the steppe's deceptive surface holds tens of thousands of years' worth of fertility, the product of grasses' ability to turn to biomass the energy of the fierce but brief summer's sun. Squirrel-tail barley, needlegrass, a clutch of fescues, Tatary buckwheat, plains lovegrass and wild oats: the rooting networks of these grasses seek out and trap moisture and nutrients. Dead roots are broken down and added to the store of humus.

Above ground, some grasses of the steppe, like needlegrass, are sod-forming: they put out surface runners that trap moisture and smother bare ground. Forbs—the non-grasses such as herbs and wildflowers—bring up nutrients from deeper down, or, if they are leguminous, fix in the soil essential nitrogen from the air. An ungrazed summer pasture is no monotony: it is a riot of rippling grasses and flowering gentian, cinquefoil, yellow-rattle, motherwort and Syrian rue.

In his history of grass, Graham Harvey describes the prairie, America's equivalent of the Asian steppe, before settlers waged war on it by overgrazing or ploughing it up: it was a “biological powerhouse, rich in wildlife and with a productivity no modern farming system could match.” Inner Asia's steppes may never have boasted the 60m bison that white settlers on the prairies estimated there to be in the 1860s, quickly slaughtered to near-extinction. But rock-carved reliefs 11,000 feet (3,350 metres) up on one mountain pass in the Altai mountains, near to the modern Mongolian border with Russia and China, depict a presumably Turkic race following great herds of wild animals on their migration—gazelles, argalli sheep, reindeer, wild horses—much as American-Indians followed the bison.

Until as recently as the 1960s, Inner Mongolia, by then part of the People's Republic of China, still had the huge herds of gazelle and wild ass that so astounded European explorers-cum-hunters at the end of the 19th century. Even today, the rolling empty eastern steppe of Mongolia proper looks like the prairie ocean must have done when it caused American settlers, heading west in their prairie schooners, to gasp and wonder about carrying on. The range of gazelle has shrunk greatly in recent decades, but in this part of the country 1.5m of them still graze, in migratory herds that run right round the horizon. Such is the biological powerhouse of the steppe.

It is a powerhouse that humans have long tapped by raising livestock; indeed, it is on the steppe that the sheep, the goat, the camel and the horse were all first domesticated. The rest of the world soon got to hear about the horse-bound nomads' success at domestication, particularly after the invention of the compound bow made of horn, and of the stirrup, which allowed the mounted nomadic warrior to fire behind him and then escape—the deadly Parthian shot. Huns originating from modern-day Mongolia struck fear into the fifth-century Roman Empire. From the 13th century, the Mongols founded dynasties in China, Persia and India. Stirrings on the steppe sent ripples around the globe. Edward Gibbon, in his “Decline and Fall of the Roman Empire”, writes that:

In the year 1238 the inhabitants of Gothia (Sweden) and Frise were prevented by their fear of the Tartars from sending, as usual, their ships to the herring-fishery on the coast of England; and as there was no exportation, forty or fifty of these fish were sold for a shilling. It is whimsical enough that the orders of a Mogul khan, who reigned on the borders of China, should have lowered the price of herrings in the English market.

Genghis Khan's homeland is in modern-day Mongolia, a country the size of France and Spain combined that sits at the heart of Inner Asia, with perhaps the world's finest and most extensive remaining grasslands. Its pastoralists no longer strike fear near and far, but their household techniques for raising livestock would, in their essentials, be recognisable to a Mongol from the great conqueror's time. Pastoral nomads in Mongolia still use a felt tent with wooden frame, a ger, which keeps out the heat in summer and protects from the cold in winter—Mongolia's continental climate has the world's greatest extremes of temperature. Ager is perfectly round not only to create the greatest space out of the least material, but also to stand up to the fierce katabatic winds, which whistle round it rather than topple it over.

The social divisions of the ger—left as you enter for the guests, opposite the door for the family head, right for the rest of the family—are unchanged, and so are the divisions of labour. Men are responsible for the raising of livestock: their herding, castration and slaughter, and (a job that the younger men relish) the breaking-in of horses. Women oversee the household, the raising of children, the milking and the making of dairy products: yogurt, butter, hard cheese, milk-vodka and the noble airag, fermented mare's milk.

The 27m livestock in Mongolia—the cow has been added to the mix, with yaks on higher pastures—outnumber the population tenfold. Nomadic pastoralists care for the bulk of these animals. Indeed, nowhere is the economy so tied to nomadic pastoralism as in Mongolia. And never have so many Mongolians—a third of the population, nearly double the number a decade ago—practised it as today.

It is tempting to regard nomads as the medieval Europeans and Chinese did: fierce, free and independent of a constraining, higher authority. Such an impression is reinforced by the sight of any Mongolian herder at sunset galloping back to his camp, in full song; by the Mongolian marriage ceremony, which is a ritualised form of abduction; or by the sight of two young lovers' horses by a cave or concealing rock, the man's urgaa (his pole-lassoo) stuck in the ground to demand privacy but presumably also to boast of sexual conquest.

A giant steppe for a man; a small steppe for a hordeAlamy

Mongolia's political history certainly seems to support a romantic notion of their independence. Mongolia owes its political existence to a struggle by a pastoral society against the encroachments of an agrarian one, as David Sneath, a pastoral specialist at Cambridge University, points out. In the late 19th century, pastoralists in Inner Mongolia failed to stop the appropriation of the best land by Chinese agriculturalists; that failure prompted an armed struggle—led by many who had fled from Inner Mongolia—for the independence of Outer Mongolia. After over two centuries of subjugation by China's Manchu rulers, and the collapse of the Qing dynasty in 1911, Outer Mongolia declared independence. A revolutionary Communist state, the second ever, was created in 1924, under Soviet tutelage; it set about the destruction of feudal and monastic seats of power.

With the collapse of the Soviet Union a decade ago, Mongolians embraced liberal democracy with gusto (albeit declaring the illiberal Genghis Khan as their refound hero). The Russians, whose stooges instigated genocidal purges in Mongolia of Buddhist lamas, intellectuals and rich herders in the 1930s, have largely been forgiven; the distrust of Chinese intentions remains as visceral as ever.

Today, the state and its citizens, even townspeople, still identify with nomadism and the horse. Witness the minister and the ambassador who, besuited, jumped up on horseback for a gallop after lunch with this correspondent just outside the capital, Ulan Bator, before heading back to the office. The official Mongolian tourism website, which lists ten reasons for visiting the country, says it all. Reason number six is “No fences”. You can still ride the 3,000 kilometres (1,900 miles) from west to east without encountering a single man-made impediment. Mongolia is a strange thing: a free-market economy with public ownership of land. But how long can the two continue to co-exist?

The call of the wild

To understand how land ownership touches nomadic life, however, it is important to unpack the exaggerated notion of the nomads' freedom from higher authority. For pastoralism has always depended upon a political authority to regulate access to pastures. As William of Rubreck, a 13th-century Franciscan monk, put it:

Every captain, according to whether he has more or fewer men under him, knows the limit of his pastorage and where to feed his flocks in winter, summer, spring and autumn.

Under the Manchus, Mongolia was split into 83 districts called hoshuu, (meaning banner), within which herdsmen were assigned to smaller units, sum (arrow), and sub-units, bag. As Mr Sneath says:

The territory of the hoshuu generally contained a number of different areas of pasture used in winter, spring, summer and autumn. These seasonal pastures were divided between various sums and bags, and within these areas the individual households had customary use-rights to particular pastures. In effect this meant that each family owned no land as such but had a recognised area of pasture that it used in the different seasons, and of these the rights to the exclusive use of winter pasture (ovoljoo) tended to be the most strictly enforced.

It was not such a great leap from the Manchu system to the pastoral collectives under socialism, called negdel, that were set up in the late 1940s and 1950s. In feudal days, most herders looked after animals belonging either to aristocratic or to monastic masters, while raising livestock for private consumption. Under collectivisation, the state was the master; a number of private livestock were still allowed. The shift from collectivisation to a market economy, Mr Sneath argues, was in many ways a far more wrenching change, one that undermined or destroyed institutions that had long sustained nomadic pastoralism, particularly ones that spread risk and reaped economies of scale.

With democracy, the 300-odd negdel were, at their members' insistence, disbanded and turned into marketing companies. Herds were privatised and the two-dozen huge state farms dissolved. Prices were freed. The western development specialists who flooded in predicted that market signals would allocate resources more efficiently, allowing dynamic enterprise—including in pastoralism—to break free from moribund old structures.

It did not happen that way. Real income per head in Mongolia fell by half between 1990 and 1992, according to the World Bank, and by another third the next year. By 1998, a third of Mongolians were living below the poverty line, compared with none, at least officially, in socialist days. In part, the decline was down to the collapse of trade with the Soviet block: new trade with China filled only part of the hole. It was also due to the loss of Soviet aid, which supplied perhaps a third of GDP. Western donors made up much of the aid gap (Mongolians get among the highest number of aid dollars per head in the world), but to dismayingly small effect.

In the pastoral sector, the services that the negdel provided for herders under socialism—the regulation of access to pastures, the upkeep of wells for watering animals, the provision of winter hay, a collective truck for transport to fresh seasonal pastures, and much more—collapsed, and little replaced them. Herding became more atomised. People increasingly took up subsistence herding to escape joblessness in the towns. Traditional rights of use to certain pastures were eroded, as Robin Mearns of the World Bank puts it, by a spirit of free-for-all.

Without decent transport on Mongolia's roadless steppe, a ready market for livestock and processed goods was no longer assured, particularly for remote herders. The result was great hardship. The herders' response was to fall back on small, uneconomic networks of family or friends, to breed ever more animals with less regard to their quality (numbers rose to a record 34m in 1999), and to move closer to towns. This concentration has caused pastures near to the towns to be overgrazed, and more distant ones to be under-used. There is a desperate need, says Mr Mearns, to restore mobility.

Between the summer of 1999 and early 2002, an unprecedented series of meteorological disasters took place: great swathes of Mongolia were hit by drought, and by different types of zud, winter phenomena that prevent animals feeding either because of ice crusts or heavy snow. Some 7m animals died, wiping out many families' entire herds and so their livelihood. Under collectivisation, with fewer beasts, greater mobility and the state delivery of supplementary feed, such a disaster would not have happened.

The pastoral disappointments of the 1990s have led to a couple of alarming responses. The first is to dismiss pastoralism as a backward pursuit, an embarrassment to notions of modernisation rather than a proven response to a harsh environment. The governor of Dornod, the easternmost province, says that herders “get in the way” of his ambitious plans for resource extraction. These include not just mining, but also inviting Chinese agriculturalists to farm great swathes of steppe.

The second response, more sympathetic to herding but as disturbing in its potential consequences, is promoted by, among others, the Asian Development Bank. This argues that market reforms in pastoralism cannot work without the private ownership of land. Who can argue with that? Without ownership, herders have no incentive to protect land from degradation and to invest in land improvements. The theory of the tragedy of the commons is well-known: it is in the interests of any individual to add to his stock of animals on common land, even if that leads to further degradation.

Enter the free-market fundamentalists

Already, a 1995 land law, only recently being implemented, allows herders to apply for the rights to use certain winter shelters. Many interpret this as entailing the rights to winter pastures around those shelters too. Rich herders have rushed to stake their claims, leaving poorer ones at a loss. A new land law, passed in mid-2002, sensibly gives Mongolians the right to own urban plots of land. But many see such ownership eventually being applied to pastures, and are laying claim now to the best ones. “Traditional unwritten law is not working any more,” says Batbuyan, a specialist in pastoralism at the Mongolian Academy of Sciences. “Younger herders don't really know the traditions. They want things written down.”

Alamy

Yet privatisation, say pastoral experts (though not most economists), would be a disaster, undermining centuries of institutional best practice. Inner Mongolia offers a cautionary tale. From the 1980s, pasture was, in effect, privatised through contracting-out. One justification was the threat of a tragedy of the commons. Fencing has gone up to delineate the private land. As a result, Inner Mongolia and Mongolia are distinguishable from the air: up to 40% of Inner Mongolia's steppe is reckoned to be degraded; less than 10% is in Mongolia.

Pastoral households, or even small groups of connected households, called khotail, form too small a unit to cope with the unpredictable weather and pasture conditions that characterise nomadic life. Proper mobility (sometimes the ability to move over 100 kilometres to a new pasture), and flexible access, are crucial to avoiding livestock losses and ensuring healthy herds. Private herds might one day gain the scale of former collective or feudal herds, but that is a long way off. Of some 275,000 households that own livestock, fewer than 1,000 have more than 1,000 animals. In the meantime, ways need to be found to make herding more co-operative.

One priority is to improve access. Outside Choibalsan, Dornod's capital, one herder, Ovgii, said he moved a year ago from the better pastures around Sumber, 300 kilometres to the east, because he can get more for his livestock: 40,000 tugrugs ($39) for a cow in Choibalsan, compared with 26,000 tugrugs in Sumber. Improved roads would lessen the discrepancy, and encourage more of the private co-operatives that are only now starting to take off, with groups of herders pooling resources for marketing and transport. Better roads would also improve distant herders' terms of trade, by lowering the price of flour, tea and Chinese consumer goods. Already, better information about market prices of produce such as cashmere, broadcast by radio, improves herders' bargaining power when traders come to buy wool.

Meanwhile, says the World Bank's Mr Mearns, herders need to share better the risks that collectives used to bear. Partly, this involves organising fodder provision, water supplies and pasture management. It also means spreading financial risk. One idea being developed with World Bank support is livestock insurance, with pay-outs calculated from data on a district's livestock mortality, weather and (using satellite imagery) vegetation growth. If growth failed, pay-outs to herders would be based on their livestock holdings.

Gankhuayg, a young former soum governor from Khentii province, argues for sweeping administrative changes, reshaping the artificial boundaries of the 300 soum set up under socialism, or even doing away with many of them; in effect, recreating hoshuu, the banners of old. That, advocates say, would better reflect the way herding is more intensive nearer the towns. It would also allow for more traditional roaming in remoter areas, including reciprocal access, for something approaching the large herds of former times. “The people who remain in those remote places,” says a Mongolian specialist in pastoralism, “will be Mongolia's toughest.”

from the print edition | Christmas Specials

Booming Mongolia-Mine, all mine

2012-01-20T09:16:00.000+08:00

The country that is likely to grow faster than any other in the next decade, and how it is changing, for better or worse

Jan 21st 2012 | OYU TOLGOI AND ULAANBAATAR | from the print edition

“GOIN’ to OT?” drawls Andy, a burly tattooed man with that worldly air common to those who have done time in the American army. The gate at Incheon airport in South Korea is packed with travellers, mainly Mongolian expatriates on their way home, waiting to board a flight to Ulaanbaatar. Andy’s is a fair guess as to the destination of one of the few other Western passengers. “OT”—Oyu Tolgoi, or “Turquoise Hill”—is in the middle of nowhere, a desolate spot in the Gobi desert, another hour-and-a-half’s flight south of Ulaanbaatar (inevitably, “UB”). But it is the site of the biggest foreign-investment project in Mongolia, a copper-and-gold mine that is springing up at a remarkable speed and is expected, by 2020, to account for one-third of Mongolia’s GDP.

For Andy, who normally “does security” in places such as Afghanistan, Nigeria and Somalia, OT is a rest cure. Conditions are comfortable, the locals are a delight, and nobody tries to shoot him. And there are the transits through UB, a veritable Bangkok of the steppes—at least if your comparators are Kabul and Mogadishu. In the OT bus from UB airport into town, Andy is on tenterhooks waiting for the overnight hotel allocation. He is delighted with his billet—one where overnight guests are readily tolerated. The other news is less cheery: the airport bus will leave at four in the morning.

UB is a boom town on the frontier of global mining. Hotels are bursting; the Irish pubs, of which there are several, are heaving with foreign miners, investment bankers and young local women with very long legs and very short skirts. French bistros serve steaks the size of tabloid newspapers. Dozens of cranes punctuate the skyline. The streets, empty 20 years ago, are now clogged. It is hard to believe on the clear sunny mornings the city enjoys much of the year, but UB’s air is now as polluted as anywhere—second only to the Iranian city of Ahwaz, according to a recent study by the World Health Organisation. In the winter, when temperatures average from -10 to -30 centigrade, and often fall to -40 at night, UB burns a lot of coal.

Another sign of a boom is the effort to keep the city functioning through these crippling winters. When a Singaporean firm was building a joint-venture brewery to make Tiger beer, it was so anxious to finish in time for the summer-drinking high season that it hired patio heaters the size of jet engines for the construction site. Without such aids, building stops in the Mongolian winter. It is too cold to pour concrete.

A glitzy mall on the corner of the main Sukhbaatar Square houses the sort of establishments you come across in the better class of airport: chic boutiques, pricey restaurants, expensive-watch shops and, of course, an outlet of Louis Vuitton, which sells posh luggage. The shops usually look empty, which is reassuring for those nostalgic for the UB of the recent past—small, drab and poor, and offering its visitors, as one unhappily put it, a choice of “mutton, mutton and mutton”, but at least refreshingly different from other capitals.

Central Tower, as it is known, is a new ornament to downtown Ulaanbaatar. It is built next door to the lot where once stood the former headquarters of the former Mongolian People’s Revolutionary Party, the MPRP (it has since dropped the “R” word), which for seven decades until 1990 ruled Mongolia as a one-party state and rock-solid Soviet satellite. The building was burned down in rioting in 2008 after a disputed election. The use to which the site has now been put is as good a symbol as any of the new aspirations of Mongolia’s ruling class.

Dreams under your feet

To pay for these dreams, Mongolia is being dug up and sold to China. Already, more than 80% of its exports are minerals, a proportion expected to rise in a few years to 95%. Mongolia makes mining geologists salivate over its known riches and unexplored potential—for copper, coal, gold, silver, uranium, molybdenum, and on and on. Some 3,000 mining licences have been issued.

It is not just that Mongolia is a treasure-chest of geological wealth. It is slap-bang next to the world’s biggest and fastest-growing market for most minerals. Put together Mongolian supply and Chinese demand, and Mongolia will be rich beyond the wildest dreams of a population many of whom, a generation ago, saw themselves as nomadic herders. With just under 3m people, Mongolia has a chance of becoming a Qatar or a Brunei: a country that has only a small population but almost all of it, in global terms, loaded. Brian Fisher, an Australian economist who has conducted a study of the economic impact of OT, says Mongolia “sounds like Australia in 1930”.

In the third quarter of 2011 Mongolia’s economy grew by 21% compared with the same period in 2010. Even sober economists think the country is going to have to get used to this sort of thing. The IMF expects growth to average 14% a year between 2012 and 2016. In 2013, the year production is due to begin in earnest at OT, it is forecast to reach 22.9%. Others think it will be at least twice that.

Indeed, OT is the force driving many of these short-term projections towards the sky. Its construction is a big factor in this year’s boom. From 2013 its sales will start adding an average of about five percentage points a year to the national growth rate up to 2020, when its impact on the economy will peak. By November last year over $3 billion had already been spent on OT, a figure that will rise to $6 billion by 2013 and $10 billion by 2020. For Mongolia, a $6 billion economy, this is enormous.

So is the scale of the logistical challenge of building one of the world’s biggest copper mines in the middle of the desert. All supplies have to be brought in by road, from China to the south. Some 18,000 workers, including about 10,000 Mongolians and 6,000 Chinese, have to be housed and fed. Water had to be found, and is to be piped from an underground aquifer over 50km (32 miles) away. Electricity is to be provided first from China, then by a purpose-built power plant. And local people have to be compensated, coaxed and cajoled into believing that the mine is in their interests, not just those of the foreigners who are running it.

The project is a joint venture between the Mongolian government (34%) and Ivanhoe Mines of Canada (66%), which is in turn 49% owned by Rio Tinto, the mining giant that is managing OT and has put up most of the money. Already the Turquoise Hill, where the colour of the soil first betrayed the presence of copper to prospectors decades ago, has vanished. A huge pit is opening up for the first phase of the mine. Two shafts have been sunk for the second, underground, phase. On top of one, a tower is soaring. It will be the tallest structure in the Gobi, and perhaps in Mongolia. The workers are housed in long prefabricated buildings or, for the luckier ones, traditional gers, circular felt tents (equipped with untraditional en suite facilities, TV and Ethernet cables).

All this is justified commercially by the expectation that this mine will produce 450,000 tonnes of copper a year, making it one of the world’s five biggest mines, as well as being a big gold producer. And it will have a life of at least 50 years. The more they look, the more potential geologists find in the area. It will be what Rio calls a “first-quartile” mine in terms of costs—ie, among the cheapest. And its proximity to China means that the cost of transport should not be prohibitive. The price of copper is especially vulnerable to swings in market sentiment. But global supply is constrained, and barring global economic Armageddon, demand is not going to collapse.

Yurts revisited

OT, however, matters not just in itself, but as a test of Mongolia’s ability to work with foreign investors to pull off such mammoth undertakings. Next in line is Tavan Tolgoi (Five Hills), the world’s biggest untapped coal deposit, also in South Gobi province. Notional shares in this project have already been distributed (electronically) to every Mongolian born before March 31st 2011. With a general election due in 2012, this adds political urgency to an ambitious scheme to raise billions of dollars for the mine through an initial public offering of shares in Ulaanbaatar and London. This will double the market capitalisation of the sleepy UB stock exchange.

Mongolian coal production is expected to increase from about 16m tonnes a year now to 40m by 2020 and 240m by 2040. Again China provides a ready market, but the mining boom has exacerbated Mongolian fears of a Chinese takeover by commercial stealth. So feasibility studies are under way on the costly options of building railways to take coal to Russia, and thence out to Korea and Japan via Vladivostok, or to Dandong on the Chinese-North Korea border and thence by sea to South Korea.

A touch of Dutch on the steppes

Not everyone in Mongolia looks at the growth projections and goes giddy with delight. Many worry about the economic, environmental, social and strategic costs of becoming “Minegolia”. Economists fret about a “resource curse”, or “Dutch disease”. If even the Netherlands can be vulnerable to this—whereby wealth floods in as natural resources are exploited, pushes up the exchange rate, inflation, or both, and renders other industries uncompetitive—how is poor Mongolia to cope? And the Netherlands never had a year like the one Mongolia can expect in 2013, when the economy will grow by a quarter and the current-account balance will lurch from a deficit of 14% of GDP into surplus.

Furthermore, Mongolia, a 20-year-old democracy, is prone to populist policymaking. Even as the economy is booming, political parties are tempted to promise handouts. After pledges made at the previous election, every Mongolian, rich or poor, gets 21,000 togrogs ($16) on the 15th of every month. The big parties have declared a no-handout pact ahead of the next election, and the government has set up a “fiscal-stability fund” to smooth the commodity cycle. But the temptation to dip into the till will mount as voting nears.

For economists, the resource curse is a risk Mongolia has little option but to take. As Mr Fisher, the Australian economist, puts it, its comparative advantage is in commodities and mining services. There is no point in trying to compete in manufacturing with “the biggest factory on the planet” next door in China.

Mongolia is still a desperately poor country. It has just graduated, in development-bank speak, to “lower-middle-income” status, with a GDP of around $2,000 per head. The population of UB has expanded by 70% in the past few years, to about 1.2m now. Some poor people still spend the winter nights beneath the streets (open manholes are a pedestrian hazard), huddling near the pipes for warmth. The city is sprawling outward through valleys in all directions along dirt roads lined with clapboard fences, behind which former herders live in gers.

One such herder, given the name Igor by Russians he knew in his youth, describes a common life path. A few years ago, herding in Central province, he lost many of his sheep to a dzud, one of the periodic climatic disasters that hit Mongolia—a summer drought that results in too little pasture and too little hay for the winter, followed by heavy winter snow and colder-than-usual temperatures. Igor sold the rest of his livestock to pay for his children’s schooling, bought a pickup truck and moved to UB, where he makes a living hiring it out. He finds UB going from bad to worse, as more people come to town and scramble to earn money. All there is to look forward to is the summer pilgrimage home, to drink airag (fermented mare’s milk) with his friends in a ger.

It is not just the weather that drives herders into town. Some are mining refugees, fleeing environmental devastation. Besides the licence-holders Mongolia has tens of thousands of illegal gold prospectors, known as “ninja” miners because the green plastic bowls they carry on their backs to sift for specks of the metal make them look like mutant turtles. Their use of mercury and cyanide has poisoned rivers.

Mongolia’s most flamboyant environmental campaigner is a former herder called Tsetsegee Munkhbayar. He made his name helping clean up the Onggi river, and then for his extreme forms of protest, involving shooting at mining equipment or vehicles. In April 2011 he led a group of supporters into Sukhbaatar Square on horseback to demand talks with the government. Mr Munkhbayar, a grim-faced man looking out of place behind a desk in his UB office in knee-length boots and traditional jacket, believes that if Mongolians exploit the mines, “we will never develop.” He suggests an alternative future of herding, dairy-farming and tourism. As he talks he is interrupted by a loud blare of traditional Mongolian music. It is the ringtone on his mobile.

And not a drop to drink

One UB resident, visiting the OT site as an interpreter for a foreign journalist, cannot stop herself from weeping at what is being done to the area and to her country. For the outsider, the bleak brown desolation of the Gobi is not a landscape that evokes sympathy. And it needs an awful lot of Gobi to sustain a flock of goats and camels, so, vast though the OT project is, the number of herders directly affected is small. But the translator sees ruin: “You can’t drink copper; you can’t drink gold.”

In fact, the aquifer tapped for OT is too deep to affect surface water, too saline to pass human-consumption standards and so big it will be no more than one-third depleted after 50 years of the project. The big danger environmentalists see from its use is that even a future natural drought may be blamed on OT. It will be hard for the project to deny water to distressed local herders. That might lead to overgrazing.

The way it was

Such a massive undertaking is bound to distort the local economy and disrupt the environment. Compared with the ninjas, the multinationals and the development banks that will help raise the largest-ever project financing for mining can at least claim to be part of the solution. They are conducting impact assessments and bio diversity studies. The project is also providing jobs, and creating more employment for locals through subcontracts.

But it will struggle to be popular. Oyun Sanjasuuren, an independent member of parliament, says mining is bound to be political because it is “the main thing in the country”. And the face of Mongolian mining over the past 15 years has been “mostly ugly”. Miss Oyun says she entered parliament as a centrist, but now finds herself on the right as the main parties have shifted steadily to the left. OT has not been helped by tactless remarks made in the past by Robert Friedland, Ivanhoe’s boss, about “the cash machine we intend to build”, and how nice it was to have so few people around and “no NGOs”.

The wealth generated by the miners is an obvious target. And the militant Mr Munkhbayar has many fans even among young urban Mongolians who moan that development is arriving too slowly. Like him, they wish it could come from some other industry. Every herder, says one environmentalist, hopes that at least one person in his family will carry on the life. But that may be changing. Twenty years ago it was hard to meet anyone in UB who identified with the city. Even if they were born there, they saw “home” as the “aimag”, or province, from which their parents came. Now a new generation of city-dwellers feels less attached to the countryside and to nomadic herding traditions. Their numbers are swollen by young people returning from an overseas education to chase the new opportunities the mining boom is throwing up.

One such, a young man called Damdin, is finding life difficult. After 15 years in Fairfax, Virginia, he has forgotten most of his Mongolian. He left Mongolia with his mother, who was fleeing his alcoholic father. At school in America the other Asian students were scared of him, despite his short stature; Mongolians, he says, have the reputation of being psychos. Now back in UB, living in a ger with his father who spends his time playing games on Facebook, his ambition is to open UB’s first skateboard shop.

When The Economist encountered him, outside a derelict Buddhist temple in a gerdistrict in the middle of the afternoon, and later at the nearby police station, he had just been punched and robbed of his phone by friends of the friend he had lent it to (“It was 4G, man!”). He was drunk, despite saying he is always teased as a wuss for sticking to beer when real men drink vodka. He was cradling a little street-puppy he had rescued from his muggers, knowing his grandmother would not let him take it home. He presented as forlorn a picture as could be imagined of the pain and dislocation of being caught between two worlds. But he said he had no intention of going back to Virginia.

from the print edition | Briefing

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Source:Economist

Rio clear to take over Mongolia project after Ivanhoe relents

2012-01-19T20:21:00.001+08:00

By Cameron French and Clara Ferreira-Marques

TORONTO/LONDON | Wed Jan 18, 2012 9:43pm EST

(Reuters) - Global miner Rio Tinto (RIO.AX) is clear to take over Mongolia's coveted Oyu Tolgoi project, which promises to be one of the world's largest copper-gold mines, after project owner Ivanhoe Mines (IVN.TO) decided to scrap a controversial "poison pill".

Ivanhoe said on Wednesday it would ditch its shareholder rights plan, originally aimed at blocking Rio Tinto from raising its stake in the Canadian firm, as a separate agreement capping the global miner's holding at 49 percent expired.

Rio, which has built its stake in the miner as it has helped fund construction of Oyu Tolgoi, welcomed the decision.

"As the 49 percent cap on Rio Tinto's ownership of Ivanhoe expires today, we are free to increase our shareholding as we see fit," a Rio spokesman said.

Ivanhoe said Rio had recently told Ivanhoe's board that it intends to buy additional shares to raise its stake to more than 50 percent.

Ivanhoe's rights plan, backed by shareholders in 2010 and due to expire next year, was dealt a fatal blow in December when a court ruled it could not be used to dilute Rio's stake.

The ruling recommended Ivanhoe consider scrapping the provision, which would have triggered a massive rights issue in the event of a bid.

"Certainly Rio would like to own it, they would like to control it - it is their biggest copper project. They see it is a great asset and they are willing to back it," said analyst Nik Stanojevic at brokerage Brewin Dolphin in London.

"They want to buy it and they will think of a sensible way of getting hold of more of it."

Cancelling the shareholder plan will require approval of shareholders at the company's annual meeting on May 11.

TOUGH NEGOTIATIONS AHEAD

Analysts said Rio, still scarred by its costly takeover of Canadian aluminum giant Alcan in 2007, was unlikely to move aggressively to take over Oyu Tolgoi or Ivanhoe - or get into a potentially bruising battle with Ivanhoe CEO Robert Friedland.

Rio's preference, they said, is most likely to lie with a friendly deal with Ivanhoe directors to give Rio control of Oyu Tolgoi in a cash and share swap, leaving behind Ivanhoe's other assets, including stakes in coal miner South Gobi Resources, Ivanhoe Mine Australia and Kazakh project Kyzyl Gold.

Credit Suisse analysts valued the 66 percent stake in Oyu Tolgoi at $13.3 billion in a note earlier this week.

Rio's Australian shares traded a touch firmer on the news on Thursday, at A$66.80, but trailed the wider materials sector .AXMJ.

Friedland, one of the industry's best known entrepreneurs, may be ready to move on to fresh pastures. But he is also known for tough negotiation, having extracted a fortune from Inco for the Voisey's Bay nickel deposit in Eastern Canada - the 1990s deal that made his name.

There are no other apparent buyers for Oyu Tolgoi, with Rio already controlling a blocking stake in Ivanhoe. It already operates the project and is one of few companies with the deep pockets necessary to fund a similar sized mine.

This could allow Rio time to resolve key operational issues at Oyu Tolgoi, including power provision to the site.

Oyu Tolgoi, which translates to Turquoise Hill, is located about 50 miles north of Mongolia's border with copper-hungry China and is considered one of the world's largest copper and gold deposits.

Development of the $6 billion project was delayed for years as Ivanhoe hammered out a complicated royalty agreement with Mongolia, finally agreeing to a deal in 2009 that gave the country 34 percent of the project.

Once at commercial production in 2013, Oyu Tolgoi is expected to produce more than 544,000 tons of copper, 650,000 ounces of gold, and 3 million ounces of silver a year on average over its first ten years.

Ivanhoe also said it had obtained second $1.8 billion bridge loan as a stopgap measure while it negotiates $4 billion in long-term financing for Oyu Tolgoi. The bridge loan is subject to Rio's approval.

Shares of Ivanhoe were barely changed, last trading at C$19.31 on the Toronto Stock Exchange on Wednesday.

(Reporting By Cameron French and Clara Ferreira-Marques; Editing by Frank McGurty and Janet Guttsman)

Source:Reuters, news service

Kazakhstan and Mongolia mark 20th anniversary of diplomatic relations

2012-01-19T20:18:00.002+08:00

"Kazakhstan and Mongolia mark the 20th anniversary of diplomatic relations," Extraordinary and Plenipotentiary Ambassador of Mongolia to Kazakhstan Haraavch Ayuurzan told a press conference.

According to him, Mongolia was one of the first countries of the world to recognize Kazakhstan's independence and sovereignty and to establish diplomatic relations back to 1992.

"A series of political ad cultural events is being prepared to mark this significant date. First of all, Mongolian Minister of Foreign Affairs and Trade Gombojab Zandanshatar is expected to visit Kazakhstan, also Ulan Bator Mayor is expected in Astana early Feb. Days of Astana City Culture will be held this September in Mongolia. We will also hold concerts of our artists in Astana Almaty cities and organize exhibitions," he resumed.

Source:gazeta.kz

Berkh Uul JSC (mse:BEU) Completes 1,700 Meter Drilling Program

2012-01-19T20:08:00.000+08:00

ULAANBAATAR, MONGOLIA, Jan 19, 2012 (MARKETWIRE via COMTEX) -- Berkh Uul JSC (mse:BEU) is pleased to announce the successful completion of its 1,700 meter drilling program at the Delgerkhaan fluorspar deposit. The goal of the drilling program was to verify prior drilling data, enabling the registration of reserves with Mongolian authorities at MRAM. The drilling data will also be used to prepare a NI 43-101 compliant resource report.

The drilling has intersected the previous veins established by the historic data, which was based on drilling by Russians in the 1960s. MRAM compliant resource report will be prepared by a local consulting company, while an Australian-based mining consultant, Micromine, has been engaged to prepare the NI 43-101 report. Management anticipates that the report will produce a resource estimate in line with the historical drilling.

Berkh Uul JSC (mse:BEU) is a diversified Mongolian mining and exploration company listed on the Mongolian Stock Exchange and is one of the companies used to calculate the MSE Top 20 Index. Berkh Uul JSC's primary asset is the Delgerkhaan fluorspar deposit. Berkh Uul JSC is controlled by funds managed by affiliates of Firebird Management LLC, a New York-based private equity and hedge fund management company.

Source:marketwatch.com

Expatriate musings on Mongolia:City stumbling

2012-01-18T22:03:00.000+08:00

By P.LEON

One day, in Ulaanbaatar (UB), I was talking with a fellow foreigner about my job at the UB Post, and he commented, “If a journalist is not assassinated, he is not doing his job.” Now, I think that is a bit extreme, don’t you? Nobody wants to be assassinated. And, that’s easy for him to say, since he is not a journalist. I’d like to see him write some articles and put his neck on the line. I’m sure he has some tales to tell.
We all know that there is crime and corruption wherever we go on this planet. Even our own home countries are not exempt from crime and corruption. Tourists and foreigners are targets in every country.
Because we all know that there is crime and corruption everywhere, it behoves the would-be traveller to take some very basic and common-sense precautions. The best precaution is to get a native friend, for the natives know all the precautions that one should take. At number two, never go anywhere alone after dark, especially if you are a woman. If you are a man, I would caution you to avoid dark alleys at night. Furthermore, if you are attacked, don’t fight back, because that will only make your beating worse. Then, if the police get involved, it doesn’t matter how much damage the perpetrators have done to you, it only matters how much damage you’ve done to your perpetrators. Your perpetrators will say that you started it and you will be put in jail and made to pay fines and damages. I’m sorry, but that’s just the way it is. Life’s not fair. No one ever said that it was, so don’t expect it to be so.

Now, let’s talk business. The aforementioned man, who claimed that I would have to get assassinated in order to be doing my job correctly, probably has his gripes with the corruption in the business and political sectors of society, as he is a businessman trying to run a business in UB. Well, let me point out some very pertinent facts. There is not a single McDonalds restaurant in Mongolia and there is not a single Kentucky Fried Chicken (KFC) either. Yet, there are a myriad of Korean businesses all over UB. The Koreans have been very successful in Mongolia. Why do you think that is? Well, having lived in Korea for 10 years and having had lots of business relationships with Korean businessmen, I think I am qualified to tell you why that is. It is so, because the Korean businessmen know how to “wine and dine” the appropriate authorities in order to get what they want. The Western McDonalds and KFC businessmen do not know how to “play the game”. They don’t know how to get their foot in the door. Furthermore, they won’t compromise. I heard that McDonalds couldn’t get their foot in the door in both Vietnam and Mongolia because they refused to use a certain percentage of local meat and vegetables. You see? Either you have to “wine and dine” to get what you want, or you have to compromise. Otherwise you are S.O.L. (So Out of Luck).
Someone might counter my arguments by saying, “I’ve tried ‘wining and dining’ to get what I want, but it didn’t work.” I would give my rebuttal thusly, perhaps you didn’t go high enough on the ‘food chain’ or you were not willing to compromise. I would further suggest that ‘wining and dining’ involves a bit more than wine and food, if you catch my drift.
If you don’t like them apples, then so be it. You don’t have to play the game if you don’t like the rules. I never make my students play the games in my classroom. If they complained about my rules, I showed them the door and said, “You are welcome to go home.”
Corruption is the name of the game, in ANY country, not the least of which is the United States of America, where Big Banks get lower interest rates (near zero) from the Federal Reserve and where the Huge manufacturer General Electric pays zero taxes, while the little guy must pay exorbitant self-employment taxes. The little guy cannot compete with the big guys in the U.S. It is grossly unfair, undemocratic, and unrighteous. Well, welcome to planet Earth, my friend! Welcome to the Globe of government corruption. Welcome to the Planet of pilfering. That’s where we live. If you don’t like it, then don’t play the game.
Hey, there’s an idea: don’t play the game. Maybe if everybody would stop playing the rigged game, then the gig would be up. Just refuse to participate in corrupt business. Just…. don’t….. play….. the game.
Maybe what we sensible people should do is put our money together, buy an island somewhere, and set up our own country—a country where there is no corruption and no bloody politicians to steal our hard-earned money; one where the rules of the game are fair for all, both for the big guy and the for little guy.
Either that or we can try to fight against the system; Although, I’m not recommending that course of action. The system is much more powerful than we are individually. Only by using a Ghandi-like mass civil-disobedience movement would we ever have hope of achieving a truly corruption-free life. Honestly, I don’t see that happening. People are too busy going about their daily lives, running to and fro, spending multiple hours a day stuck in bloody traffic, trying to make ends meet, trying to feed the children and give them a decent education. Where is the time to fight corruption? I mean personally, I barely have time to urinate each day, let alone worry about who’s digging into my pockets, whether it’s the corrupt pick-pocket on the street or the corrupt authorities charging me 200 dollars to renew my family’s stinking visas. Where’s the time to fight corruption?
In the fight against corruption, does Mongolian have a chance? Honestly, I don’t know. I was talking with a Mongolian acquaintance of mine one day and he said that Mongolians (as a whole) cannot seem to achieve much, because they are not collectively-minded. Even 70 years of communist rule seems to have failed to produce a collective mind. “Mongolians have a nomadic mind,” he said. “Historically, they worked for the survival of their small, nomadic clan and competed against the other nomadic clans for dominance,” he continued. It was his conclusion that the nomadic mindset prevented Mongolians from achieving any global greatness, because they can’t come together and work as a collective.
Yet, somehow Chinngis Khan was able to unite the nomads into a common goal—one of dominating the world under a single Khan. Could my acquaintance be wrong? Is it possible to unite the Mongolians into a fight against corruption? Is it possible for the Mongolians to come together for the collective benefit of the Mongolian people as a whole? Or are we going to continue to see certain individual Mongolian families selfishly insure their own clan’s survival, to the detriment of the rest of Mongolia and ultimate to their own detriment? Only time will tell, I suppose.
From reading that last paragraph, one might get the erroneous impression that I am against big business. Let me state for the record that I’m not against big business. I think that there is a place for big business. I mean that’s how South Korea developed into the powerhouse that it is today. South Korea went from an impoverished, third-world country to one of the top twenty economic powers in the world in just 30 years. How did they do it? There were four major chaebols (and that is a word in the Oxford dictionary). With the help of the government under the leadership of President PARK, Chung-hee, those four chaebols played major roles in developing the small country of just 40 million people into a major world economic power. Perhaps you’ve heard of them. They are Samsung, LG, Hyundai and Daewoo.
So, I’m not against big business. Big business has the capital to invest, the clout to make big deals, and the cleverness to put money into research and development in order to compete in a market that craves innovation. So long as big business doesn’t step on the little guy, which it doesn’t in Korea, I’m okay with big business. So long as the government prevents monopolies and insures fairness in the market place, without favouritism to any one faction, I’m okay with big business.
However, let’s spread the wealth around a little bit, eh? It is my hope that Mongolians can pull together and realise that they are more powerful as a unit, then as a divided nomads. Have they not learned from the Man of the Millennium, their very own Chinngis Khan? You must first unite the nomadic tribes in order to conquer the world. All this political division in Mongolian politics just won’t do. It just won’t do at all. The political party system divides the people, it doesn’t unite them in a common goal. What Mongolia needs is a non-party leader, with the charisma to unite all parties into a single common aim; and, that aim should be to end corruption, insure domestic tranquillity, provide for the common defence, and develop the common welfare of all Mongolians. And that would include, as my wonderful colleague, Jargalsaikhan, mentioned in his article: education. Mongolian needs to invest in the education of its people. Teachers should not be going on strike. They should feel like a very valuable member of society. They should be paid the same as the politicians. That’s right! The same salaries as the politicians get in parliament should be paid to all public servants! Students should have adequate facilities and adequate learning materials. If Mongolia does not invest in the future by investing in its children, divisions will only grow. That gap between the poor and rich will get wider. There will be growing resentment and dissatisfaction between the haves and the have-nots. Again, I say, “Spread the wealth.”
In conclusion, let it be said that I, Leon, have spoken out against corruption. Let it be known that I, Leon, stand for a government that loves all the people whom it was designed to serve. Let it be attested that I, Leon, promote big business that shares the wealth and stimulates the local economy by providing jobs and innovation in order to compete in a global economy. Lastly, let it be paramountly promulgated that I, Leon, encourage investment in Mongolia’s future, namely its children as a whole, and NOT as individual clans. If Mongolia is to become a great nation again, it must unite to these ends, and stop the petty partisanship. It must unite in a collective aim for greatness.
It is sad to see that Mongolian has the potential to become an economic mountain through unification of political parties, but it prefers to wallow in the waves of division and nomadic self-interests.
I challenge Mongolia to find a person who can unite the country into a collective aim for a monumental and magnanimous Mongolia. As this is an election year in Mongolia, I challenge the Mongolian people to vote for unification, rather than division. Good luck, Mongolia. May Wind-Horse be your guide to Political and Economical Shambhala.

Source: UB Post

Centerra Gold says delays hit Mongolia project

2012-01-18T09:15:00.002+08:00

Centerra Gold says delays hit Mongolia project

Tue Jan 17, 2012 11:07pm GMT

[-] Text [+]

Jan 17 (Reuters) - Centerra Gold Inc said it could not predict when it would start production at its Gatsuurt project in Mongolia due to continued delays in receiving permits and approvals.

The Toronto-based company said it expects total gold production of 635,000 ounces to 685,000 ounces for the full year. For 2011, the company produced 642,380 ounces of gold.

The company added that the outlook for 2012 does not include any production from the Gatsuurt project.

Centerra said pending discussion of the water and forest law amendment in the Mongolian parliament made it difficult to predict the timing of the start of production at the Gatsuurt project.

The company also expects gold production to be impacted by four days in the first quarter, due to scheduled mill maintenance.

Shares of the company closed at C$18.21 on the Toronto Stock Exchange.

Source:Reuters

Mongolian Doctors to Train in Seoul

2012-01-18T09:14:00.001+08:00

Doctors from Mongolia are heading to Korea to learn from medical practitioners here and introduce themselves to the country's cutting-edge technology and medical know-how.

The Ministry of Health and Welfare announced on Monday that its Mongolian counterpart has signed an agreement with Samsung Medical Center in Seoul to conduct a training program for Mongolian doctors.

A total of 68 will come to Korea in five batches from this April to June of next year. The Mongolian health ministry will pay Samsung Medical Center US$1 million for the cost of developing and running the program.

Source:The Chosun Ilbo, South Korean newspaper

Mongol Monsters: The Country’s Giant Heritage

2012-01-18T09:13:00.000+08:00

By CATE CADELL

Mongolia has a heritage of monsters. In 1971 a fossil of a velociraptor and a protoceratops locked in deadly combat was discovered by a Mongolian-Polish team in the Gobi desert. The famous discovery was among the many hundreds of prehistoric artifacts discovered in Mongolia, including a dinosaur egg that still contains an embryo.
The Cretaceous period in Mongolia was a predator's wonderland. According to fossil evidence, the area was a historical and natural anomaly in that were more predators than herbivores. Even Mongolia's plant eaters had a fierce reputation.
Among them was Erlikisaurus, a huge clawed Theropod that inherited its namesake from the Shaman demon - Erlik, who according to mythology was cast into the underworld as the deity of evil.

For millions of years, the Mongol heritage of mega-monsters has been upheld. Last year, the world's largest fossilized spider was found in the Gobi desert. The giant arachnid had a leg span of over 15cm and was related to the modern day Golden Orb spiders. The 165 year old specimen was preserved on a bed of volcanic ash; suggesting that she was victim of a large scale natural disaster like many other animals of the day.
In the past, Mongolia's monsters have drawn some of the world's most famous explorers, including the original Indiana Jones, Roy Chapman Andrews. During the Soviet era, authorities restricted who could scour the Gobi - meaning that Polish and Soviet explorers were privy to some of the country's most amazing finds.
The period also promoted the education of Mongolian naturalists and paleontologists, who were taking on the jobs usually delegated to foreign funded academic and museum groups. Rinchen Barsbold is perhaps the most influential paleontologist Mongolia has produced. His work on identifying feathered dinosaurs was extremely influential in historical and evolutionary terms.
It's not just Mongolia's prehistoric giants that draw so much attention however. The country is still home to many mythical and actual monsters.
The most disputed case of a currently living monster is the Mongolian Death Worm. The Hollywood style giant is locally called олгой-хорхой (olgoi-khorkhoi), and though its existence is still heavily contended, first and second hand reports from local tribesmen are frightening.
The mega-worm is described to be thick and pink. It’s between 2 and 6 ft long, while hysterical reports have put it at 10 ft. It has been said that the monster is able to spew a deadly corrosive acid and also has the potential to electrify its victims. locals have reported camels falling dead on the spot, while others have claimed that whole hunting parties were attacked and killed.
During his time as a paleontologist in the Gobi desert, Roy Chapman Andrews set out to verify the existence of the monster; setting a trend for many naturalist and documentary makers after him. In his 1926 book On The Trail Of Ancient Man Andrews was able to collect many detailed accounts of the creature but doubted its existence in conclusion.
It has since been a favored topic of conspiracists and super naturalists, who believe mining activity in the Gobi will reawaken the monster. Scientists have not been able to rule out the possibility that a similar creature may exist, considering that much of the desert is unexplored, and parts near the Mongol-Chinese border are restricted.
In his 2009 documentary Lair of the Red Worm New Zealander Richard Freedman also documented many accounts and sightings. He managed to conclude that sightings had peaked in the 1950's and that there had been a decreasing amount of reports since then.
Without crossing the borders of mythology and speculation, Mongolia is still home to some of the worlds current living monsters. The country's mega-fish are particularly well known, being the biggest freshwater fish in the world.
The Taimen is the world's largest trout, growing over two meters in length and weighing nearly 100 kilograms. The population of Taimen in the Eg and Uur rivers is one of the biggest in the world due to the fact that there has historically been very little fishing culture among the herders in those areas.
Many fear that new interest in fishing culture will severely deplete the last healthy reserve, with the slow growing fish taking years to regenerate, living to over 50 years of age.
In 2009, a joint project between the World Wildlife Fund and Craig Miller Productions created the documentary Creating a Lasting Sanctuary for the Mighty Taimen. The documentary was a finalist in the Jackson Hole Wildlife Film Festival and showed how the health and prevalence of the Taimen as the key predator could indicate the overall health of the 3000 mile long Amuur river.
Mongolia’s rivers are also famous for their giant Greyling and Lenok; providing one of the most challenging and remote fishing opportunities in the worlds and one of the final reservoir of modern river giants.
While the giants of Mongolia's future may be technological and economic, the country's modern outlook could mean that much more will be uncovered about past and present giants. Whether that means excavating groundbreaking prehistoric discoveries, disproving the existence of killer Gobi worms or even just providing a sustainable future for the Amuur Taimen, Mongolia’s heritage of monsters will surely continue.

Source:UB Post

Making Coke Affordable in Ice-Cold Mongolia

2012-01-14T10:23:00.003+08:00

Editor's note: GlobalAtlanta traveled to Mongolia last year. It is the next country to be featured in our series of Emerging Markets special reports.

It's easy to take for granted that a cold Coca-Cola is just a cooler or vending machine away, no matter where you are in the world.

But in Mongolia, a sparsely populated nation with only 3 million people and very few factories, it's hard to overlook the logistics that make this possible.

Mongolia became a democracy in the early 1990s and is still ironing out its vision of capitalism.

Despite growing interest in its mineral wealth, the country remains relatively undeveloped. Only a handful of paved highways intersect in Ulaanbaatar, the capital city. A few rail spurs jut north through Russia or south toward China, lined with trains mostly carrying exported coal.

Mongolia's frigid weather does provide one advantage, said Basil Kleu, a Coca-Cola Greater China general manager visiting from Shanghai.

"You can deliver Coke colder off the back of a truck than out of a cooler," Mr. Kleu said.

In 2002, before Mongolia was gaining so much attention, Coke opened a local bottling plant. It was a bet expressing confidence in a country that was small but ascendant, exotic but bent on connecting with the world.

Of course, it didn't hurt that rival PepsiCo had yet to build a factory here, but the choice to bottle domestically instead of import was about costs. (Canned Coke is still imported from Hong Kong, for instance.) The central factor is making Coke affordable to the average person, even if he or she only brings home a few thousand dollars per year.

That has paid off in Mongolia, just as it has in China and elsewhere. When the Mongolia plant opened in nearly a decade ago, Mongolia's yearly Coke consumption was four eight-ounce servings per capita. As of 2008, that number had ballooned to nearly 70. Coke spent $22 million on a bigger plant east of Ulaanbaatar that opened Aug. 24, 2008.

GlobalAtlanta visited the plant last year to learn how Coke relies on its bottling partner for local business insight while introducing marketing techniques that have enabled it to sell in nearly every country in the world.

With nearly half the population under the age of 24, Mongolia is a young nation that is growing better-educated all the time.

Foreign-trained business leaders are returning to participate in its growth, and the Internet and television are opening the younger generation's eyes to Western lifestyles. But even as it grows more cosmopolitan, marketing strategies in Mongolia have to consider local tastes, said Zol Orshikh, Coke's country manager there.

"You can't cut-and-paste on Mongolia," he said.

GlobalAtlanta spoke with some young people who resented the characterization of their country as a land of herders. The bucolic Mongolia of the past still exists, they said, but they also felt that there should be more focus on its modernization.

They've got a point, said Mr. Kleu.

"Many people believe Mongolians are still riding horses. If you had seen (Ulaanbaatar) seven years ago when I came, you wouldn't believe the evolution," he said.

Today, the capital city is prone to traffic jams in the late afternoon. Construction cranes add to a skyline where a few gleaming buildings tower over run-down Soviet-style apartment blocks.

Coke's local bottling partner has had a front-seat to this development. MCS Group started as an energy consulting firm but has diversified into a variety of fields: cashmere, property, fashion, restaurants, and of course, beverages - including vodka.

Founded in 1993, just after the transition from socialism to democracy that coincided with the fall of the Soviet Union, MCS now employs more than 4,500 people and is one of the top three taxpayers in the country.

"They are an integral part of the Mongolian society now," Mr. Kleu said.

The partnership has allowed many Mongolian workers to receive training at the Coca-Cola University in Shanghai. Pepsi's bottling plant, operated through a partnership with GN Beverages, is providing similar benefits for the local workforce.

Getting there first has helped "entrench" Coke's brand, but the competition is good for the company and the country, said Mr. Kleu.

"It forces everyone to step up their game," he said.

Source:http://www.globalatlanta.com

Chinese, Mongolian foreign ministers meet to discuss bilateral ties

2012-01-12T21:23:00.003+08:00

(Xinhua)

17:01, January 12, 2012

BEIJING, Jan. 12 (Xinhua) -- Foreign Minister Yang Jiechi on Thursday held a talk withhis Mongolian counterpart Gombojab Zandanshatar in Beijing.

The two sides hailed the progress of bilateral ties and agreed to increase exchangesand cooperation in multiple fields to advance their strategic partnership in a sustainableway, according to a press release issued after their meeting.

Zandanshatar, Mongolia's minister of foreign affairs and trade, is paying an official visitto China from Wednesday to Sunday.

Source:Xinhua news agency

Entree Discovers New High Grade Gold Zone at Shivee West, Mongolia

2012-01-11T09:42:00.001+08:00

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 10, 2012) - Entrée Gold Inc. (TSX:ETG)(NYSE Amex:EGI)(FRANKFURT:EKA) ("Entrée" or the "Company") has received final results from the recently completed work program on its 100%-owned Shivee West project in Mongolia. Work was conducted over the Zone III near-surface epithermal gold target and expanded north, where a new gold zone ("Argo Zone") was discovered 250 metres beyond the previously known area of gold mineralization (see news release dated December 14, 2011). Significant results at the Argo Zone included two separate high-grade chip samples averaging 42.4 grams/tonne gold ("g/t Au") over 4 metres and 19.3 g/t Au over 3 metres (see map on www.entreegold.com).

Greg Crowe, President and CEO of Entrée, commented, "This program yielded some very high grades in a new area of mineralization now called the Argo Zone. Both Zone III and Argo lie within a well-defined, northerly-trending magnetic-low, which extends for at least 2.5 kilometres along strike. Potential for additional gold targets is excellent and we are planning further exploration in 2012."

The 2011 work program targeted near-surface epithermal gold mineralization and included 23 vertical holes (2,470 metres) of reverse circulation ("RC") drilling, 1,120 linear metres of excavator trenching and surface sampling over an area of 200 metres x 600 metres. The area tested now appears to comprise two distinct zones of shallow gold mineralization (Zone III and Argo) hosted by quartz veined felsic volcanic rocks located approximately 300 metres apart.

The Argo Zone has been partly defined by six new RC holes (holes EGRC-11-110 to 115), two trenches and surface chip sampling. Hole EGRC-11-112 returned 14 metres of 1.82 g/t Au and hole 11-111 returned 3 metres of 2.21 g/t Au (see table of results below). The two very high-grade chip samples were taken to evaluate a quartz stockwork in dacitic volcanic rocks 50 metres southeast of the nearest 2011 RC drill hole. The mineralization remains open in several directions.

Trench sampling in 2011 on Zone III returned 0.69 g/t Au over 6 metres and a separate interval of 1.44 g/t Au over 6 metres. Previously, trench and outcrop sampling returned gold values of up to 0.51 g/t over 22 metres and 1.39 g/t over 18 metres. Numerous grab samples of siliceous material in the Zone III area have returned between 0.2 g/t and 29.2 g/t Au. Best results from recent RC drilling are from hole EGRC-11-123, located near the centre of Zone III, which returned 8 metres of 2.08 g/t Au.

Planning is underway for additional drilling and surface work commencing in Q2 2012 to better define gold mineralization in both Zone III and the Argo Zone.

Table 1. Significant gold results - Zone III and Argo RC Holes

HOLE	FROM (m)	TO (m)	INTERVAL (m)	Au g/t	COMMENT
EGRC-11-109*	63	67	4	0.27	Argo Zone
EGRC-11-110*	34	40	6	0.36	Argo Zone
EGRC-11-111*	67	70	3	2.21	Argo Zone; Ended in mineralization
EGRC-11-112*	46	51	5	0.91	Argo Zone
including	47	48	1	3.35
and	63	77	14	1.82
including	73	75	2	9.32
EGRC-11-114	17	20	3	0.76	Argo Zone; Ended in 0.18 g/t Au over 6 m
EGRC-11-119	66	71	5	0.36	Zone III
EGRC-11-121	65	67	2	0.74	Zone III
EGRC-11-123	67	75	8	2.08	Zone III; First sample is 9.34 g/t Au over 1 m
including	67	69	2	5.60
*Announced in December 14, 2011 news release.

QUALITY ASSURANCE AND CONTROL

Rock chips and RC drill chips from Shivee West were prepared and submitted to Actlabs Asia LLC located in Ulaanbaatar, Mongolia. Prepared standards, blanks and duplicates are inserted into the RC sample stream at the project site to monitor the quality control of the assay data.

QUALIFIED PERSON

James R. Foster, P.Geo., Entrée's Exploration Manager - Lookout Hill, and a qualified person as defined by NI 43-101, supervised the preparation of the information in this news release.

ABOUT ENTRÉE GOLD INC.

Entrée Gold Inc. is a Canadian mineral exploration company focused on the worldwide exploration and development of copper and gold prospects. The Company's flagship Lookout Hill property in Mongolia completely surrounds the Oyu Tolgoi project of Oyu Tolgoi LLC, a subsidiary of Ivanhoe Mines and the Government of Mongolia. A portion of the Lookout Hill property is subject to a joint venture with Oyu Tolgoi LLC. The joint venture property hosts the Hugo North Extension copper-gold deposit and the Heruga copper-gold-molybdenum deposit. Excellent exploration potential remains on the joint venture property for the discovery of additional mineralized zones.

In North America, the Company is exploring for porphyry-related copper systems in Nevada and New Mexico. The primary asset is the Ann Mason property near Yerington, Nevada, which hosts an inferred mineral resource estimate of 810 million tonnes grading 0.40% copper using a 0.30% copper cut-off, containing approximately 7.1 billion pounds of copper. The property has considerable potential, both to increase the size of the Ann Mason deposit and to discover additional targets.

In addition to being a politically stable jurisdiction, the Yerington copper camp has seen significant historic copper production along with a resurgence of exploration activity and now hosts over 20 billion pounds of copper in several deposits owned by a diverse group of companies.

The Company is also seeking additional opportunities to utilize its expertise in exploring for deep and/or concealed ore deposits. Rio Tinto and Ivanhoe Mines are major shareholders of Entrée, holding approximately 13% and 11% of issued and outstanding shares, respectively.

This news release contains forward-looking statements and forward-looking information (together, "forward-looking statements") within the meaning of applicable securities laws and the United States Private Securities Litigation Reform Act of 1995, with respect to the extent and timing of the Company's drilling and exploration programs, the interpretation of its exploration results, and the potential for discovery of additional mineralized zones and targets. These forward-looking statements are made as of the date of this news release. Users of forward-looking statements are cautioned that actual results may vary from the forward-looking statements contained herein. While the Company has based these forward-looking statements on its expectations about future events as at the date that such statements were prepared, the statements are not a guarantee of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors and assumptions include, among others, the effects of general economic conditions, the prices of gold, copper and molybdenum, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations and misjudgements in the course of preparing forward-looking statements. In addition, there are known and unknown risk factors which could cause the Company's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Known risk factors are described in the Company's Annual Information Form for the financial year ended December 31, 2010, dated March 25, 2011 filed with the Canadian Securities Administrators and available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company is under no obligation to update or alter any forward-looking statements except as required under applicable securities laws.

Contact Information

Entree Gold Inc.
Monica Hamm
Manager, Investor Relations
604-687-4777 or Toll Free: 1-866-368-7330
604-687-4770 (FAX)
mhamm@entreegold.com
www.entreegold.com

Mongolia’s Quest to Balance Human Development in its Booming Mineral-Based Economy

2012-01-11T09:39:00.003+08:00

JANUARY 2012 —

Mongolia—long ignored by Asia specialists as a sleepy nomadic ex-Soviet satellite—finally burst onto the world economic scene in 2011 when exploitation of its vast mineral deposits led it to a 6.7 percent economic growth rate that was 2^nd highest in the world. During the fourth quarter of last year the economy was booming at a growth rate of close to 20 percent. Both the Asian Development Bank and the Economist Intelligence Unit are predicting a 2012 growth rate of 15 percent, and other forecasters contend that if Mongolia’s informal economy is taken into account the growth rate could approach 40 percent. Mining experts estimate that the country possesses as much as $1 trillion worth of untapped precious metals and minerals in at least 6000 sites. That works out to potentially over $333,333 per every man, woman and child in the country.[1] While this is undeniably a positive situation for Mongolia, the challenge facing the nation is to ensure that its mineral wealth benefits the whole nation rather than just certain sectors of society, as has been the case in some other resource-rich countries.

After wrenching economic difficulties in the 1990s caused by the collapse of its Soviet-inspired command socialist system, the Mongolian economy has grown by an average 7 percent a year since 2003. Foreign direct investment (FDI) has soared with the long-delayed but now operational large-scale western mining joint venture, the $4 billion Oyu Tolgoi (OT) copper and gold operation, now under development by Ivanhoe of Canada and multinational giant Rio Tinto. OT may hold as much as 32 million tons of copper and 1,200 tons of gold, according to government estimates. Annual output when the mines are developed is predicted to exceed 450,000 tons of copper and 330,000 ounces of gold. Per capita GDP in Mongolia has more than tripled to $2,200 in 2010 from $638 in 2004. Haruhiko Kuroda, president of the Asian Development Bank (ADB), has proclaimed that Mongolia is at “the threshold of prosperity,” while advising that further efforts must be made to make economic growth more inclusive to ensure that the benefits from high economic growth are distributed more broadly, and that people have equal access to opportunities and basic social services.[2]

In 2008 Mongolia’s Parliament [Great Khural] passed a National Development Strategy and created a Human Development Fund (HD Fund) with the ambitious goal of bringing Mongolia’s human development status to the same level as that of the developed countries by 2020. (The country has been ranked with a value of only 100th out of 169 countries by the United Nations Development Programme’s (UNDP’s) Global Human Development Report.[3]) This Fund made it legally possible for every citizen of Mongolia, for the first time in its history, to be equally eligible to own a share of the nation’s mineral wealth. In preparation for the establishment of the Fund, Mongolian economists looked at the $40 billion Alaska Permanent Fund, Norway’s sovereign wealth fund worth $410 billion, and Chile’s use of its copper resources to help drive growth. They also considered Canada and Australia as models for distribution of mineral revenues to alleviate poverty and avoid the so-called Dutch Disease, a curse afflicting some resource-rich societies.[4]

To avoid this destabilizing effect, in July 2009 the Mongolian Parliament passed a law, based on a similar Chilean act, that creates a mechanism for saving surplus revenue from mineral royalties when prices are high in order to stabilize the annual state budget when prices (and therefore mineral revenues) fall—as happened in 2008.[5] The state budget each year sets a certain amount of money to be drawn from the HD Fund in anticipation of revenues to be earned; this draw is stated as an actual amount of Mongolian National Tugriks (MNT, the Mongolian currency), not as a percentage of the Fund’ value. The state budget must pay out the specified number of tugriks, regardless of whether the Fund has earned the money anticipated. The 2009 legislation is a way to keep the Government in compliance with the Parliament-approved annual budget while at the same allowing the flexibility to react to actual Fund earnings.

Initial capital for the HD Fund was drawn from the OT mine project, which is estimated will account for 30 percent of Mongolia’s GDP when completed and will generate $30 billion in tax revenue over 50 years.[6]Additional revenues for the HD Fund will be coming from development of Mongolia’s $2 billion Tavan Tolgoi (TT) coal deposit, the largest in the world. The country also has very rich uranium and rare earth mineral resources waiting to be exploited. The HD Fund’s other sources include income from sale of shares and dividends of state property connected with state-owned mineral deposits (because they were designated by law as large deposits of national strategic significance); fees for exploration and processing activities in these mining sites; advance payments and loans related to the exploitation of the strategic mining sites; and income from bonds, loan certificates, and savings interest from international and domestic financial markets for the Fund.

The HD Fund is expected to provide pension, health, housing, and educational benefits as well as cash payouts to all citizens, and thus be a mechanism to distribute the wealth obtained from Mongolia’s minerals equitably among the populace. The Parliament in 2011 stipulated that MNT805 billion (roughly US$567 million) from the Fund should be distributed to all citizens for health insurance and to students for tuition fees,[7] with MNT21,000 (about US$15) per citizen for cash payouts. Although the per capita amount is small, the amount distributed in 2010 was 16 percent of the state budget―and in 2011 almost 40 percent. Both the IMF and World Bank have criticized the 2011allocation as too expansionary, and a cause of the high 14 percent inflation rate.[8] Most of these payout monies were in cash,[9] which is opposed by 87 percent of the people who preferred the benefits be in cashless form.[10]

Originally, the HD Fund’s resources were to be applied for investment and capital repairs, to reduce the budget deficit, and for social welfare systems.[11] However, its use has become embroiled in Mongolia’s volatile election politics. In the 2009 presidential election, the two main parties, the Democratic Party and the Mongolian People’s Revolutionary Party (now renamed the Mongolian People’s Party), pledged to distribute as much as $6 billion, or up to 1.5 million tugriks (US$1,060) for every citizen, from the country’s mining wealth. However, because of a sizable shortfall in actual revenues as opposed to anticipated revenues, the Parliament at the end of 2009 authorized only the distribution of MNT120,000 (approximately US$92) as a cash grant for each citizen of Mongolia. In the just-approved state budget for 2012, HD funds are to be distributed in July 2012, which is around the time of Mongolia’s parliamentary elections, so many observers believe the distribution plans are once again most likely exaggerated campaign promises designed to attract votes.

Mongolia’s Prime Minister, Sukhbaataryn Batbold, wrote in 2011 that “human development is at the center of government policy and we are taking all efforts to achieve this goal. Yet, Mongolia faces many challenges…such as unemployment, poverty and inequality are coupled with environmental problems such as climate change, pasture degradation, natural disasters, droughts, dzuds, water and forest resource depletion, air and soil pollution.”[12] He and other Mongolian leaders emphasized that although economic growth is considered essential for the wellbeing of the people, the human costs of the growth are of serious concern for the nomadic pastoral society and contribute to a sense of vulnerability. Therefore, the government is committed to promoting human development as a central strategy for achieving economic sustainability.

Mongol herders, although accustomed to an extreme climate, periodically suffer under dzud (harsh winter drought) which can decimate the nation’s 40 million head of livestock herds and make the nation vulnerable to food insecurity. National leaders increasingly are concerned by climate changes which affect the delicate ecosystems of the countryside’s inhabitants (over 40 percent of the total population of 2.8 million) who depend upon a traditional pastoralism based upon herding sheep, goats, cattle/yak, horses and camels; degrade the grasslands;[13] and pollute the country’s very limited water resources. Such factors negatively influence the local population’s view of mining and agricultural development.

As of 2008, an estimated 35 percent of the population was still living below the official poverty line. Inequality remains high both within cities and between those living in urban areas and those in the countryside. Although poverty assessment studies may be exaggerating rural poor versus urban poor, there is no doubt that the poor lack access to clean energy and heating sources, clean water and sanitation, and educational and healthcare facilities. The government, in consultation with international organizations and the United Nations, aims to utilize budget resources from FDI-generated taxes pouring into the HD Fund to reduce the nation’s carbon and ecological footprints by 20 percent within five years and significantly reduce the high air pollution that engulfs the nearly one-half of the national population that lives in the Ulaanbaatar capital area.

In light of these challenges, discussion of how to distribute the HD Funds has been a hot topic in Mongolia for years. All stakeholders, including the countryside and urban poor, have actively expressed their opinions via workshops, community groups, environmental protests, and in the vibrant Mongolian press. While it is clear that in the 20 years of the democratic era Mongolia has made much economic progress, income inequality, unemployment, and a failure to measurably reduce the poverty rate have incited much public criticism and compelled the UNDP to call for greater promotion of human development at the national policy level, protection of human rights, and greater transparency and accountability in use of HD Fund monies. Another major aspect to the whole discussion is centered around how poverty in Mongolia’s traditional pastoral society should be measured and compared to the previous socialist era. However, there is a national consensus that the government should utilize mining revenues to focus on improving access to basic services and housing conditions, reducing inequality in life expectancy and material standards of living, and maintaining environmentally sustainable income flows to transform mineral wealth into renewable assets for sustainable and broad-based growth to meet Mongolia's most significant development challenges.

The World Bank has warned that although so far Mongolia has managed well the global economic downturn, it must devise management skills to reduce the impact of cyclical mineral prices on Mongolia’s increasingly mineral-based economy, use fiscal rules to manage monetary policy and the exchange rate, develop and maintain a competitive and stable regime for the mining and private sectors, and encourage economic diversification in its herding and tourism sectors to sustain balanced growth.[14] But it appears that Mongolia’s present policies are being well received by some of the international community: on December 19, 2011 Standard & Poor upgraded its outlook on Mongolia to positive, citing that Mongolia had introduced a fiscal responsibility law to limit budget deficits to 2 percent of GDP from 2012. In the upcoming 2012 parliamentary election season in Mongolia, it is certain that widespread debate will continue on the HD Fund and its use in Mongolia to ensure that the wealth flowing in from rapid development of national mineral resources benefits all Mongolian citizens. If the electorate is not generally satisfied with the government’s overall mineral development policy and plans for utilization of the HD Fund, it is highly likely that this coming spring will see a renewal of the nearly annual street protest demonstrations in the capital which were particularly violent in 2008.

Mongolia is blessed with this wonderful revenue stream, and at least some of its leaders have long-term ideas for how to use it (a reserve fund for re-investment in the mineral industry; improving the quality of life of the people; mitigating climate change and pollution). Two challenges will be constant. One is to insulate this revenue stream from corruption on the part of the various actors who have some degree of authority over it. The other is to protect it from the temptation of politicians to ignore some priorities (reinvestment and mitigation) in favor of more immediate but comparatively minor problems in an effort to win votes.

[1] “Mongolia: Mineral Wealth Set to Transform country into “Minegolia”,” November 8, 2011, Eurasianet.org and Economic Intelligence Unit’s World in 2012 report.

[2] “ADB President Kuroda: Mongolia's Development Should Benefit Everyone,” October 10, 2011 beta.adb.org.

[3] Since its introduction in 1990, the Global Human Development Report publishes a human development index (HDI) as an alternative way to compare development performance of countries. Its modeling formula was reformulated in 2010 based on geometric mean and using gross national income (GNI) per capita, life expectancy index, and a new education index to take into account the expected years of schooling a child entering school age today can attain.

[4] Where a sudden surge in wealth invites a commodity boom and attracts so much foreign exchange that it raises the local currency’s value and makes domestic manufacturing less competitive and ultimately hampers expansion.

[5] Michael Forsythe, “Mongolian Harvard Elites Aim for Wealth Without ‘Dutch Disease,” February 15, 2010, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aONmVLraqtO8.

[6] Yuriy Humber, "Mongolia Seeks Balanced Growth to Avoid `Dutch Disease' From Mining Boom,” March 7, 2011, http://www.bloomberg.com/news/2011-03-08/mongolia-says-shifting-focus-to-balanced-growth-from-mining.html and “Mongolia Fund to Manage $30 Billion Mining Jackpot,” Sept. 11, 2009,http://www.swfinstitute.org/swf-news/.

[7] Montsame News Agency, August 31, 2011 report of a Mongolian Cabinet meeting which decided each student regardless of age would receive MNT500,000 for tuition fees.

[8] International Monetary Fund, “IMF Executive Board Concludes the Second Post-Program Monitoring with Mongolia,” Public Information Notice (PIN) No. 11/146, November 28, 2011 and quotes in the financial press in 2011 from Steven Bennett, IMF’s head of Mongolia coverage.

[9] United Nations Development Programme, Human Development Report of Mongolia 2011, From Vulnerability to Sustainability: Environment and Human Development: Environment and Human Development, “Box 1.3: The Human Development Fund,” 2011, 23.

[10] Badrakh, “Human Development Fund survey results revealed,” July 1, 2010, Business-Mongolia.com.

[11] B. Bat and Ts. Batsukh, “Some lessons of natural resource revenue management: The searching NRRM for Mongolia,” Ulaanbaatar, 2010, http://ic.ses.edu.mn/files/pdf/0202BatEn.pdf.

[12] United Nations Development Programme, Human Development Report of Mongolia 2011, xi.

[13] Ibid., 2. It is claimed that within Asia, Mongolia has the highest proportion of people living on degraded lands.

[14] See the World Bank’s Mongolia country overview for 2011 at http://www.worldbank.org/.

Key political risks to watch in Mongolia

2012-01-10T10:11:00.002+08:00

By David Stanway

ULAN BATOR Jan 9 (Reuters) - Mongolia sits on vast quantities of untapped mineral wealth, the exploitation of which is likely to turn it into one of the world's fastest growing economies over the next decade.

But political uncertainty ahead of parliamentary elections in June 2012 has worried investors, with Mongolia's shaky coalition government under pressure to renegotiate a landmark 2009 investment agreement for the Oyu Tolgoi copper deposit, which is set to begin operations later this year.

The priority for Mongolia is the development of its tiny economy, and foreign investors want to know if the government can create a stable legal environment while handling the pressures exerted by impatient citizens as well as its two giant neighbours, Russia and China.

Following is a summary of key political risks to watch:

INVESTMENT POLITICS

The government has now formally given up on its idea of renegotiating the contract for the Oyu Tolgoi copper-gold mine, after earlier saying it wanted to look again at a 2009 deal with Ivanhoe Mines, now 49 percent owned by Rio Tinto .

Foreign investors were worried that renegotiating a deal two years after it was first signed would undermine confidence, but Mongolia is under pressure to boost revenues and meet ambitious social pledges made at the last elections in 2008. Some politicians have called for the prime minister to resign over his handling of the Oyu Tolgoi contract.

The controversy over Oyu Tolgoi's ownership has spilled over into another giant mine, the Tavan Tolgoi or "Five Hills" coal deposit.

Mongolia hopes to complete an investment agreement for the project before the end of 2011 as it races to launch a much-anticipated initial public offering, and meet the promises it made to voters. Its chief financial officer said in November it would be listed in London, Hong Kong and Ulan Bator, but the date was unclear.

An initial proposal to hand development rights in the project to China's Shenhua, Peabody of the United States and a Russian-Mongolian consortium was rejected, and the government is trying to devise another deal that will include Japanese and South Korean partners.

What to watch:

-- Progress of new laws through parliament. The Democratic Party said in early January it will withdraw from the coalition government ahead of the elections, leaving several ministerial vacancies.

-- Whether the government can produce an investment agreement for Tavan Tolgoi that will satisfy foreign partners and keep the public happy, and whether it can do it in time.

-- More inward investment. In November, commodities trader Trafigura and private equity investor Origo Partners Plc , formed a joint venture to develop Mongolian coal and iron ore deposits for export.

-- Whether foreign investors will be deterred by Mongolia's less than transparent approval procedures.

THE RESOURCE "CURSE"

Mongolia's dependence on mining has alarmed environmentalists and opposition politicians, and the country is already showing classic symptoms of "Dutch disease", including soaring inflation and high interest rates.

The government is trying to put in place structures that will protect it against fluctuating commodity prices, and is keen to use the proceeds from mining to pay for infrastructure, health and education programmes and develop other sectors.

It is under pressure to spread the wealth, and has already extracted "pre-payments" from foreign firms involved in both the Tavan Tolgoi and Oyu Tolgoi projects in order to give money to the public.

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 well as inflation as foreign investment transforms the country's mainly rural economy. The International Monetary Fund warned in November that Mongolia's economic policies are creating inflationary pressures.

GETTING ON WITH THE NEIGHBOURS

Many of Mongolia's 2.7 million citizens are concerned about growing Chinese and Russian influence, and their fears were not allayed by the plan to hand the majority of Tavan Tolgoi's western block to Chinese and Russian interests.

China already dominates Mongolia's economy, buying 90 percent of the country's exports in the first half of 2011.

Mongolia's growing dependence on Russia and China for fuel, power and transportation also poses a major risk to its mining sector. Russia has been known to turn off supply taps, and China is not averse to closing crucial railway links.

Mongolia also depends on Russia's railway network to fulfil plans to deliver coal to Japan and South Korea.

What to watch:

-- Will efforts to ease dependence on China merely increase Russia's hold, and vice versa? Is the Chinese market for coal and other minerals its only option in the short term?

-- How will the government handle growing nationalist sentiment, and fears about the role of foreign firms and workers.

For a feature on the wrangling over the Tavan Tolgoi project, click here: (Editing by Daniel Magnowski)

Source:Reuters

Information center of OyuTolgoi Project opened

2012-01-09T09:55:00.004+08:00

By Kh.KHALIUN

An information center is now open to anyone who wants to acquaint with creation process of Oyutolgoi Project, Mongolian mining department development and history. Minister of Mineral Resources and Energy D.Zorigt innovated the information center of OyuTolgoi Project and the opening ceremony was held on January 7. At this center you can learn more about excavation, perforation work, the processing creation at Umnugobi and see the models of technology and uniform, which are using worldwide.
The Information center has opened at first floor of Talk Talk English center, which located next to the 4th building of National University of Mongolia: School of Economic Studies. They also founded library for students, who are studying for geographical and mining sectors. And anyone could take latest information about OyuTolgoi LLC in English and Mongolian both languages through the internet, which also established at this center.
“People can research information of Mongolian mining department’s history, current development and future, not only information about OyuTolgoi Company. Thus, we opened this epicenter where many universities are located. Students and job seekers can find the vacancies related to OyuTolgoi Company from this center,” said chief of board of directors G.Batsukh.

Source:UB Post

Fuel prices spikes linked to inflation and Russian oil tax reform

2012-01-09T09:55:00.000+08:00

By Kh.KHALIUN

After being informed that fuel prices would increase by 300 MNT, all Mongolians with vehicles stood in queue at the petrol stations. From January 7 this information spread so from 7 p.m. until 4 a.m. vehicles waited their turn at petrol station to fill their vehicles bank. This line continued for 20-30 meters and caused many traffic jams.
Petrovis and Sod Mongol Companies petrol stations were overloaded, because these stations didn’t increase the fuel price, and some branch stations ran out of fuel. Servers of these petrol stations said: “We didn’t receive statement to increase the price, so we selling fuel by the old price. The main resource of fuel of our company didn’t finish, so just the branch stations ran out.”
Some citizens think that MT-Oil Company increased the fuel price on their own which influenced other stations. They think this because of MT-Oil Company was the first to increase their price by 260 MNT. Petrol AI-92 was 1590 MNT, but after 10p.m. it turned up to 1850 MNT. And also other petrol AI-80, AI-95 and diesel fuel increased. We wanted explanation about this from MT-Oil Companies administration, but they refused to give report claiming that they would give a press release on Monday.
On January 7 Parliament discussed about the fuel price rise. They said they would discuss the issue at a press conference. The conference’s date is still being debated.
Taxi services, supermarkets and shops have already increased their price, triggering a rise in fuel prices. This shows how directly linked the economy is to fuel price fluctuations. If the prices continue to rise, lifestyles will inevitably change. The Russian Government approved the 60/66 oil tax reform on October 1, 2011. So Mongolian Government received information about impending spike of fuel prices in October. Russia came off with drawback of oil, so the radical change made to policy of oil export. The tax of crude oil import decreased to 60 percents from 65, but tax of all fuels import increased up to 66 percents. They explained this as a policy to support domestic usage. According to Russian economic indicator of 2011, companies which operate through export had most high income, such like Rosneft, LUKOIL, TNK-VR and Surgutneft Company. Currently, Mongolia is importing fuel from Rosneft and TNK-VR.
Mongolian economic is growing fast and on top of this the usage of fuel and energy has increased. If the resource of diesel fuel is extensively depleted, this will directly affect the mining industry. Thus, the Ministry of Mineral Resources and Energy has made it an obligation to prepare a back up diesel fuel fund.
The price, which is newly hanging on petrol station’s price boards, may hang through all 2012. So, it’s time to discuss how to hold inflation stable, not how to decrease the fuel price. The fuel price will not decrease, under Russia’s 60/66 policy. But the rising price of other goods, following the fuel price will continue to have a direct influence on inflation.

Source:UB Post

New Year wishes sent to Mongolia’s people

2012-01-07T14:11:00.000+08:00

New Year wishes sent to Mongolia’s people

President Ts. Elbegdorj making his New Year’s greeting

On the evening of December 31, 2011, the President of Mongolia conveyed his New Year greetings to the people. In his speech, he said: “The outgoing 2011 year was rich with historical events, leaving a unique pathway and embedding us with fruitful ideas and edification. This year was the 2220th Anniversary of Mongolian Statehood, the 805th Anniversary of the Great Mongolian State, the 100th Anniversary of the

Restoration of National Independence, the 90th Anniversary of the People’s Revolution of Mongolia and the 50th Anniversary of becoming a member of the United Nations. All of these events enriched the pride in our history, and our countrymen commemorated these anniversaries with numerous successes and achievements.

In 2001, the good name of Mongolia was spread throughout the world. The talents, voices and strengths of Mongolian people reached many places and earned the respect of others. Also, a book about Mongolia and news about Mongolia were selected as the most interesting in the world, and the whole world heard about this. Mongolia’s civiloriented and open policies have gotten results as Mongolia became Chair of the Community of Democracies beginning this year and started its contribution to strengthen democratic norms. Our people work honestly in many places in the world.

This outgoing year was fully loaded with new creations and the achievements of our people and individuals that honored our culture and history. Those were the result of their diligent efforts. Moreover, many new developments were undertaken and foundations were laid for many new projects.

I am delighted that many people, families, collectives, and organizations supported my initiative of “Alcohol-Free Mongolia” which was proposed on New Year’s Eve, 2011. Congratulations to my citizens who were able to get rid of bad habits and made their mates, children and collectives happy. I am pleased with the efforts of small children who are trying to alienate alcohol from their fathers, and all of my people’s attempts to be alcohol free and of those who have been successful. May all good deeds prosper and dark things stray away from our path.

The coming New Year will be of historical importance. Just before the New Year, a newly reformed election law to elect Parliament was ratified. The authority to select or to be selected must be exercised creatively according to the new law. The year 2012 must be full of new achievements that consolidate Mongolia’s prosperity.

In my speech at the honorary session of the State Great Khural dedicated to the Centennial Anniversary of the Restoration of Mongolia’s Independence and Freedom, I expressed my viewpoints on pressing issues. Now, it is vital to tackle these issues by relating these ideas according to the guidelines of government and current needs. Government agencies, citizens, and parties are required to reflect these in their goals and activities in all stages.

The new year is approaching and I am extending my greetings to all my countrymen joyfully waiting to meet the new year, that reside in the four directions and eight azimuths – from Altai Tavan Bogd to the Dornod steppe and from the Huvsgul woodlands to the South Gobi, where big projects are in progress. I wish a happy new year to all Mongolian nationals that live throughout the world. I also wish a happy new year

to the foreign Ambassadors, diplomats and representatives and collectives from international organizations.

I wish that the year 2012 will be the best year that brings happiness to masses in the world and the Mongolian nation. May every single person and every child smile with cheer, may Mongolian youth be colorful, every man be vibrant and every woman be charming, may the masses be full of life having all family members alive, may our elders live a long happy life, and may the Mongolian nation have fortune and broad vision.

I wish that our history, as bright as milk which belongs to my kind people, continue forever. I toast milk, the finest drink of Mongolia, wishing health, happiness, and well-being to all my countrymen. I heartily greet the

Happy New Year”. In his New Year greeting to the people, PM S. Batbold underlined that the year of 2011 has been full of landmark historical events and achievements in Mongolia and mentioned government goals in the coming year. The Prime Minister said, “We have achieved so much this year. There was a significant progress in socio-economic life of Mongolia. Our GDP growth increased by 20 percent in 2011 and our credit rating was upgraded while the country entered into the list of lower-middle-income countries from low-income ones. In particular, our agricultural sector has had good success due to Mongolian herders’ efforts and hard work. Mongolia became self-sufficient in agricultural crops such as potatoes and vegetables because of successful implementation of Virgin land III campaign for crop farming.

Such economic growth should give fruits to the people. Therefore, the Government of Mongolia will focus on improving the livelihood and well-being of our people, especially low and middle income households and promoting small and medium enterprises in 2012.

I wish that incoming year of 2011 is a year that successfully implements economic programs that give impetus to the country’s economy.”

Source: THE MONGOL MESSENGER

Mongolian Views

Propane tank explodes in Darkhan apartment, residents evacuated

IMF Rep blames fiscal policy for Mongolia’s inflation

President Ts.Elbegdorj visits South Gobi mine sites and soums

The Mongolian Sandwich

The Mongolian Sandwich

An American Capitalist in Mongolia - Part 2

Canada's Man in Mongolia Has Fond Atlanta Memories

Rio Tinto gains majority stake in Ivanhoe

No exploration licenses to be issued in 2012

MPP nominates six new ministers

Lunar New Year celebrations reflect Bay Area diversity

Lunar New Year celebrations reflect Bay Area diversity

Mongolia Aims for Tavan Tolgoi IPO by June

Mongolia Aims for Tavan Tolgoi IPO by June

By PR VENKAT And NISHA GOPALAN

Nomadism in Mongolia-The - best place - last

This piece was writing exactly 10 year and appeared in the Economist as Christmas Special. Quiet interesting read.

Nomadism in Mongolia

The - best place - last

As Mongolia shows, nomadic pastoralism and private land just don't mix

The call of the wild

Enter the free-market fundamentalists

Booming Mongolia-Mine, all mine

The country that is likely to grow faster than any other in the next decade, and how it is changing, for better or worse

Rio clear to take over Mongolia project after Ivanhoe relents

Kazakhstan and Mongolia mark 20th anniversary of diplomatic relations

Berkh Uul JSC (mse:BEU) Completes 1,700 Meter Drilling Program

Expatriate musings on Mongolia:City stumbling

Centerra Gold says delays hit Mongolia project

Centerra Gold says delays hit Mongolia project

Mongolian Doctors to Train in Seoul

Mongol Monsters: The Country’s Giant Heritage

Making Coke Affordable in Ice-Cold Mongolia

Chinese, Mongolian foreign ministers meet to discuss bilateral ties

(Xinhua)

17:01, January 12, 2012

Entree Discovers New High Grade Gold Zone at Shivee West, Mongolia

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Mongolia’s Quest to Balance Human Development in its Booming Mineral-Based Economy

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