BUSINESS COUNCIL of MONGOLIA NewsWire
www.bcmongolia.org [email protected]
Issue 218 – April 20, 2012
NOTE „INFLATION‟, „POLICY RATE‟ AND „SUPERMARKET PRICE COMPARISON‟ IN
ECONOMIC INDICATORS
NEWS HIGHLIGHTS:
Business;
Friedland steps down as Ivanhoe Mines CEO;
Government threatens to suspend SouthGobi Resources licenses;
Rio tightens grip on Ivanhoe Mines;
Not interested in assets outside of Oyu Tolgoi, says Rio Tinto;
Government orders halt to mining operations at Khar Altat;
E-Trans to list IPO on MSE;
Khukh Gan steps up to international trade with finished iron product;
German firm partners for CTL-plant development;
Draig Resources uncovers coal sequence at Teeg site;
Mongolian National Lottery introduces new game;
XacBank shelves debut dollar bond;
Khan Resources dropped from TSX;
Xanadu appoints new executive director in Mongolia;
Director resigns from SouthGobi Resources;
Black Ridge Mining appoints new executive director;
Hogan Lovells looks to build in Mongolia with partner’s transfer;
Meritus takes consultant to register resources;
U.K. prince greets Mongolia's leaders from private sector;
Corporate governance certificate training program for directors;
GE and Caterpillar vie for rule of locomotive market.
Economy
Mongol Bank raises policy rate to 13.25 percent;
Tugrug strengthens as Mongol Bank lowers pressure on exchange rate;
Government needs balanced expenditures for sustainable growth, says ADB;
Parliament considers new taxes on growing profits from coal;
Stabilization Fund collects state revenues if copper prices exceed USD 9,760.50;
Government aims to open up iron sector;
Domestic oil firms to receive tax relief;
University of Sydney to direct transparency program in key public sectors;
Study reports downward trend in poverty;
Rio Tinto executive still sees robust long-term demand for copper;
Risk of copper surplus worries investors;
Gold star shines less bright;
World Bank lowers expectations for China’s economy in 2012;
Cambodia joins the stock-market party.
Politics
Enkhbayar's arrest leads to uncertainty in elections;
MPs demand resignation of Minister Nyamdorj for Enkhbayar’s arrest;
Public unlikely to receive ID cards before elections;
Government details Erdenes-TT distribution;
Mining license changes enacted at start of drilling season;
Mothers will be supported;
Discontent reveals cracks within MPP;
Financial laws need renovation, says FRC head;
Quiet returns to UB after protest;
Mongolian NGO joins Global Federation of Competitiveness Councils;
Alaska National Guard shares health care experience with Mongolian soldiers;
Chinggis sculpture stands in London.
*Click on titles above to link to articles.
SPONSORS
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BCM MONTHLY MEETING NOTICE
BCM‘s next monthly meeting for members will be Monday, April 23, 2012 at 5PM at the KEMPINSKI
HOTEL KHAN PALACE, 2nd floor, Altai Ballroom. Parking will be reserved in front of the hotel for
BCM Members.
The bilingual meeting will feature the following presentations:
- Call to Order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM
- BCM Report: Jim Dwyer, Executive Director, BCM
- L. Sumati, Director, Sant Maral Foundation –―Trends in Politics‖
- Igor A. Kovarsky, President & CEO, Kincora Copper –―Bronze Fox Copper-Gold Project: Revealing
True Potential – from Discovery to Production‖
-Robert Schoellhammer, Country Director, and Jan Hansen, Senior Country Economist, Asian
Development Bank ―Development Outlook for Mongolia and Asia: Confronting Rising Inequality‖
- Graeme Hancock, Chief Operating Officer, Erdenes TT – ―An update on developments at Tavan
Tolgoi‖
A networking reception will be held for all attendees immediately following the business portion of
the meeting in ―Oasis‖ restaurant, 1st floor, Kempinski Hotel.
BUSINESS
FRIEDLAND STEPS DOWN AS IVANHOE MINES CEO
Billionaire Robert Friedland has resigned as Chief Executive Officer of Ivanhoe Mines Ltd. after the
company's majority shareholder Rio Tinto PLC agreed to secure funding for the USD 6 billion Oyu
Tolgoi copper mine.
Rio Tinto will provide an immediate credit facility of as much as USD 1.5 billion to ensure
construction at Oyu Tolgoi is not interrupted, Vancouver-based Ivanhoe Mines said today in a
statement. Rio also will support the completion of a syndicated loan of USD 3 billion to USD 4
billion. Ivanhoe plans a USD 1.8 billion rights offer to repay the loan and an existing facility.
The accord resolves questions over financing Oyu Tolgoi. It also makes the conclusion of efforts by
Friedland, 61, to develop the project in southern Mongolia after buying rights to the deposits from
BHP Billiton for USD 37 million in 2003.
Six other Ivanhoe directors and four senior management members resigned. Kay Priestly, chief
financial officer of London-based Rio Tinto's copper group and an Ivanhoe Mines director, was
appointed Ivanhoe's interim Chief Executive Officer.
Ivanhoe Mines said that Rio Tinto may advance loans to Oyu Tolgoi as an alternative, or in addition
to, the syndicated loan. Ivanhoe has already drawn down about USD 1.3 billion of an existing USD
1.8 billion facility provided by Rio.
Source: Sydney Morning Herald
GOVERNMENT THREATENS TO SUSPEND SOUTHGOBI RESOURCES LICENSES
Mongolia has announced its intention to suspend the mining license of the Gobi Desert coal mines of
SouthGobi Resources Ltd., which is the subject of a Chinese stake purchase attempt, a move that
could potentially derail China's biggest investment to date in its resource-rich neighbor.
Mongolia's mining authorities have threatened to suspend some of the licenses of SouthGobi
Resources, a mining company listed in Toronto and Hong Kong, because the Chinese metals
company Chalco intends to purchase a majority state in the company, said SouthGobi.
SouthGobi's auditor, Deloitte, resigned shortly after the Mongolian announcement, contributing to a
10 percent drop in SouthGobi's Hong Kong share price on Tuesday.
Although Mongolia's vast mineral resources lie next to its border with China, the world's biggest
consumer of many commodities, historical mistrust has limited the involvement of Chinese mining
companies in Mongolia's resource sector.
Earlier this month Chalco said it planned to make a CAD 925 million ((USD 935.2 million) offer for a
majority stake in SouthGobi. SouthGobi's biggest shareholder, Ivanhoe Mines Ltd., is committed to
selling the entirety of its 57.6 percent stake in SouthGobi Resources.
SouthGobi added that it ―has not received any official notification‖ of a license suspension. Because
the share sale was to take place in Toronto, where SouthGobi is listed, it was not technically
subject to review by Mongolian authorities. Mongolia's mining minster declined to comment.
Chalco's deal would allow them to gain an additional 15 percent of Mongolia‘s coal output and
almost 19 percent of Mongolia's coal exports. That's why Mongolia considers this deal very important
and very sensitive for its national security,‖ said Sardor Koshnazarov, head of research at Eurasia
Capital.
SouthGobi said it did not know whether the company would receive a formal request to suspend
operations.
―The mine is operating as usual,‖ David Bartel, vice president, said. ―We have received no
notification not to operate, so we are continuing mining just like we did yesterday and the day
before.‖
Source: Financial Times
RIO TIGHTENS GRIP ON IVANHOE MINES
Rio Tinto PLC tightened its grip on Ivanhoe Mines Ltd. as part of a USD 3.3 billion financing deal
Wednesday that will see chief executive and founder Robert Friedland step away from the
company. Rio Tinto, which owns a 51 percent stake in Ivanhoe Mines Ltd., will nominate 11 of a
new 13-member board for the company, which is building the massive Oyu Tolgoi mine in Mongolia.
―Today's agreement provides future financial certainty for Ivanhoe and stability for the timely
development of Oyu Tolgoi,‖ Rio Tinto Copper chief executive officer Andrew Harding said. He later
added ―...we are dedicated to meeting our target of starting commercial production from Oyu
Tolgoi in the first half of 2013 and bringing the benefits of the mine to the people of Mongolia.‖
The company has said the Oyu Tolgoi was about 73 percent complete at the end of February. The
project is expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold per year in
the first decade of operation. Under the financing agreement, Rio Tinto provides a standby
commitment for a USD 1.8 billion rights offering by Ivanhoe Mines and USD 1.5 billion in bridge
financing to Ivanhoe Mines. The funding is in addition to USD 1.8 billion in interim funding that was
agreed in December 2010.
Six of Rio Tinto's 11 nominees to the board will be independent directors. Friedland will nominate
two directors, one of whom will be independent.
Source: Business Week
NOT INTERESTED IN ASSETS OUTSIDE OF OYU TOLGOI, SAYS RIO TINTO
Rio Tinto PLC plans to keep hold of the prized Oyu Tolgoi copper and gold project in Mongolia but
has no interest in the other assets owned by Ivanhoe Mines Ltd., the head of Rio's Copper division
said.
―We have indicated that our interest in Ivanhoe Mines was in Oyu Tolgoi and not in the other
assets,‖ Andrew Harding said during an interview at the annual CESCO copper industry week in
Santiago. ―We're a 51 percent owner of the business, but the CEO is Robert Friedland, there's a
board in place that has been in place historically,‖ he added.
Rio raised its stake in Ivanhoe Mines earlier this year, but Friedland holds a 13.7 percent interest
Canadian rules require a potential buyer to own over 90 percent of a company's shares before
forcing a full takeover. The company has other assets including a gold project in Kazakhstan. Rio is
project manager of Oyu Tolgoi, which is 66 percent owned by Ivanhoe Mines and 34 percent owned
by the Mongolian government.
The physical power infrastructure from the Oyu Tolgoi project to the Mongolia-China border is
nearly finished. The power lines and infrastructure from the Chinese grid to join the Mongolian
infrastructure are currently under construction and are expected to be finished in time to allow
power to be supplied to the project, Harding said. The company must still negotiate the
commercial terms for the supply of power from China and commercial supply agreements would
follow, he added.
Source: Fox Business
GOVERNMENT ORDERS HALT TO MINING OPERATIONS AT KHAR ALTAT
Protests by citizens of Bukhmoron Soum, Uvs Aimag have halted operations of mining operations at
the Khar Altat mining site.
The government has put the operations of the joint venture firms CGBEM of Canada and Mongolia
and Khotgor Shanaga of Korea and Mongolia and the Chinese firm Ment Yu on hold after citizens
used sit-in demonstrations to catch the attention of government to bring an end to mining
operations.
The decision came after head of the Cabinet Secretariat Ch. Khurelbaatar and officials from the
General Agency for Specialized Inspection met with local residents and learned about the situation.
Source: Zuunii Medee
E-TRANS TO LIST IPO ON MSE
E-Trans Logistics JSC is prepped to release its initial public offering (IPO) on the Mongolian Stock
Exchange (MSE). Mongolian securities firm BDSec JSC is the underwriter for the deal.
E-trans works reloading cargo that passes through the China-Mongolia border, provides warehouse
storage, and providing customs control.
The offering will place shares comprising 16.67 percent of the company, or 7.5 million shares, at a
minimum of MNT 120 a share to a maximum of MNT 135 a share for a total offering of MNT 924
million. In February last year the company raised USD 1.2 million through a private placement,
bringing the number of share holders in the company to four.
The IPO has received clearance from the Financial Regulatory Committee.
Source: BDSec
KHUKH GAN STEPS UP TO INTERNATIONAL TRADE WITH FINISHED IRON PRODUCT
The iron-ore firm Khukh Gan has signed an agreement with China's largest iron firm to export 2,000
tons of processed iron a month.
Khukh Gan used to sell its ore to an iron processing plant located in Darkhan for USD 314 a ton.
Now, with the establishment of its own processing plant, the company will sell its own value-added
iron metals for 10 percent more to the Chinese firm. The firm considers the deal its first step to
making its introduction to the international market.
The company's processing plant will produce 300,000 tons of iron annually.
Source: Unuudur
GERMAN FIRM PARTNERS FOR CTL-PLANT DEVELOPMENT
Representatives of the Mongolian government have signed two memoranda of understanding
relating to the development, engineering, and construction of both a coal-to-liquids plant and a
heat-recovering coke-making plant.
The agreement took place during President Ts. Elbegdorj's five-day visit to Germany, accompanied
by a major business delegation.
At the same time as the memoranda, ThyssenKrupp Uhde GmbH also signed a licensing agreement
with the Ulaanbaatar-based company Industrial Corporation of Mongolia for use of ThyssenKrupp's
proprietary PRENFLO coal-gasification technology.
"ThyssenKrupp Uhde is contributing proprietary technologies to both projects and will also be acting
as general contractor," said Alfred Hoffman, chief technical officer and member of ThyssenKrupp
Uhde GmbH's executive board. Referring to the coal-to-liquids plant, he added, "This plant will
enable us to offer the customer a holistic process solution from coal to synthetic fuel."
The Mongolian government has been intending to limit fossil fuel imports for quite some time and
instead to increasingly utilize its abundant domestic coal deposits. It has therefore set itself the
goal up upgrading this domestic coal and converting it into high-grade chemical and petrochemical
products. As a primary measure, the Mongolian government intends to build a coal-to-liquids plant
in Mongolia to produce synthetic fuels from coal.
Source: ThyssenKrupp Uhde GmbH
DRAIG RESOURCES UNCOVERS COAL SEQUENCE AT TEEG SITE
Draig Resources Ltd. announced an intersection with coal sequences at the Teeg site.
The company reported steeply dipping coal sequences with an apparent cumulative coal thickness
of 20 to 40 meters per hold, at three drill holes at the Teeg coal licensed property in Uvurkhangai
Aimag. The coal was reportedly relatively shallow and well within open-pit mining depths.
The company was keen to point out that one of the holes is located approximately 3.5 kilometers
from the coal intersections made by Draig during a due diligence drill program prior to its purchase
of eight coal license in Uvurkhangai and Umnugobi Aimag.
"Although it's still early stage, we are very pleased with the initial drill results, particularly to have
located this coal sequence. Most significant is the fact the coal intersections seem to be in line with
seams discovered during our initial drilling on Teeg.
The current drill program was designed to test the potential lateral extent of the coal seams
identified in the original due diligence drill holes. At the time of the announcement, the drilling of
two further holes had commenced. The Teeg site covers 22 square-kilometers and sits immediately
south of the 50-year-old Bayanteeg open-cut mine, which has extracted an estimated five million
tons of surface coal to date.
Source: Draig Resources Ltd.
MONGOLIAN NATIONAL LOTTERY INTRODUCES NEW GAME
The Mongolian National Lottery (MNL) has rolled out a 4D lottery game in April. The games are
owned by subsidiaries of Singapore-based Monvest Group Pte. Ltd., which have made a deal with
fast-food chain Grab and Go to install lottery terminals to encourage greater sales.
―We are confident the introduction of 4D will significantly boost the sales of lottery tickets,‖ said
Nixon Yap, chairman of Monvest. ―The impact of these new games for the National Lottery will be
significant. Our prime objective is to provide a greater value of entertainment choices for players
to test their luck and to entice more consumers to gain an interest in lottery products.‖
The 4D game, which has players choose a four-digit number, expands upon the games already
offered since December 2011, 6/42 Jackpot Lottery and 6D. Since launch MNL has established over
60 lottery outlets in an effort to reach out to the community. Monvest expects the number of sales
points to exceed 80 with the roll out of at least 22 terminals at Grab and Go restaurants, which will
initially offer the 6D Lotto and 6/42 Jackpot games.
Source: Monvest Group Pte. Ltd.
XACBANK SHELVES DEBUT DOLLAR BOND
Investor enthusiasm for exposure to Mongolia has yet to spill over into the banking system as
XacBank last week shelved it debut dollar bond. Yet, investors remain upbeat on the prospects of
Mongolia and put the failure to launch down to its aggressive pricing rather than issues related to
the credit or the lender‘s nationality.
XacBank was looking at a 10 percent coupon for a three-year deal, but that level for a Single ―B‖-
rated bond did not go down well with investors.
―The pricing was wrong,‖ said Harsh Agarwal, desk strategist at Credit Suisse. ―I would, any day,
own bonds from [Mongolian Mining Corp (MMC)) at the same yield of 10 percent that was being
offered by XacBank, a small privately owned micro-lender.‖
The result is likely to send a clear message to Golomt Bank, Mongolia‘s large privately owned
lender, as it announced its own maiden foray into the dollar bank. XacBank‘s attempt at such tight
pricing was, partly, because the Development Bank of Mongolia had been able to raise USD 580
million in five-year bonds at 5.75 percent last month. However, investors saw the DBM as a
sovereign proxy with plenty of scarcity value to boot.
As Golomt wraps up a roadshow, Golomt can expect a less-enthusiastic response. One European
account estimated the fair value for the Golomt bond would be in the neighborhood of 9.75
percent, while another fund manager said the deal size could be a maximum of USD 200 million.
Source: Reuters
KHAN RESOURCES DROPPED FROM TSX
Khan Resources Inc. announced today that it has received a notice from the Toronto Stock Exchange
(TSX) that it would delist the company's securities effective at the close of market on 11 May 2012.
The TSX has determined that the company has failed to meet the continued listing requirements of
the TSX. This includes its cease of business activity, discontinued operations, and its failure to
spend at least USD 350,000 on exploration or development work.
The charges are a result of the company's decision to put its Dornod uranium project in a care and
maintenance status and initiating international arbitration action for USD 200 million in January
2011 against the government of Mongolia and its state-owned uranium company, MonAtom LLC.
Trading of Khan Resources‘ shares will continue on the TSX for 30 days before delisting before
moving to the Canadian National Stock Exchange (CNSX). But the company could not confirm that
the CNSX listing would be completed prior to the TSX delisting.
Source: Khan Resources Inc.
XANADU APPOINTS NEW EXECUTIVE DIRECTOR IN MONGOLIA
Xanadu Mines Ltd. has appointed Hadyn Lynch as it Executive Director of Xanadu Mines Mongolia
LLC, based in Ulaanbaatar. The company said it chose Lynch to strengthen its existing in-country
management team.
―I look forward to the challenge of helping continue the development of the company's asset base
and advancing Xanadu's strategy on copper and coal,‖ said Lynch.
Lynch comes from a background as a senior financial executive within the Australian and
international mining industries, having worked in corporate advisory and project funding roles with
global and domestic investment banks over the past 19 years. His financial career has included
commodity sales at Bankers Trust, project finance at Investec Bank Australia, corporate advisory
and equity capital markets at RBC Capital Markets and Southern Cross Equities now Bell Potter.
The newly appointed executive holds a Bachelor of Mechanical Engineering and Economics from the
University of Queensland and a Masters degree in Finance from the University of New South Wales.
Source: Xanadu Mines Ltd.
DIRECTOR RESIGNS FROM SOUTHGOBI RESOURCES
Coal miner SouthGobi Resources Ltd. announced the resignation of director John Macken. Macken
had been a member of the board since June 2007.
―We thank Mr. Macken for his guidance and service throughout the formative years of the
company,‖ said Chairman of the Board Peter Meredith.
Source: SouthGobi Resources Ltd.
BLACK RIDGE MINING APPOINTS NEW EXECUTIVE DIRECTOR
Black Ridge Mining NL has appointed Robert Molkenthin to its board as executive director.
Molkenthin's appointment took effect on 11 April. Black Ridge has recently announced its interest in
rare-earth exploration opportunities in Mongolia.
Molkenthin has held a variety of positions throughout his career and has over 25 years' experience in
Australia and internationally in a wide range of business environments at all levels in corporate
finance and business operations. He also, more recently, worked as chief financial officer and
commercial manager at the engineering consultancy. Lycopodium Minerals Pty Ltd.
The new board executive‘s previous experience encompasses capital raising, public offerings, and
corporate restructuring in the engineering, mining, property, and retail sectors.
The company has also announced the resignation of Angus Middleton, effective 13 April, in order to
avoid any conflicts of interest with other business opportunities he is now undertaking.
Source: Black Ridge Mining NL
HOGAN LOVELLS LOOKS TO BUILD IN MONGOLIA WITH PARTNER‟S TRANSFER
Hogan Lovells is sending London-based corporate partner Chris Melville to its Ulaanbaatar office in a
bid to extend its reach in Mongolia.
Melville, who has worked on a number of Russian transactions including Onexim's USD 200 million
takeover of a U.S. basketball team in 2010, will continue to focus on cross-border deals and
infrastructure while working closely with the firm's Ulaanbaatar managing partner Michael Aldrich.
The relocation brings partner numbers at the Ulaanbaatar office to two, along with five associates
and three other fee-earners.
"It's exciting to be supporting the development of the Mongolian practice at this point in a time
when foreign investors are really taking notice of the investment opportunities and the country's
need for additional capital and infrastructure investment," said Melville. "The focus will still very
much be on inbound corporate investment work and joint ventures. I expect my experience in
infrastructure and natural resources [merger and acquisition] to prove invaluable, as growth will be
driven to a significant extent by these sectors.
Hogan Lovells gained an Ulaanbaatar presence when it entered a formal association with Mongolian
outfit GTs Advocates in August 2010. Since then DLA Piper has entered the market via a local tie-up
with C&G Partners. Soon after, Australian firm Allens Arthur Robinson opened a representative
office in Ulaanbaatar, before fellow Australian firm Minter Ellison followed suit in a bid to capitalize
on the country's emerging resource-based economy.
Source: The Lawyer
MERITUS APPOINTS CONSULTANT TO REGISTER RESOURCES
Meritus Minerals Ltd. announced its appointment of a Mongolian consultant to ensure its
applications for registering resources at its Gutain Davaa project in Mongolia with the National
Register of Reserves and Resources for two licenses with the Mineral Resources Council (MRC) in
late February.
The MRC has appointed two experts to review the applications and make recommendations and to
comment on their content prior to submission to the full MRC committee for consideration.
Source: NASDAQ
U.K. PRINCE GREETS MONGOLIA'S LEADERS FROM PRIVATE SECTOR
A business breakfast hosted by PricewaterhouseCoopers LLC was held at the Kempinski Hotel to
welcome Prince Michael of Kent, and his delegation of senior business people. In attendance were
senior Mongolian politicians and representatives of many of the largest companies in Mongolia.
―The diversity of attendees at the breakfast event clearly demonstrates the interest these two
countries have in working together for the future benefit and prosperity of Mongolia,‖ said Carolyn
Clarke, managing partner of PricewaterhouseCoopers Mongolia.
The visiting business delegation included companies such as Barclays Capital Inc. and Citi Group.
The event was organized to celebrate the growing commercial ties between the United Kingdom
and Mongolia following the example of companies like Rio Tinto PLC, the London Stock Exchange
(LSE), and PricewaterhouseCoopers with their operations in Mongolia.
In addition to developing business relationships, the prince and his delegation launched a new
charitable enterprise for Mongolia, ―Care for Children,‖ focusing on providing permanent homes to
families of orphaned children.
Source: PricewaterhouseCoopers
CORPORATE GOVERNANCE CERTIFICATE TRAINING PROGRAM FOR DIRECTORS
The Corporate Governance Development Center will offer its Corporate Governance Certificate
training program. The training will be held in Room 210 at the Institute of Finance and Economics in
English language on 27 and 28 April beginning each day at 9:45 am.
The program aims to teach directors and business heads the major changes in the Company Law and
its corporate governance implications and the concepts and principles of corporate governance. In
addition, there will be instruction on the responsibilities and procedures of a board as well as the
major corporate finance decisions boards must make.
The training is conducted by certified facilitators with seminars combing lectures and interactive
discussions. Certificate training lasts a day and a half.
Source: Corporate Governance Development Center
GE AND CATERPILLAR VIE FOR RULE OF LOCOMOTIVE MARKET
Caterpillar is trying to catch up with General Electric Co., two heavy equipment suppliers with
operations in Mongolia, in the locomotive market amid a surge in demand, as rising profits allow
railroads to upgrade their fleets. Rail infrastructure is also a heated issue in Mongolia, where rails
to transport minerals to foreign ports are in desperate need.
Making much headway could be a challenge, at least in the short term, because Caterpillar is
closing what had been its main locomotive-assembly plant, in London, Ontario, after a wage
dispute. The company is relying instead on its new Muncie plant, and on another plant still under
construction in Brazil.
General Electric likewise is gearing up production, adding a new locomotive plant in Texas, while
keeping its main factory in Erie, Pennsylvania. For years the company has outsold its main
locomotive rival, Electro-Motive Diesel (EMD), which languished as its owner, General Motors Co.,
was distracted by its slide toward bankruptcy. Now, EMD is part of Caterpillar, which bought it in
2010, and has the financial muscle to take on General Electric.
General Electric and Caterpillar mainly produce freight locomotives, which sell for USD 2 million
and up, but they are eager to expand in the passenger market, competing with such suppliers as
Germany's Siemens AG and Bombardier. Caterpillar's strategy is to start afresh in a new plant
without the inefficiencies of the 62-year-old facility it is closing. But that means disruption at a
time of growing demand.
General Electric, by contrast, wants to keep all its production capacity available for the current
upswing, and so is hanging on to its big unionized plant in Pennsylvania, which has an experienced
work force and offers wages that are about twice what Caterpillar pays at the nonunion Muncie
factory. At the same time, it is also opening a lower-wage plant in Texas.
Read more…
Rail equipment is just a sideline at both companies. Caterpillar makes most of its profits from
construction and mining equipment, while General Electric is more focused on jet engine and
energy equipment. But both companies see locomotives as a global growth opportunity.
Source: Wall Street Journal
ECONOMY
MONGOL BANK RAISES POLICY RATE TO 13.25 PERCENT
The Bank of Mongolia has decided to increase its policy rate yet again to contain runaway inflation.
This was the second time the Central Bank has raised interest rates in recent months.
The bank has decided to increase the interest rate by half a percentage point to 13.25 percent and
the required reserve rate by one percentage point to 12 percent.
The national average consumer price index increased notably by 15.3 percent in March year on year
and the index for the capital city of Ulaanbaatar rose by 17.3 percent, according to the National
Statistical Office.
The surging inflation was mainly caused by soaring meat prices during the first three months of
2012. Meat prices, which increased by 51.8 percent, contributed to 68.2 percent of the inflation,
said the Central Bank.
Increasing demand caused by foreign investments and demand generated by higher Government
budget expenses may push inflation even higher.
Source: Xinhuanet
TUGRUG STRENGTHENS AS MONGOL BANK LOWERS PRESSURE ON EXCHANGE RATE
The Mongolian tugrug has strengthened nearly 7 percent this year due to a combination of tightened
monetary policy, Central Bank intervention in the forex market and strong capital flows, reported
the source. The source had a bullish outlook on the Mongolian currency for the long-term, while
making exception for short-term volatility in the second quarter of 2012.
The tugrug hit the target exchange of MNT 1,300 against the U.S. dollar last week compared with
MNT 1,396 on 31 December 2011. On 19 March the Bank of Mongolia raised the policy rate by 50
basis points to 12.75 percent and on April 18 another 50 basis points to 13.25 percent, saying it
intended to slow down inflation and lower pressures on the exchange rate with the increase.
The Central Bank reported that it had sold USD 242.75 million to commercial bank year-to-day as
part of its efforts to avoid the downward pressure on the currency caused by surging imports. It
allowed gradual depreciation in 2011, from its peak MNT 1,195 to MNT 1,396 by the end of last
year. Amid strong political pressure to control inflation and contain the currency's depreciation, the
Central Bank became active in the forex market, beginning in November last year, to ease tensions
before the June 2012 parliamentary elections.
The Central Bank spent at least USD 200 million to bolster the tugrug last year. The bank said its
policy is to intervene only to prevent sudden swings in exchange rate in either direction.
Read more…
The recent agreement between the Bank of Mongolia and the People's Bank of China to expand
swap agreements to CNY 10 billion to MNT 2 trillion provides additional support. The bank sold CNY
269 million (USD 42.7 million) to commercial bank year-to-day. The tugrug also received support
from strong foreign investment this year worth USD 395 million, offsetting the current account
deficit of USD 474.1 million.
Finally, the bond offerings issued by the Development Bank of Mongolia and Mongolia Mining Corp.
(MMC) raised nearly USD 1.2 billion in international debt markets, providing even greater criteria
for strength. Extensive capital raising in international markets by Mongolian banks would provide
further support.
Source: Eurasia Capital
GOVERNMENT NEEDS BALANCED EXPENDITURES FOR SUSTAINABLE GROWTH, SAYS ADB
The Mongolian government should review and re-direct government expenditures to critical areas
such as transport, energy, water, education and health care to ensure sustainable economic
growth, an expert of the Asian Development Bank (ADB) said.
The Mongolian government budget for 2012 had very substantial increase in public investment
including infrastructure investment, which is very necessary to develop the country's natural
resource sector to diversify the economy and to enhance general and inclusive growth, said Jan
Hansen, a senior financial specialist of ADB resident mission in Mongolia.
Speaking at a launch ceremony of ADB's flagship annual economic publication Asian Development
Outlook, Hansen emphasized that the government should ensure that the country's macroeconomic
stability was preserved and inflation was kept at a low and acceptable level.
According to the ADB report, Mongolia's gross domestic product could grow by 15 percent in 2012
and 17.5 percent in 2013, driven by mining-related investment and output. Mongolia‘s economy
expanded by 17.3 percent in 2011. Inflation nationwide has increased by 15.3 percent in March 2012
and is expected to remain in the double digits over the next two years.
Source: CPS International
PARLIAMENT CONSIDERS NEW TAXES ON GROWING PROFITS FROM COAL
Tremendous growth in the sale of coal abroad has helped bring huge profits to Mongolia's mining
firms, but some are beginning to worry about new taxes the government might add to the products
they export.
Last year Mongolia exported 21.3 million tons of coal for USD 2.3 billion compared with 4.5 million
tons for USD 184.5 million in 2008. Due to research that shows profits of USD 40 to USD 60 a ton of
coal have not been equally distributed throughout the country, the government is considering the
institution of new taxes.
Some policymakers have already submitted draft laws on the issue and have met with
representatives of the private sector.
G. Zandanshatar, the Minister of Foreign Affairs, said an estimated 41 million tons of coal will be
exported this year at USD 70 a ton from Erdenes-Tavan Tolgoi JSC. He added that a minimum of USD
28 million would be collected from a 10 percent tax on sales. Comparatively, Russia imposes a 25
percent tax on exported coal, and China 10 percent for thermal coal, and 45 percent for coking
coal. Indonesia has recently increased its tax from 15 to 25 percent.
Source: Undesnii Shuudan
STABILIZATION FUND COLLECTS STATE REVENUES IF COPPER PRICES EXCEED USD 9,760.50
The government has prepared for falling copper prices through its Stabilization Fund, established by
the Law on the Stabilization of the State Budget.
Mongolia has long relied on copper as its main source of income. Although the country has
introduced diversification with the coal and gold industries, the copper industry still accounts for 3
to 4 percent of state revenue.
During the past few years copper prices have hovered near USD 8,000, leaving Mongolia safe, but
now analysts are less enthusiastic toward the base metal due to projections of economic slowdown
in China and economic troubles in the west. Recently copper has fallen to USD 7,893.
An officer at the Finance Office of Fiscal Policy, J. Enkhzul, reasoned that with a projected market
price of USD 9,760.50, a stabilized copper price was calculated at USD 6,663.40, and that copper
prices should not fall any lower than the stabilization price. All of the state revenue collected if
copper goes above the projected market price will be directed into a stabilization fund to provide
assistance for times when copper prices fall below the stabilization price.
―This year's copper price is expected to reach USD 9,760.50 a ton, which allows MNT 583.5 billion
for the state budget and MTN 168 billion for the Stabilization fund,‖ said Enkhzul. ―A fall in copper
prices could create complications for the state budget, but the stabilization price is based on
predictions for the lowest projections for copper prices.‖
Source: Undesnii Shuudan
GOVERNMENT AIMS TO OPEN UP IRON SECTOR
The government has set out to support the ferrous metallurgy sector. A processing plant is planned
for Darkhan-Uul and Selenge Aimag, in addition to the Sainshand Industrial Complex.
"This metallurgy plant in Darkhan would make metal objects from disposed iron," said Ch.
Tsogtbaatar, head of the Mining and Heavy Industry Strategy department at the Ministry of Mineral
Resources and Energy. "Although there are a few other smaller iron smelting plants, this metallurgy
plant can be considered the only iron processing plant in Mongolia."
The official pointed out a number of small iron deposits at Tumurtei, Khust Uul, Tumur Tolgoi, and
Bayangol.
The project has majority ownership from the government, and also has rights to nearby iron mining
projects, said Tsogtbaatar. However, the official added that the project would need better
technology and equipment to be a success. He said construction would begin soon, without any
further details.
Source: UB Post
DOMESTIC OIL FIRMS TO RECEIVE TAX RELIEF
The Cabinet announced a decision for tax relief to domestic oil firms.
Only one refinery exists so far in Mongolia, founded in 2001 at Erdenet, but the government expects
many will open due to government policy encouraging the establishment of national oil refineries.
The Cabinet found it was necessary to offer tax relief to national companies that have workers
employed and are seeking technical renovation. It stressed that the motion was especially vital
when export tax on Russian raw materials are much higher than those on final products.
Source: Montsame
UNIVERSITY OF SYDNEY TO DIRECT TRANSPARENCY PROGRAM IN KEY PUBLIC SECTORS
The University of Sydney Business School has won a prestigious AusAID research grant that will see it
export its capacity-building expertise to Mongolia.
The two-year USD 639,245 program will see the Business School partner with the Mongolian Ministry
of Finance, the Financial Regulatory Commission of Mongolia, and the Mongolian Stock Exchange to
deliver a program aimed at enhancing sustainable economic growth by improving transparency and
accountability in the country's key public sectors. BCM assisted in the submission of information
required by AusAID from the aforementioned Mongolian agencies for the application for this grant.
―Given the relative infancy of Mongolia's public institutions, there is little experience and precedent
in implementing transparent and accountable frameworks and systems,‖ said lead grant researcher,
Professor Nigel Finch.
―This activity will address this broader development issue by improving the Mongolia's government's
ability to implement transparent and accountable practices, and build frameworks for the effective
regulation of financial and non-financial disclosures of its public institutions.‖
Finch will be supported throughout the program by business regulation expert Professor Andrew
Terry. The research project will form part of a Department of Foreign Affairs and Trade showcase
to mark 40 years of diplomatic relations between Australia and Mongolia.
Source: University of Sydney Business School
STUDY REPORTS DOWNWARD TREND IN POVERTY
Statistics from the National Statistical Office and World Bank have reported reductions in poverty
among Mongolian nationals. From a joint study, analysts found that poverty in the 2010 index had
fallen 9.4 percent from to 19.6 percent.
The study collected data from 11,300 families and 730,000 individuals, dividing those they surveyed
between families close to the poverty line and those below adequate living standards. The number
of those living in extreme poverty fell to 7.6 percent from 11.3 percent. The number of people
living near the poverty line fell to 2.8 percent from 4.6 percent.
By region and area, in the west poverty stands at 30.2%, in the central region it is 27.2 percent, in
the east it is 34.3%, in the mountainous regions it is 38.9%, and in the capital it is 23.5%. Overall the
poverty level reduced by 2.1-20.9 percent.
Source: Zuunii Medee, Undriin Sonin
RIO TINTO EXECUTIVE STILL SEES ROBUST LONG-TERM DEMAND FOR COPPER
Slowing growth in China, the top importer of Mongolian mining commodities, and Europe's debt
crisis will not derail the long-term outlook for the copper industry, which would continue to benefit
from robust demand for the metal and challenges in bringing new supply online, said Rio Tinto PLC's
chief executive of copper.
―While in the short term we will see continued volatility, the long-term copper demand picture has
not changed,‖ Andrew Harding said at the CESCO copper industry conference in Santiago, Chile.
Harding said continued industrialization in China and other emerging markets would underpin
demand for the industrial metal. While he was expressed confidence that growth in China would
remain at current levels, he admitted that growth would likely remain at a slower pace than the
double-digit expansion in gross domestic product (GDP) seen during parts of the last decade.
China is the world's top copper consumer, accounting for about 40 percent of global consumption of
the metal. Copper is widely used in electricity and construction, and has been a key ingredient in
China's rapid industrialization. Copper supply, Harding said, would continue to be limited as years of
mining have depleted the better part of many copper deposits.
Harding said he doesn't expect the structural supply shortages in the copper market to change,
despite massive investment in new and expanded mine projects globally. Rio's Oyu Tolgoi mine in
Mongolia is expected to record its first sales next year, Harding said, eventually ramping up to
annual production of 450,000 metric tons of copper and 330,000 ounces of gold.
Source: Fox Business
RISK OF COPPER SURPLUS WORRIES INVESTORS
During the past few years, the world's largest miners, including BHP Billiton PLC and Xstrata PLC,
reaped record profits as copper prices surged above the cost of getting the metal out of the ground
while consumer demanded more than the world's mines seemed capable of producing. That tide is
turning with a wave of new and expanded mine projects on the horizon, one of which is Mongolia's
Oyu Tolgoi copper and gold mine, a response to years of near-record high prices for the industrial
metal.
Growth is likely to reach 8.5 percent a year through 2015 compared with 1 percent a year between
2009 and 2011. Production gains this year are set to be led by projects in Chile's copper belt,
including more than 200,000 metric tons of increased production from both BHP-controlled
Escondida, the world's largest mine, and Anglo American PLC's Los Bronces.
―If China cannot absorb the copper flowing into it, then the outlook for copper is negative,‖ UBS
analysts said.
Chinese demand for the red metal nearly doubled during the past five years, making the country by
far the top consumer. The world's copper mines couldn't keep up. Copper ore quality went on the
decline and investment into new projects stalled during the 2008 financial crisis.
China has shown anemic consumption of the metal since the start of the year, allowing stockpiles to
build up in warehouses and at manufacturers. It could be months before Chinese consumers return
to the global market for more copper, said Macquarie Group Ltd.'s head of its metals hedge fund
sales.
Source: Wall Street Journal
GOLD STAR SHINES LESS BRIGHT
Deep into the 12 years of a historic rally, gold investors are wondering whether the metal is due for
a pause. Gold is down 7 percent from its peak for the year in late February, settling Friday at USD
1,659.10 per troy ounce, and shouts for gold to reach USD 2,000 have quieted. Gold production is a
growing venture in Mongolia; meanwhile the government is considering stockpiling the precious
metal to back its currency.
Gold is still benefiting from concerns that the global economy remains fragile and a belief that
governments will launch new rounds of stimulus, undercutting paper currencies. But that belief has
been shaken with signs that the U.S. economy is stabilizing, giving investors fresh cause to wonder
if there might soon be better returns elsewhere.
Any sustained pause in the gold rally could have far-reaching consequences for investors, and
reflect a new phase of the halting recovery from the global financial crisis that rocked markets.
For now, there appears to be enough economic and market uncertainty to give gold an edge, Gold
prices are up 6 percent in 2012, outperforming the Dow Jones Industrial Average. Last week the
metal rose 2 percent in the wake of weak employment figures, which some took as a sign that the
U.S. government effectively will have to print more money to keep stimulating the economy.
Bullion bulls still see potential gains as the world works through its problems, including Europe's
debt woes and the U.S. government‘s bloated balance sheet. Central banks also have become big
net buyers of gold, with the official sector absorbing 455 metric tons last year, more than at any
point since the mid-1960s.
But an improving U.S. economy makes other headwinds facing the gold market loom larger, analysts
say. On the supply side, gold miners have pumped out more bullion for the past three years,
including a 3 percent gain in 2011, to hit an all-time production high for two years running.
And buyers may not purchase at the same fervent rate as in recent years. Government is looking to
curtail gold imports in India and there is slowing demand in China. Central banks will not likely top
their 2011 purchases either.
Source: Wall Street Journal
WORLD BANK LOWERS EXPECTATIONS FOR CHINA‟S ECONOMY IN 2012
The World Bank cut China's expected gross domestic product (GDP) growth for 2012 to 8.2 percent,
from 9.4 percent last year, on the back of uncertainty in the global economy and the ongoing
correction in its domestic property market.
The "China Quarterly Update', a regular World Bank assessment of the country's economy, identified
the need to facilitate a "soft landing" and to sustain growth as the key near-term policy challenges.
It comes a month after resource-hungry China cut its growth target to 7.5 percent for 2012—the
lowest in eight years.
"Although government's primary concern now is to provide for a soft landing, buoyed by continued
strong economic growth by 2013," said World Bank leading economist for China Ardo Henson.
While the prospects for a soft landing remained high, there was concern that growth would slow too
quickly. The World Bank expected the economy to hasten GDP growth slightly to 8.6 percent by
2013. The team of analysts believed the ongoing slowdown was partly welcome, to the extent that
it reflected a deceleration from above-potential growth.
Read more…
Henson added that although China is expected to have a gradual economic slowdown, risks still
exist as long as developed countries continue to recover from past economic disruptions and China
bears the correction of prices within the real estate sector. The World Bank has also welcomed
efforts to rebalance the economy made by China by being more socially inclusive. Fiscal measures
to support consumption were expected to attract first-priority in the form of targeted tax cuts,
social welfare spending and other social expenditures.
The policy challenge for the longer term was to continue steering the Chinese economy towards a
more sustainable growth path. The World Bank added that new approaches could also help sustain
poverty alleviation and could encourage green growth.
Source: Mining Weekly
CAMBODIA JOINS STOCK-MARKET PARTY
Cambodia tapped into the growing global interest in Southeast Asia with the start of trading in the
sole stock at is gleaming new stock exchange on Wednesday. Mongolia was in a similar position
when countries vied to direct the development of the Mongolian Stock Exchange (MSE) before the
London Stock Exchange (LSE) Group finally came out on top.
Ordinary Cambodians and local businesses scrambled to buy into the country's first initial public
offering (IPO) of shares in a local water company. Phnom Penh Water Supply Authority shares
jumped in prices to close at KHR 9,300 (USD 2.33), up 48 percent from their IPO prices of USD 1.57
a share, which raised USD 20 million. The shares—15 percent of the firm—were subscribed 17 times
over.
Two more state-owned companies, Telecom Cambodia and Sihanoukvill Autonomous Port, also plan
to list shares on the new exchange.
South Korea's stock exchange provided aid to Cambodia to help it set up the stock exchange. It also
helped neighboring Laos set up its stock exchange in January 2011, with just two companies listed
on it. Japan is also stepping into the region. The Tokyo Stock Exchange (TSE) is helping Myanmar
build a functioning stock market as the country comes out of isolation.
A number of stock markets in the region have reached multiyear highs in recent weeks, with
benchmark indexes in Manila and Jakarta up 19 percent and 11 percent year-over-year,
respectively, amid sluggish global growth rates.
Read more…
Southeast Asia clawed back the hard way. In the 1990s, huge amounts of foreign borrowing, tied to
what were thought to be tightly-pegged currencies, led to a harrowing financial crisis. As
currencies around the region eventually buckled, Thailand and Indonesia went cap in hand to the
International Monetary Fund for multibillion-dollar bailouts, while other countries fell into deep
recessions. Part of the answer was China. While China took over Southeast Asia's old role as the
world's low-cost factory floor, it also ramped up demand for component parts and raw materials.
Source: WSJ Blog, Wall Street Journal
POLITICS
ENKBAYAR'S ARREST LEADS TO UNCERTAINTY IN ELECTIONS
With Mongolia's economy poised for boom times, politics is taking a dodgy turn. The 13 April arrest
of N. Enkhbayar on corruption charges has some analysts in Mongolia worried about the formerly
communist state's democratization process. The timing of the arrest has raised questions in
Ulaanbaatar about political motives.
Parliamentary elections are scheduled for June, and polls show the popularity of the major parties,
the Mongolian People's Party (MPP) and the Democratic Party (DP), to be slipping. Enkhbayar, a
former political insider, has emerged in recent years as the major parties‘ most prominent critic.
The fact that Mongolia will rake in billions of dollars from the mining sector in the coming years
should give the next government abundant patronage opportunities. Thus, the stakes in the June
election are higher than ever before in the post-Communist era.
Recent events have roots in the controversial parliamentary elections of 2008, which were marred
by post-vote rioting that left five dead. Enkhbayar was president at the time. Responsibility for the
bloodshed—the worst in Mongolia‘s post communist period—is still the subject of heated debate.
The current president, Ts. Elbegdorj, was chairman of the DP back in 2008. Human rights groups,
including Amnesty International, have documented accounts of police firing live ammunition into
crowds, followed by illegal detentions and torture.
―We are still waiting for answers. What exactly happened? Why did it happen?‖ said N. Khashkhuu,
head of Globe International, part of a human rights monitoring coalition formed by local activists.
Sumati Luvsandendev, Director of the Sant Maral Foundation, a respected public opinion polling
entity, suggested that authorities hoped the arrest would take the wind out of the MPRP sails.
―[Enkhbayar] has been under investigation for quite a long time now. It's too close to the elections
for [the arrest] not to be related,‖ Luvsandendev, said.
Source: Eurasianet
MPS DEMAND RESIGNATION OF MINISTER NYAMDORJ FOR ENKHBAYAR‟S ARREST
Nine MPs have submitted a letter to the speaker of Parliament, requesting the resignation of Ts.
Nyamdorj, the Minister of Justice and Home Affairs.
Seat holders in Parliament have banded together to push for Nyamdorj's resignation because they
feel the arrest of former President N. Enkhbayar is a violation of Mongolia's constitution and have
found Nyamdorj responsible. They also claim that the order for the police action was not the
responsibility of his ministry.
There have also been statements from members of the Democratic Party (DP) that the legal bodies
that executed the order for Enkhbayar's arrest were illegal and the head of the organization,
Nyamdorj, should be held responsible.
Source: Udriin Sonin
PUBLIC UNLIKELY TO RECEIVE ID CARDS BEFORE ELECTIONS
The new electronic identification cards planned for issuance by the government will reportedly be
unable to reach the public before this year's elections in June. The identification cards were
planned to be used to help defend against election tampering.
Democratic Party head N. Altankhuyag counted the misstep as an ―operation to sabotage the
election.‖
The Minister of Justice and Home Affairs, Ts. Nyamdorj, has taken the blame for the failure
because of his ordered that the finger print reading machine should be moved. The device is used
to electronically store fingerprint data on the card.
Nyamdorj has ordered the fingerprint machine be moved to the General Election Committee after it
had already been decided it should remain at the Authority for State Registration, with agreement
from the General Election Committee.
Moving the machine would reportedly create problems for the people who would operate it.
Source: Zuunii Medee
GOVERNMENT DETAILS ERDENES-TT DISTRIBUTION
The government has laid out its plans to distribute 20 percent of all Erdenes-Tavan Tolgoi's shares
to Mongolia's citizens.
The 98th resolution of 2011 has added an additional 536 shares to citizens who already own shares
from the transfer of 1,072 shares to citizens born before the implementation of the resolution on 31
March 2011. Deductions of shares will be made to seniors and developmentally challenged citizens
who receive cash of up to MNT 1 million from the Human Development Fund, as per the 53rd
resolution of Parliament; students who receive tuition assistance for the 2010-2011 and 2011-2012
academic years; and those who received health insurance assistance in 2011.
The State Property Committee, General Agency of Taxation, and General Agency of State
Registration have each been charged with organizing the sale of up to 10 percent of shares.
Meanwhile, officials from government have been assigned the task of acquiring the funding to buy
those shares.
―Citizens, especially those in remote areas, should be wary of brokers and dealers opening accounts
and charging MNT 5,000," said Ch. Khurelbaatar, the Cabinet‘s chief of staff. ―In due time, the
government will make a decision and give direction to citizens.‖
Source: Frontier Securities
MINING LICENSE CHANGES ENACTED AT START OF DRILLING SEASON
Last month the government made several changes to the registration of special licenses in the
mining industry.
The government issued four new licenses for coal, gold and fluorspar operations in Dundgobi,
Umnugobi and Khentii Aimags. Twenty-two companies received license transfers, and another 28
licenses expired. The government also extended 60 license dates.
The miner Uul Zaamar has returned 84.35 hectares of land from Zaamaryn Enkh and Zaamar Soum
of Tuv Aimag to the state. In Khuvsgul, the mining firm Khurgatai Khairkhan had its license expire
on 27 March, while its license for mining at Khurimt and Tsagaan-Uul and another for Tsetserleg
Soum were extended.
Many expect the government to change registration requirements so that mining firms would hold
more responsibilities over the land they operate on.
Source: Zuunii Medee
MOTHERS WILL BE SUPPORTED
Mothers who have given birth to a third child will receive a one-time cash allowance of MNT
300,000.
The Cabinet made this decision when considering a draft amendment to a law that aims to support
mothers and a draft parliamentary resolution on fixing the size of cash payments.
The draft has yet to be submitted to Parliament.
Source: Montsame
DISCONTENT REVEALS CRACKS WITHIN MPP
Discord within the Mongolian People's Party (MPP) may result in the formation of a new opposition
party.
Party members have repeatedly criticized leadership for failing to meet objectives, with the
government's failure to distribute the promised MNT 1.5 million promised from the 2008 election
being a particularly sore spot. Various MPs have spoken out in the media and some have hinted that
the rift may result in officials forming a new political party.
Before his arrest, N. Enkhbayar, head of the Mongolian People's Revolutionary Party (MPRP), was
seen meeting with a number of officials, leading some to believe that some of those officials might
be planning a break from the MPP.
Source: Udriin Sonin
FINANCIAL LAWS NEED RENOVATION, SAYS FRC HEAD
Current financial laws to the financial sector are inadequate, necessitating the passage of a new
securities law as well as amendments to the law on debt offerings, said the head of the Financial
Regulatory Committee (FRC). D. Bayarsaikhan said the Erdenes-Tavan Tolgoi initial public offering
cannot be legally issued until after the Law on Securities is passed.
In addition to the passage to the Law on Securities, Bayarsaikhan suggested amendments to the Law
on Bonds. He suggested looking to international models for drafts to new laws and amendments
regarding issues to the financial sector. He said that drafts already in development have pulled
from the advice of experts from the International Monetary Fund and Asian Development Bank.
―There are a number of reasons why the law should be adopted,‖ he said. ―Our stock exchange is
cooperating with the London exchange, having made a strategy agreement. ―Therefore, our stock
exchange should meet international requirements.‖
He said Mongolia is currently graded ―B‖ among members of the Association for International Bonds.
He expressed his hope that Mongolia could boost that to ―A‖ after cooperating with the
organization. First, Mongolia would have to clear up its legal environment and sign a memorandum
before the issuance of any bonds, however.
The first priorities, he said, should be cooperation between the government, the State Property
Committee, and his agency for the issuance of bonds and listing miners operating on deposits
important to Mongolia's national security on the stock market in Ulaanbaatar. He also noted that
Erdenes-Tavan Tolgoi, as well as most other companies operating on projects classified as ―mineral
deposits of strategic importance,‖ are not (yet) listed on the Mongolian stock exchange. Yet, the
Minerals Law requires those projects to list on the Mongolian Stock Exchange (MSE).
Source: Undesnii Shuudan
QUIET RETURNS TO UB AFTER PROTEST
Uneasy calm returned to Ulaanbaatar after protests erupted due to the arrest of the country's
former president, N. Enkhbayar.
Foreign embassies are operating in emergency mode. A few hundred of supporters of the Mongolian
People's Revolutionary Party (MPRP) took to the street that day, demanding the release of their
leader and threatening riots.
Experts link Enkhbayar's arrest to the standoff between the country's two biggest political forces in
the run-up to parliamentary elections, due to be held in Mongolian in June this year.
Source: Voice of Russia
MONGOLIAN NGO JOINS GLOBAL FEDERATION OF COMPETITIVENESS COUNCILS
The Economic Policy and Competitiveness Research Center of Mongolia (EPCRC) has joined the
Global Federation of Competitiveness Council (GFCC),‖ said EPCRC president Ch. Otgochuluu. ―The
EPCRC's membership will allow it to collaborate and exchange experiences with other organizations
with the same objective.
―By becoming a member of the GFCC, we will be able to compare ourselves to other similar
organizations and also contribute to their work. These organizations may help us by evaluating our
work, and we can do the same for them. We can learn from each other's mistakes. All the benefits
will help us to create a more elaborate and effective plan on improving Mongolia's
competitiveness.‖
The GFCC currently has affiliated competitiveness organizations from 30 different countries.
Source: UB Post
ALASKA NATIONAL GUARD SHARES HEALTH CARE EXPERIENCE WITH MONGOLIAN SOLDIERS
U.S. Alaska National Guard officials say members of Mongolia's military have visited a remote
western Alaska village to see how their U.S. counterparts deliver health care and veterinary
services to underserved areas.
Guard‘s officials say Arctic Care will involve 16 communities. Other officials have reported that
more than 250 military medical professionals are participating in the effort.
The idea for the visit by Mongolians is for them to share their knowledge with health care providers
in their country. Officials say Alaska and Mongolia formed a partnership in 2003 to share information
through exercises and exchanges.
Source: Anchorage Daily News
CHINGGIS SCULPTURE STANDS IN LONDON
A bronze sculpture of Mongolian warrior Genghis Khan has been unveiled at Marble Arch in central
London.
London has honored the Mongolian empire of the 1300s and Mongolia's most famous historical figure
with a recently unveiled bronze sculpture of Chinggis Khan at Marble Arch in central London.
The sculpture by artist Dashi Namdakov, who was born in a Siberian village, will stand next to
Cumberland Gate until early September. The artist wanted to honor the warrior on the 850th
anniversary of his birth.
―If I wanted to show him as a warrior, I would have him as a warrior, but he is a thinker in this case.
He is a divine figure in my country.‖
Source: BBC
ANNOUNCEMENTS
STARTUP WEEKEND ON 4-7 MAY
The fourth installment of Startup Weekend Mongolia will be held from 4 to 7 May at the WIBE
Campus in Handgait.
Startup Weekends are 54-hour events where developers, designers, marketers, product managers
and startup enthusiasts come together to share ideas, form teams, build products, and launch
startups to build applications and develop commercial cases around them.
For more information, visit the website swmongolia.org.
___________________________________________
FIFTH CORPORATE GOVERNANCE FORUM, ULAANBAATAR, 9 MAY
The fifth Mongolia Corporate Governance Forum will be held 9 May at the Kempinski Hotel Khan
Palace in Ulaanbaatar. As a Supporting Organization for this event, members of the Business Council
of Mongolia will receive a special 10 percent discount.
The event will feature speakers such as Prime Minister S. Batbold and Ch. Khashchuluun, Chairman
of the National Development and Innovation Committee. The key points for discussion include
corporate governance in private companies, the reform process for corporate governance, and its
role in the financial sector. There will also be time devoted to the Capital Market Development
Initiative.
To register, visit the website cgdc.org.mn and fill out the registration form. For more information,
call Tsend-Ayush at 9910 5111 or email [email protected] or [email protected]
___________________________________________
FUTURE MONGOLIA, UB SPORTS PALACE, 16-19 MAY
Mongolia first-ever world-class exhibition, Future Mongolia, will open from 16 to 19 May at Buyant
Ukhaa Sports Palace in Ulaanbaatar. Future Mongolia is an international trade fair and conference
for sustainable development.
Future Mongolia is on the best track to become the leading trade fair in Mongolia for the
international capital goods industry. Industry giants, e.g. Caterpillar, Liebherr and the mining
equipment manufacturer TAKRAF already confirmed their participation. The organizer is confident
that the envisaged number of more than 100 exhibitors will be reached. BCM is a Supporting
Organization for the trade fair. For more information visit the website.
Those interested in the event can call +49 89 244 41 9370 or email [email protected].
___________________________________________
2nd COALTRANS MONGOLIA, ULAANBAATAR, 23-24 MAY
Coaltrans Mongolia will be held from 23 to 24 May at the Chinggis Khan Hotel in Ulaanbaatar.
Having overtaken Australia to become the largest exporter of metallurgical coal to China at the end
of 2011, the Mongolian coal market continues to establish itself as a competitive producer in the
global coal markets. This event will explore the development of coal projects in the country and
offer insight into what level of influence Mongolia will have over the future of coal prices.
Guest speakers include Graeme Hancock, Chief Operating Officer of Erdenes Tavan Tolgoi, and Dr.
G. Battsengel, Chief Executive Officer of Mongolia Mining Corp.
BCM is a Supporting Organization again this year for Coaltrans Mongolia. For more information visit
coaltrans.com/mongolia or email [email protected]
___________________________________________
MINExpo INTERNATIONAL 2012, LAS VEGAS, 24-26 SEPTEMBER
The Business Council of Mongolia (BCM) and the Mongolian National Mining Association (MNMA) with
the support of the U.S. Embassy‘s Commercial Section in Ulaanbaatar are now registering a
Mongolian business delegation to participate in ―MinExpo International 2012‖ which will be
organized at the Las Vegas Convention Center on September 24-26, 2012.
MinExpo International 2012 is the world's largest and most comprehensive exposition dedicated to
mining equipment, products and services. More than 1,400 exhibitors in eleven exhibit halls will
display the latest technology, equipment, components, parts and services for exploration,
extraction, safety, environmental remediation and preparation and processing of metallic ores,
coal, industrial minerals and more!
Registration deadline is 5 pm, 30 April. Please contact BCM at 70114442, [email protected] or
MNMA at 314877, [email protected] for registration and additional information about
the event.
___________________________________________
REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.
BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
___________________________________________
“MM TODAY” on MNB-TV, Fridays at 18:30 [TONIGHT]
BCM is pleased to announce Mongolian National Broadcasting continues its cooperation with BCM on
―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for
18:30 tonight! Tune in to watch this program that reports stories from today‘s BCM NewsWire.
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“BSPOT” ON B-TV, MONDAY TO FRIDAY AT 18:20
B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 18:20, taking most of the stories from the BCM NewsWire.
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POSTINGS ON BCM‟S ENGLISH WEBSITE 'PRESENTATIONS' AND 'MONGOLIA REPORTS' SECTIONS
AND BCM‟S MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website which can be reached via link to
bcm.mn/itgeluud. Several presentations already posted include 9 from Coal Mongolia in February
9-10, 2012.
As a key component of BCM‘s Mongolian website, ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are two presentations
from BCM‘s March 26 monthly meeting, 12 presentations on Mongolian entities at Mines and Money
Hong Kong 2012 on March 21-23, 11 presentations from Coal Mongolia 2012 on February 9-10, 7
speeches from the Mongolian Investment Summit on December 8-9, 2011 in London, several
speeches at the Risk Management Forum on November 8 co-organized by BCM and Mandal Insurance,
speeches at Discover Mongolia 2011, and speeches from all BCM‘s monthly meetings in 2011-12.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note ADB‘s Asian
Development Outlook, April 2012; detailed results of BCM‘s NewsWire survey of March 2012; World
Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive Summary of the Mongolian
Real Estate Report 2012 by M.A.D. Investment Solutions; Mongolia – World Bank Country Survey
2011; Welcoming remarks by Jim Dwyer, BCM at Mongolia Investment Summit 2011 Hong Kong,
Mining Journal Supplement for Mongolia, October 2011; Polit Barometer-May 2011 from Sant Maral
Foundation; and Mongolia‘s Mining Services Cluster 2010, Professor Michael E. Porter, Harvard
University, The Microeconomics of Competitiveness.
We are now posting some news stories and analyses relevant to Mongolia to BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all
together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,
and will incorporate items that are already on the home page, so that it presents a consolidated
account of the week‘s events.
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NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Of course for news information, interviews, and announcements regarding our organization, visit
the official BCM website at www.bcmongolia.org and www.bcm.mn.
ECONOMIC INDICATORS
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
March 31, 2012 *15.3% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 17.3% y-o-y, Ulaanbaatar city, March 31, 2012
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
CURRENCY RATES – April 19, 2012
Currency Name Currency Rate
U.S. dollar USD 1317.52
Euro EUR 1731.35
Japanese yen JPY 16.17
British pound GBP 2115.34
Hong Kong dollar HKD 169.47
Chinese yuan CNY 208.90
South Korean won KRW ` 1.16
Russian ruble RUB 44.65
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.
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