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BUSINESS COUNCIL of MONGOLIA NewsWire
www.bcmongolia.org
Issue 98, December 11, 2009
NEWS HIGHLIGHTS:
Business:
Mongolia Looks to Foreign IPOs to Cash Out its Mineral Wealth;
State Bank Announces its New Board of Directors;
Government Discussing MNT 100 billion Bond Issue for State Bank;
Interview with Mr. Ben Turnbull, State Bank’s CEO;
Tavan Tolgoi bidder selection Delayed to 2010;
TT Bidders Should Sell Coal Domestically First, Lawmaker Says;
Oyu Tolgoi 2010 Construction Budget of USD 758 million;
BHP, Rio Tinto Reach Iron-Ore Joint Venture Agreement;
Cameco Agrees to Sell Entire Stake in Centerra Gold;
Centerra Boosts Estimates of Gold Reserves at Boroo Mine;
Mongolia Energy Selects Leighton for Khushuut Mine Development;
New Rail Freight Line in South Gobi;
IFC Wants to Get in Early on Exploration Projects;
South Gobi Energy to Sponsor Altan Urag Band.
Economy:
Mining Sector’s State Budget Impact;
Oyu Tolgoi’s Community Health, Safety & Security Program;
Treasuries, Dollar Rise while Stocks, Commodities Prices Slump;
Asian Financial Forum in Hong Kong, Jan 20-21;
Singapore, China Learn Hard Lessons in Sovereign-Wealth Funds;
China Reassures on Dollar Strategy;
Chinese Firms Plan to Raise $2 Billion Each in IPOs;
Reality May Pinch China Auto Sales;
Hong Kong Stock Exchange Emerges as Champ in IPOs;
Copper Project Pipeline Insufficient to Meet Demand, says Xstrata CEO;
Rio Tinto Teams to Establish USD 11 Million Sorting Centre;
U.S. Job Report is Strongest Since the Start of the Recession;
Regulators Pull Plug on U.S. Bank;
North Koreans Protest Currency Issue.
Politics: Mongolian Officials Visit Rio Tinto in London;
World Bank Capacity Building for Laws Related to Mining Sector;
Climate Change Talks Open in Copenhagen with Urgent Call for Action;
U.N. Plea to Climate Conference;
Pastoralism Unraveling in Mongolia;
Switzerland Gives MNT 7 billion for Pasture Management;
Prime Minister Chairs Mongolian Millennium Challenge Foundation Board Meeting;
Meeting of DP Group Discusses Responsibility for Financial Instability;
Population Census Postponed for 10 months;
Minister of Health: Treatments and Insurance Fund will Increase;
Current Status of Private Schools in Mongolia.
BCM MONTHLY MEETING RECAP
The Business Council of Mongolia’s monthly meeting on December 7 was attended by 65 members and began with BCM Chair Laurenz Melchers review of future Conferences planned with BCM sponsorship involvement – Asian Financial Forum on January 20-21 in Hong Kong, Euromoney Mongolia Investment Forum, late March, in Beijing, and U.S. Franchising, April, in Washington, DC. Laurenz updated as to the growth of the registrants on the Mining Supply Chain Database, now at 1,300 entities with improvements underway and exciting future expansion prospects.
Executive Director Jim Dwyer reported that membership has increased to 138 and introduced BCM’s three new members – Across Solutions Mongolia, Ilinx Express, and WebGuru. The 2010 Membership Drive is in full swing with 85 members renewed. All other 2009 members were urged to do so before the next monthly meeting on January 25, 2010 which will be for 2010 members only. Jim then reviewed the current efforts of BCM working groups. He highlighted the Tax Working Group’s efforts in connection with the recent Tax Workshop with PricewaterhouseCoopers attended by 105. Recommendations based on the issues presented will be sent by BCM to the Minister of Finance and the Tax Authority.
Mr. Eric Enhhuyag, First Deputy Governor, Bank of Mongolia, discussed "Views on Current Macro-Economics and Mongolia's Banking Sector". He said he believed the major financial crisis was behind us. Inflation is at less than 4% and is expected by Mongolbank to not exceed 6% in 2010. He said the Central Bank’s inspections were going well for the country’s three largest banks – Khan, Golomt and TDB and that reports were expected by mid-January 2010. In reference to Zoos Bank, he mentioned that the outstanding loans of the Mongol Gazar mining company were at the root of the former bank’s problems. Eric also noted that Anod Bank will be placed in liquidation this week. The deposits and the ―good loans‖ from both Zoos and Anod banks will be transferred to the newly-formed, 100% government–owned State Bank.
Mr. Barrie Evans, Managing Director of Churchill’s and Chairman of BCM’s Food & Beverage Working Group, provided an update of the committee’s progress. They are working with the Parliamentary group to revise laws regarding food regulations and standards. Issues of producing safe food need to be brought to the table. He also mentioned the F&B working group welcomes additional members to volunteer to aid their work.
Mr. D. Ganbold, President, Mongolian National Mining Association, began his update by saying that Discover Mongolia 2009 was a big success with over 1000 attending. He mentioned his meeting with the Prime Minister and that the focus of the discussion was on PPP. They are expanding their scope of operation and there seems to be more understanding and cooperation from various areas of the government. Planning is underway for 2010 which will be reviewed in a meeting with BCM later in the week.
Mr. Eric de Seze, General Director & CEO, Areva Mongol, gave an extremely interesting presentation on the nuclear energy cycle, from the mining of uranium to producing energy. He also gave comparisons, in numbers, to other forms of energy, such as coal and its business pros and cons. For more information, his presentation can be found on the BCM website, BCM News & Press.
BUSINESS MONGOLIA LOOKS TO FOREIGN IPOS TO CASH OUT ITS MINERAL WEALTH
Mongolia may eventually list state-owned mineral assets in international stock markets so that the country can convert more of its natural resource wealth into cash. Prime Minister Batbold said that the poor, landlocked country is first studying the creation of three companies: one for mining assets, another for energy assets and a third for infrastructure holdings. The government would then look to float shares in these companies in London, New York or Hong Kong, before bringing them to Mongolia's domestic stock market, he said.
"People ask the question, 'why we are sitting here on our mineral resources doing nothing, while others get the benefits of these resources by bringing them to the international financial markets, especially foreign companies,'" Batbold told the Wall Street Journal. He said those companies were "doing a good promotion of Mongolia," but "now is a good time to think about our own approach, our
own move to the international financial market." Just before Batbold took office in October, Mongolia signed a landmark investment agreement with Ivanhoe Mines to develop the Oyu Tolgoi deposit, a project that will help the Mongolian state meet its budgetary commitments once it is producing copper and gold.
Mongolia was hit hard by the global financial crisis, as plunging metals prices last year dried up state revenues while repayment of bank loans to the booming construction sector slowed to a crawl. Investors have seen the Oyu Tolgoi agreement, as a watershed, setting a precedent for other resource deals after three years of uncertainty and wrangling over minerals investment laws.
Source: Reuters, Wall Street Journal
STATE BANK ANNOUNCES ITS NEW BOARD OF DIRECTORS
The State Bank, a newly formed state-owned bank, formerly operating as Zoos Bank, has a new board of directors as of this week. The State Property Committee appointed a nine-member Board of Directors including government authorities Deputy Minister of Finance, T. Ochirkhuu, First Deputy Chairman of Cabinet Secretariat Office, Sh. Solongo, and State Secretary of the Ministry of Justice and Home Affairs, G. Bayasgalan, L. Zorig, Head of the National Reform Committee, L.Ganbat, Head of the Government of the State Property Committee. Zoos Bank, which was Mongolia’s sixth largest bank, came under the control of the Government on November 19 after the Bank of Mongolia (Central Bank) implemented a receivership for the bank.
Source: UB Post, Zuunii Medee
GOVERNMENT DISCUSSING MNT 100 BILLION BOND ISSUE FOR STATE BANK
In accordance with Zoos Bank becoming State Bank, a 100% state-owned bank, the Government has proposed to issue a bond of MNT 100 billion to protect its savings accounts and to support normal bank functioning. The Parliament is discussing the size of the bond issue at the moment. The MPRP members' group is supportive of the proposal.
Source: Zuunii Medee
INTERVIEW WITH MR. BEN TURNBULL, STATE BANK’S CEO BCM NewsWire (BCM) interviewed Ben Turnbull (BT), the recently appointed CEO of Mongolia’s newly formed State Bank. Mr. Turnbull previously worked in Mongolia’s banking sector, first in 2003 for 4 years as Deputy CEO of Khan Bank and more recently as a banking consultant through EBRD. BCM spoke with Mr. Turnbull about the formation of the State Bank and the failure of the former Zoos Bank. BCM: Can you elaborate on what happened with Zoos Bank?
BT: There has been substantial stress in the Mongolian banking system overall and has been for the last nine months since the world financial crisis caught up with Mongolia. In the case of Zoos Bank, that strain began to show itself in the first and second quarters of 2009. EBRD took an active role in addressing those problems and put a management team in place, in conjunction with its existing ownership. We had been here already and working in the bank for some while. So we had a very good running start to take over the management of the bank. Our charge was to determine the nature and magnitude of the problems and come up with a solution. As we began to work within the bank, we found the problems were far greater than anyone had yet identified. The difficulty that the bank was facing as we uncovered more and more of these specific problems, led us to believe that the bank couldn’t solve its problems on its own. Over a period of time, the Bank of Mongolia also came to believe that. BCM: So it wasn’t that EBRD said a merger shouldn’t take place?
BT: That’s a big misunderstanding through the Press and bears clarification. EBRD had looked at the bank all along and said they are trying to help. That’s why they invested in it in the first place. That’s their mission, to improve banking systems in the countries that have memberships in EBRD. They had also paid for a substantial amount of technical assistance to improve the management functions here. When you have taken losses of that magnitude, you begin to understand that to pay in new funds of MNT 84 billion for a bank that had at its maximum obtained a size of MNT 250 billion is not a viable idea. It would take several eons to recover all of that even with the strongest earnings. EBRD had said this was not only a specific mismanagement problem at Zoos Bank, but also general stresses in the banking system. They couldn’t be expected to fix both of these all by themselves.
The situation required, as in other countries where the banking system has gone into severe distress, government intervention. That had been EBRD’s position over the past several months.
BCM: Can you tell us about State Bank’s management and future?
BT: The State Bank is open and ready for business. We’ve been open for about two weeks and are functioning normally. There have been a few minor start-up problems, but nothing major. We have 100% support from the Government of Mongolia. We are keeping our old Zoos customers in the bank. We look forward to serving the future economic development of Mongolia.
For the full interview with Mr. Turnbull, please refer to the BCM website, BCM News & Press.
Source: BCM NewsWire
TAVAN TOLGOI BIDDER SELECTION DELAYED TO 2010
Budget negotiations and a new Prime Minister mean that Mongolia will delay selection of winning bidders for the giant Tavan Tolgoi deposit until early 2010. Mongolia had planned to select the winners for the USD 2 billion stake sale by the end of this year. The nomination of a new prime minister, after the previous PM fell ill, and negotiations over next year's budget have delayed the selection, said Badamdamdin Ragchaa, Chairman and Chief Executive of Mongolian state uranium firm, MonAtom. "I believe the issue will be solved early next year," said Badamdamdin. Masa Igata, CEO of Frontier Securities, also expected a slight delay in the selection process. "The selection is likely to be made early next year, but it's not a big problem," said Igata.
Shortlisted bidders for Tavan Tolgoi include BHP Billiton, India's Jindal, Brazil's Vale, U.S. coal-miner Peabody, and China's Shenhua, as well as South Korea's COPEC consortium, a group of Japanese companies, and a Russian consortium including Gazprom and Renova, according to an executive in Erdenes MGL, the state company that will own at least 51% of the project.
Source: Reuters
TT BIDDERS SHOULD SELL COAL DOMESTICALLY FIRST, LAWMAKER SAYS
Peabody Energy Corp., China Shenhua Energy Co., Vale SA and other companies interested in mining the Tavan Tolgoi coal deposit in Mongolia should expect to produce fuel for domestic consumption if they’re awarded the development rights. The winning group of investors, to be selected by April, will be required to convert some of the thermal coal in the Tavan Tolgoi deposit into clean-burning fuel, Batkhuu Gavaa, Deputy Speaker of Mongolia’s Parliament, said in an interview in Ulaanbaatar. ―Lawmakers want to include the provision into any agreement to help cut Mongolia’s dependence on foreign fuel and create jobs. Some of the coal will be used in various modern technologies to convert coal into various forms of fuel like liquefied or gasified coal, and this will be part of the Tavan Tolgoi investment agreement,‖ Gavaa said. ―The priority should be to meet domestic needs first, and the rest can go to China.‖
Mongolia wants the Tavan Tolgoi deposit, which holds 5 billion metric tons of coking and thermal coal, put into production to bolster government finances and spur economic growth. Mongolia’s government holds the Tavan Tolgoi license and Parliament will review any agreement the government plans to sign with investors for development rights.
Mongolia is entirely dependent on outside sources for petroleum fuels including diesel and gasoline, Gavaa said. ―Fluctuations in gasoline prices and all the fees associated with imports put big strains on our local budgets. We need a partner who can bring the latest technologies that turn coal into fuel.‖ BHP Billiton Ltd., Mitsui & Co., Xstrata Plc, OAO Russian Railways and Sojitz Corp. are also among the companies with which the government has been negotiating this year on Tavan Tolgoi rights, Dashdorj Zorigt, Minister of Mineral Resources and Energy, said in a recent interview.
Source: Bloomberg
OYU TOLGOI 2010 CONSTRUCTION BUDGET OF USD 758 MILLION
Ivanhoe Mines with Rio Tinto, plans to spend USD 758 million next year as full-scale construction gets under way at the Oyu Tolgoi copper/gold mine, in southern Mongolia. Ivanhoe indicated construction of the initial open-pit mine at Oyu Tolgoi could be completed as soon as 2012, with production beginning in 2013. "The approval of the 2010 construction budget represents the next big step toward bringing this project into production," Ivanhoe CEO John Macken said. Initial work on site has been going on for some time, but full scale construction was delayed until the investment agreement with the government had been locked in.
To ensure it has the necessary infrastructure in place, Ivanhoe plans to build a 105-km highway link
to the Mongolia-China border, which will be fully paved by the time production begins, and will begin construction of a regional airport, with a concrete runway to accommodate Boeing 737-sized aircraft. Macken said that Ivanhoe supports the idea of building a dedicated smelter to serve Oyu Tolgoi. "For most large mines, when they go above six or seven hundred thousand tons of copper a year, it's very important to have a dedicated smelter," he said. "And there's a lot of interest in building smelters, in Mongolia and in China...so we will work with the Mongolian government, as a partner in the project to have a smelter in Mongolia in the near future."
Based on current plans, the Oyu Tolgoi mine is expected to produce about one billion pounds of copper, and 500,000 oz of gold a year in the first 10 years of its 35-year-plus life. The total project cost has been estimated at around USD 4.5 billion.
Source: Ivanhoe.com, Mining Weekly
BHP, RIO TINTO REACH IRON-ORE JOINT VENTURE AGREEMENT
BHP Billiton Ltd. and Rio Tinto Group agreed on the terms of their proposed iron ore joint venture.
―The companies today signed binding agreements on the proposed JV that cover all aspects of how the joint venture will operate and be governed. The companies have also filed submissions with the European Commission and the Australian Competition and Consumer Commission in relation to the proposed production joint venture and expect to submit filings in other relevant jurisdictions shortly.‖ The production joint venture will encompass all current and future Western Australian iron ore assets and liabilities and deliver substantial synergies. ―Rio Tinto and BHP Billiton believe the net present value of these unique production and development synergies will be in excess of USD 10 billion.‖ Rio and BHP said the European Commission will likely review the venture under. Taking into account all regulatory review processes and shareholder approvals, the companies expect completion in the second half of next year.
Source: Bloomberg
CAMECO AGREES TO SELL ENTIRE STAKE IN CENTERRA GOLD
Cameco Corp., the world’s second-largest uranium producer, agreed to sell its stake in Centerra Gold Inc. for about USD 820 million, fulfilling a pledge to focus on uranium and nuclear energy.
The transaction includes the sale of 88.62 million Centerra shares to the public through underwriters led by CIBC World Markets and RBC Capital Markets, Saskatoon, Saskatchewan-based Cameco said today in a statement.
The companies have faced regulatory obstacles in the Kyrgyz Republic, home to Centerra’s Kumtor mine, and in Mongolia where the gold producer operates the Boroo mine. The Kyrgyz government has sought a stake in Centerra while Mongolia temporarily suspended Boroo’s operating permits in June and July. ―The big political issues that have hung over Centerra like a plague have been resolved,‖ David Davidson, a Toronto- based analyst at Paradigm Capital Inc., said. Cameco Chief Executive Officer Jerry Grandey said last month the company was undecided about whether to sell the stake in Toronto-based Centerra to a strategic buyer or through a secondary offering. ―The thing that probably pushed them to do a deal now was the realization that gold isn’t going up in a straight line,‖ Davidson said.
Cameco intends to use the net proceeds primarily to grow its core uranium business as it pursues its target of doubling uranium production. London-based Rio Tinto Group was the world’s largest uranium producer by 2008 production, the World Nuclear Association said on its Web site.
Source: Bloomberg
CENTERRA BOOSTS ESTIMATES OF GOLD RESERVES AT BOROO MINE
TSX-listed Centerra Gold expects to produce 660,000 to 680,000 ozs of gold in 2010 from its mines in Kyrgyzstan and Mongolia, the company reported this week. The company expects to produce between 120,000 ozs and 140,000 ozs from its Mongolian operations, the Boroo mine and Gatsuurt project. The forecast assumes that Centerra receives the final operating permit for the heap leach facility at Boroo, and that it starts processing oxide ore from Gatsuurt in the second half of the year. Earlier this week, Centerra and 48.5% shareholder Cameco announced that Cameco will sell all its shares in the gold-miner in a bought-deal offering. The sale has been anticipated for a while.
Centerra also announced that it has revised the reserve estimates at both Kumtor and Boroo and updated the life-of-mine operating plans. At the Boroo mine, reserves increased by 25,000 ozs of contained gold before accounting for processing of approximately 188,000 ozs of gold up to October
31 in the Boroo mill and heap leach pad. The company calculated the new reserve and resource estimates with a gold price of $825/oz, compared with the $675/oz used a year ago. Centerra shares slid 8% on Tuesday, to C$11.59 each. The stock was halted shortly afterwards for the Cameco announcement.
Source: Mining Weekly
MONGOLIA ENERGY SELECTS LEIGHTON FOR KHUSHUUT MINE DEVELOPMENT
Mongolia Energy Corporation (MEC) has selected Leighton LLC as its mining contractor for development of the Khushuut coal mine project in western Mongolia. Leighton LLC is the leading international mining contractor for mining projects in Mongolia and is a member of the Leighton Group. Leighton Asia manages the group’s operations in Asia, including Leighton LLC.
At Khushuut, MEC has 149 million tons of JORC coal resources, substantially coking coal, which is within 600 hectares of 330,000 hectares of MEC concession areas in western Mongolia. MEC has built a 310km road foundation which is substantially complete and can transport coking coal from the Khushuut Mine to Xinjiang, China.
MEC’s independent technical review calls for a phased development of Khushuut. The selection of Leighton, initially for a 3 million ton/year mining operation, and in case of expansion, for up to 8 million tons over time provides the support for MEC’s commencement of mining operations. Leighton Asia’s managing director Hamish Tyrwhitt says, ―I am excited that Leighton Asia now has two significant mines in operation in Mongolia. Our partnership with MEC on the Khushuut coal mine is the second mine we have started this year and will involve a similar level of work to our existing contract at the Ukhaak Hudag coal mine in the South Gobi region. The extensive potential for mine expansion along with the quality of the coking coal means the mine will become a significant exporter of coal from Mongolia. Once we move from mine planning and pit development to full scale mining, the full potential of the Khushuut mine will be realized.‖
MEC’s chief executive officer James Schaeffer Jr. says, ―With our 310km Khushuut Road foundation substantially completed and our prospective customer in Xinjiang having received our bulk product sample for full scale testing, MEC is well on track to commence coal production. ―Our Khushuut brand of premium coking coal will be sold to the western part of China, where coking coal of such premium quality is in growing demand.‖
Source: Mongolia-energy.com
NEW RAIL FREIGHT LINE IN SOUTH GOBI
Energy Resources LLC has awarded Leighton Asia a USD 338 million contract to design and construct a new freight rail line in southern Mongolia. The main purpose of the Ukhaa Khudag to Gashuun Sukhait freight railway in the South Gobi region is to provide infrastructure to transport coal from Mongolia to China. The railway will begin at the Ukhaa Khudag (UHG) Coal Mine and travel 225km to the international border crossing between Mongolia and China at Gashuun Sukhait. The railway will be designed for an annual capacity of 28 million tons of coal which will be carried in 1.8 km long trains.
Leighton Asia’s work under the contract includes the design and construction of earthworks, structures and the rail line associated with the permanent alignment as well as works for the depots, workshops, maintenance facilities and administration buildings. Construction work is expected to begin in March 2010 with completion scheduled for mid-2011.
Leighton Asia’s managing director Hamish Tyrwhitt says, ―The award of this significant infrastructure project is a result of our commitment to the Mongolian market and our ability to bring international experience and local knowledge to projects of this type which pose a range of technical, community and environmental challenges. We have a very strong working relationship with Energy Resources who are also our client for the UHG Coal Mine contract.‖
Source: Leightonasia.com
IFC WANTS TO GET IN EARLY ON EXPLORATION PROJECTS
The International Finance Corporation (IFC) is looking to take more equity positions in the early stages of mining companies and projects, officials said at a mining investment seminar this week in Toronto. ―We like to come in after project discovery and start working on issues, making sure the company adheres to performance standards and manages their social and environmental issues early on,‖ said Senior Investment Officer, Louis Vos. ―The IFC generally comes in with investments
between $5 million and $20 million, taking a stake of 5% to 10% in exploration projects or companies. We don't want to be the biggest investor in any of these cases.‖
The IFC has helped finance mining projects with a combination of debt and equity, although Vos added that the equity ―was much more of an afterthought‖. ―Now, I think we are going the other route – the equity comes first, with a view to later on assist with finance when the project goes into production,‖ he said.
The IFC has a list of performance standards that it requires companies to work towards, including issues like labor and working conditions, environmental management and community health and safety. The benefits are mutual, as the IFC is able to carry out its mandate as a development organization, while companies can access the group's expertise to de-risk their operations. ―I like to say that you are buying some insurance against your project being disrupted,‖ Vos commented. ―There are a lot of bad examples around the world of projects that get held up for years and sometimes cancelled over community issues.‖
Source: Mining Weekly
SOUTH GOBI ENERGY TO SPONSOR ALTAN URAG BAND Alexander Molyneux, President and CEO of SouthGobi Energy Resources Ltd., is proud to announce cooperation with the renowned Mongolian folk rock band, Altan Urag. The cooperation will take the form of a sponsorship grant that will allow the band to travel internationally and promote three new albums. "We are thrilled to invest in such talented, young artists and to continue to see them flourish. Altan Urag's music is a rare fusion of traditional Mongolian folk and rock music. Their rhythms and vocals are truly powerful and innovative," said Mr. Molyneux. The Altan Urag Band was formed in 2002 by six graduates of the Music and Dance College of Mongolia. Motivated by their passion for Mongolia's rich tradition and culture, and their goal to perform for Mongolia and beyond, the band introduced a new fusion of music that could move and speak to the world. The partnership with Altan Urag is emblematic of SouthGobi's program to support the communities in which it operates. SouthGobi has played a significant role in contributing to infrastructure development in the South Gobi, which has helped to enhance trade and economic activity in surrounding local communities. Read more… SouthGobi also has improved living and working conditions for Mongolian border officers by building accommodation facilities at the Shivee Khureen border station. It has also renovated the Gurvantes secondary school dormitory to provide the students with a better learning and living environment. In addition, SouthGobi runs a university scholarship program, and provided six students from Gurvantes soum with scholarships this year. Among other contributions, SouthGobi has donated 10 million tugrugs to the Gobi Development Fund, computers and beds to the Gurvantes hospital and office furniture to local organizations.
Source: www.southgobi.com
ECONOMY MINING SECTOR’S STATE BUDGET IMPACT
As of the end of November, 2009, MNT31.6 billion was collected as tax revenue in the Mongolia Development Fund, out of which MNT11.2 billion or 35% was constituted by the revenue from royalties. According to the latest national statistics committee report, mining production reached MNT31.8 billion this year, which decreased by 3.9% from last year.
The decline occurred due to a 66.6% fall in major commodity production such as zinc, fluorspar, gold and tungsten concentration. As of 2008, altogether 564 kg gold was sold to the Central Bank, which increased two times compared to the two preceding years, but it was 33% down compared three years ago. In 2005, 1,715 kg gold was sold to the Mongol Bank. Erdenet Mining Corporation has been the only cash cow of Mongolia, making up 40% of the total state budget.
Source: Unuudur
OYU TOLGOI’S COMMUNITY HEALTH, SAFETY & SECURITY PROGRAM
Human health, safety, and security are among Oyu Tolgoi’s foremost priorities, and a core competency of the project, as evidenced by the project’s comprehensive internal health and safety
policies and procedures, and the ongoing work of the OT Health, Safety, Environment, and Security (HSES) department. OT recognizes that it has a vested interest in ensuring optimal health, safety, and security not only among its employees and contractors, but in its neighboring communities as well Therefore, OT is endeavoring to design and implement a Community Health, Safety & Security Program (CHSSP) that aims to 1) minimize and mitigate, health, safety, and security (HSS) impacts directly and indirectly stimulated by OT operations, and 2) measurably improve HSS service delivery, capacity, and indicators in the target area, and 3) complement and build upon existing OT HSES policies, standards, knowledge and best practices pertaining to employees and contractors, and extend such standards to local stakeholders where appropriate and feasible.
The Program should be compatible with existing policies of OT’s Health, Safety, Environment, and Security (HSES) department, and should carefully consider environmental issues and impacts as they affect, and are affected by, human health and safety. Te resultant CHSSP should function to deepen the alignment of project activities and strategies in the areas of HSS and environment. The CHSSP will be developed using participatory methods, relying on engagement with and input from stakeholders throughout planning, implementation, and evaluation phases. The geographic scope to be covered under the CHSSP shall be primarily the direct and indirect impact areas of the OT project.
For more information, please refer to the BCM website, Articles/Reports on Mongolia.
Source: Oyu Tolgoi LLC
TREASURIES, DOLLAR RISE WHILE STOCKS, COMMODITIES PRICES SLUMP
Treasuries advanced, the dollar gained versus the euro while stocks, gold and oil declined after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy faces ―significant headwinds‖ and inflation ―could move lower.‖ Two-year Treasury notes rose, driving their yield down seven basis points to 0.76 percent. The dollar rose 0.3 percent to $1.4817 per euro and earlier appreciated to the strongest level since Nov. 4. The Standard & Poor’s 500 Index lost 0.3 percent, reversing a 0.4 percent gain. Gold futures slumped 0.5 percent. Crude slumped to $73.93 a barrel in its fourth straight decline.
Investors sold riskier assets after Bernanke said the U.S. economy’s expansion will be limited by a weak labor market and tight credit. He has led the most aggressive monetary stimulus in U.S. history, expanding the Fed’s balance sheet by $1 trillion and cutting the benchmark lending rate a year ago close to zero. Today, Bernanke said inflation may subside further because of the unemployment rate, which has increased to 10 percent for the first time since 1983.
Gold futures for February delivery have now lost 4.5 percent since Dec. 3, closing at $1,164 an ounce. Crude oil futures expiring in January lost 2 percent. Stocks in emerging markets dropped. The Dubai Financial Market General Index sank the most among benchmark equity indexes worldwide. The measure has tumbled 17 percent since Dubai announced on Nov. 25 that state-owned Dubai World would ask creditors for a ―standstill‖ agreement on its debt, including property company Nakheel PJSC’s $3.5 billion bond due for repayment in a week.
Read more…
The S&P 500 has surged 63 percent since March 9, the steepest advance since the Great Depression, while gold and oil jumped and the dollar weakened, spurred by record-low interest rates and $12 trillion in spending by governments worldwide. U.S. stocks declined as investors speculated the economy isn’t growing fast enough to shield banks from losses on commercial real estate. Financial shares in the S&P 500 retreated 1.6 percent, as Wells Fargo & Co. and JPMorgan Chase & Co. lost more than 1 percent. Exxon Mobil Corp. fell 0.7 percent on crude’s slump.
Source: Bloomberg
ASIAN FINANCIAL FORUM IN HONG KONG, JAN 20-21
―Asia in the New Economic Order‖ will be the theme of the next Asian Financial Forum, January 20-21, 2010, at the Hong Kong Convention and Exhibition Centre. Renowned international speakers will discuss the opportunities and challenges facing Asia and, in particular, China. They include: Dominique Strauss-Kahn, Managing Director, International Monetary Fund; Nouriel Roubini, Professor of Economics, New York University; E. Gerald Corrigan, Managing Director, Goldman Sachs; and senior government officials from the region. Over 1000 business leaders and senior executives will attend the Forum.
BCM is pleased to be a Sponsor of this prestigious event. Please refer to the BCM website, BCM
News& Press, for registration and more information.
Source: www.asianfinancialforum.com
SINGAPORE, CHINA LEARN HARD LESSONS IN SOVEREIGN-WEALTH FUNDS
The financial crisis taught the investing world a lesson about managing risk. Asia's sovereign-wealth funds appear to be taking some of these to heart. State-owned investors in China and Singapore are reshaping their strategies by diversifying their investment scope and focusing on markets where they have better knowledge. These two countries' funds are Asia's largest, and Singapore's funds are viewed as models by other countries, making them essential to understanding how other Asian sovereign funds will reshape themselves.
"For many sovereign-wealth funds, this is their first brush with difficulty," Howard Marks, chairman of alternative-investment firm, Oaktree Capital, said in a recent interview in Hong Kong. "I imagine they will tighten up their practices and look at investments as something other than just the chance to make money. It's also a chance to lose money or get stuck in an unattractive vehicle."
China Investment Corp. learned the earliest lesson by investing $3 billion in Blackstone Group LP in May 2007 ahead of the private-equity firm's initial public offering (IPO). They soon learned that pre-IPO deals aren't always winners: U.S. financial stocks, including Blackstone, took a dramatic turn downward. Still, people who work closely with the Chinese sovereign fund say criticism of that investment within China could have been a blessing in disguise for CIC's longer-term success. CIC has deployed cash at a rapid clip, putting at least $40 billion this year into deals linked to cyclical businesses. Oaktree's Mr. Marks is one such beneficiary. His firm has received a roughly $1 billion commitment from CIC to manage, according to people familiar with the situation.
Temasek Holdings Pte. Ltd. made perhaps the boldest move in the aftermath of its sour bets on Barclays PLC and Merrill Lynch. It hired former BHP Billiton Chief Executive Charles "Chip" Goodyear.
Read more…
Mr. Goodyear, an American with more experience in commodities than in the finance industry, ended up parting ways with Temasek during his transition over disagreements on strategy, suggesting that change at the fund will have to come more incrementally.
Still, Temasek has refocused on Asian markets, making profitable investments in many of its portfolio companies' rights issues and stepping up its bets on China's state banks when many Western strategic partners sold out near the bottom of global markets to raise cash.
One question remains: Can sovereign funds institutionalize these lessons? Hints of a global recovery make it tempting to revert to the old status quo. Sovereign funds will need to keep their humility and stay within their circle of competence—deals where they have an advantage other than their big balance sheets. As Oaktree's Mr. Marks puts it: Sovereign-wealth funds are becoming wiser about their approach to investing, "at least until people forget the lessons of the cycle.‖
Source: Wall Street Journal
CHINA REASSURES ON DOLLAR STRATEGY
China sought to reassure the world that it is taking a conservative approach to managing its massive foreign-exchange reserves, with officials saying it hasn't made big changes to its strategy and the dollar remains a central asset. The statements by a senior regulator seem intended to reassure investors that Beijing isn't selling its vast holdings of U.S. Treasuries, despite worries the dollar is likely to depreciate. China holds the world's biggest reserves of foreign currency -- $2.27 trillion at the end of September.
"The composition remains as it was before. There is no major change" in the reserves, said Wang
Xiaoyi, vice director of SAFE, which oversees the reserves. "We are not making any big adjustments in direction. Our operations follow the existing forex reserves management goal." China has repeatedly said it follows the principles of keeping reserves safe and liquid, while seeking to increase their value.
SAFE posted a Chinese-language book about foreign-exchange issues on its Web site. The move was an attempt to increase transparency on how it manages its foreign-currency holdings. "A stable, diversified structure of currencies, with the U.S. dollar as the main component but with some appropriate diversification, is able to meet our needs of external payments and asset allocation," SAFE said in a chapter of the book on reserve management. It didn't give precise details on how China's reserves are invested. Mr. Wang said the "depreciation of the U.S. dollar is a long-term trend." In the near term, however, the dollar's key role as the global reserve currency won't change, SAFE said in the book.
Source: Wall Street Journal
CHINESE FIRMS PLAN TO RAISE $2 BILLION EACH IN I.P.O.’S
The largest Asian wind power generator, Longyuan Power Group, and the biggest Chinese shipbuilder, China Shipping Industry, plan to raise about $2 billion each as they priced their initial public offerings in Hong Kong and Shanghai last week. Longyuan is expected to raise $2.2 billion as it priced its Hong Kong offer at the top of an indicated range in one of the largest public offerings this year. The offer has attracted the interest of the sovereign wealth fund China Investment Corp.; a U.S. billionaire investor, Wilbur L. Ross Jr.; and China Life Insurance Group. China Shipping said Friday that it would raise up to $2.16 billion in an A-share listing, issuing up to two billion shares priced at 6.15 renminbi to 7.38 renminbi, or 90 cents to $1.08. China Shipping is drawing strong investor interest and is expected to price at the high end of the range, or about 7 renminbi, analysts said, bolstered by market expectations of government help in the future for the shipping industry. ―There is a lot interest in this company, because their financial backers are very strong,‖ said Su Ming Le, an analyst at Bank of China International Securities.
China Shipping said it needed $937 million to expand production capacity, and it appointed China International Capital Corp. as the offer’s lead underwriter.
Hong Kong-listed shares of the smaller wind power generators China Windpower and CP New Energy have soared 369 percent and 188 percent this year, respectively. Longyuan had a 24 percent share of China’s wind power market in terms of total installed capacity as of the end of 2008. China aims to increase wind-generated power with investments possibly worth over $150 billion, which could make it the world leader in wind energy.
Source: Reuters, New York Times
REALITY MAY PINCH CHINA AUTO SALES
While the global car industry struggles through a downturn, optimism prevails among auto companies in China. Spurred by China's fiscal stimulus, and some well-targeted tax cuts, auto sales in what's now the world's largest car market could well have risen 45%. Many are expecting the good times to continue but overheating is a lurking threat. Among the optimists, for sure, is Geely Automobile, whose parent company is the preferred bidder to buy Volvo from Ford Motor Monday, Geely said it expects its car sales to rise 33% next year to 400,000. If it achieves that aim, it'll most likely see a growth rate quicker than China's auto industry as a whole. Citi Investment Research analysts, for example, expect a 15% rise in China auto sales in 2010. Indeed, next year may add a dose of realism about sales growth and profits to what's still a positive long-term story.
While trends such as rising wealth and low car-ownership levels should continue to support Chinese auto sales, maintaining the breakneck pace of this year's growth will be a stretch. This year's sales growth was driven in large part by a halving of the car sales tax on autos with smaller engine sizes. Beijing has yet to confirm whether this tax stimulus will continue into the New Year. Even if it does, it may not lead to such high sales growth if consumers start to see the tax cut as permanent, and hence car purchases as less urgent.
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Bill Russo, an auto industry expert, points out that heavy competition in the Chinese auto sector was already leading to lower selling prices for cars prior to this year's stimulus. Price declines from 2004 to 2008 ranged from 12.1% in the luxury sector to 32.5% in the compact car market. As manufacturers continue to pour into China, and capacity grows, the balance between supply and
demand should tilt in favor of the consumer. This could be especially noticeable in the mid-market sector where Chinese auto makers are expected to increasingly challenge foreign brands.
Source: Wall Street Journal
HONG KONG STOCK EXCHANGE EMERGES AS CHAMP IN IPOS
After a hiatus of several years, Hong Kong's stock exchange is again the world champion of IPOs. As of Monday, $26.81 billion has been raised through initial public offerings in Hong Kong this year, according to Dealogic. That is well above the $17.11 billion raised on the New York Stock Exchange, which stood at No. 2 in the global rankings. It has helped being the exchange best-positioned at the moment to connect foreign stock investors with China, a beacon of growth in a world still recovering from recession. "We've been in the right place, at the right time, in the right markets," says Ronald Arculli, chairman of Hong Kong Exchanges & Clearing Ltd., known as HKEx. This year's total falls far short of the $43.9 billion Hong Kong raised in 2006, when it also topped the global list for IPO issuance. But under the circumstances, it is a worthy achievement. Partly reflecting that success, HKEx's share price is up 90% this year, and more than 150% from its lows in March.
Chinese companies still dominate Hong Kong's new listings, and they are raising big sums. China Longyuan Power Group Corp., a wind-energy company, priced on the strong end to raise US$2.2 billion. An even bigger China listing could come before year's end: China Pacific Insurance Group Co. wants to raise as much as $3.82 billion in a Hong Kong IPO. These and earlier Hong Kong listings by Metallurgical Corp of China Ltd. and China Minsheng Banking Corp., which together raised about $9 billion, underscore how Hong Kong remains China's most important center for raising capital outside the mainland.
Beijing's renewed push to make Shanghai an international financial center could also direct more potential mainland business away from Hong Kong. And China's domestic markets may pursue a little internationalization of their own. Possible changes to China's listing rules could soon bring foreign companies to list in Shanghai as well, an attractive option for multinationals that need to finance expansion in China with yuan funds that are otherwise hard to obtain. Hong Kong has comparative advantages, including a listing process that is vastly easier for Chinese companies than on the mainland. Shanghai's exchange, which ranked No. 3 in the IPO rankings, has raised $14 billion so far this year, or nearly $13 billion less than Hong Kong.
Source: Wall Street Journal
COPPER PROJECT PIPELINE INSUFFICIENT TO MEET DEMAND, SAYS XSTRATA CEO
Copper supply would fall up to one-million tons short in 2009, while economic growth in the developing world would continue to boost demand for copper, base-metals miner Xstrata Copper CEO Charlie Sartain said. He noted that producers were finding it increasingly challenging to maintain their current production rates, as the industry was faced with falling head grades and deeper mines, as well as labor disputes and technical issues. Sartain noted that supply growth had been further impacted with the fallout from the economic crisis, which had resulted in less access to capital, delaying project development.
The economic uncertainties and volatility of capital and operating costs would continue to impede on the financing of projects, with future supply growth expected to be concentrated in regions with higher political and environmental risk, as well as significant infrastructure requirements, Sartain asserted. Given these challenges, the probable mine supply growth in 2015, was now estimated to be two-million tons lower than the figures projected in 2008, he added.
The current pipeline of projects would be insufficient to meet demand requirements, while demand for copper and prices were expected to pick up in 2010. Demand from China remained high, while demand in Western countries, where demand remained weak, would recover in 2010. Sartain highlighted that the emergence of Chinese smelting industry was putting pressure on traditional Western smelters, adding that these smelters were facing a profitability squeeze, as there was overcapacity in the market. Smelters would require a strategic advantage, such as location, by-product recovery or a strong local acid market to remain competitive.
Source: Mining Weekly
RIO TINTO TEAMS TO ESTABLISH USD 11 MILLION SORTING CENTRE
Rio Tinto and the University of Queensland, in Australia, have established the Rio Tinto Centre for Advanced Mineral Sorting, at a cost of USD 11 million, to develop technologies for the separation
and upgrading of minerals, such as copper and nickel, with increased efficiency. Valuable metals such as copper and nickel were becoming increasingly hard to find and recover by using traditional processing techniques, Rio stated, adding that new copper deposits typically contained lower ore grades with more complex geology than in the past, making the recovery of target minerals more costly and energy intensive.
―The latest development in advanced mineral detection systems and rapid data processing capability now makes automated mineral sorting a very attractive processing option. Our work with the University of Queensland will develop state-of-the-art approaches to sorting across a range of strategically important minerals,‖ Rio Tinto head of innovation John McGagh said. Other centres are located at the University of Sydney and Curtin University, in Australia, as well as at the Imperial College, in London. The centres would work together to provide ongoing capability in mining and mineral processing, the miner said.
Source: Mining Weekly
U.S. JOB REPORT IS STRONGEST SINCE THE START OF THE RECESSSION
The nation’s employers have stopped eliminating large numbers of jobs and appear to be on the verge of rebuilding the American work force, devastated by the recession. The unexpected improvement comes as a relief to the Obama administration, which plans to unveil new proposals next week to ease the plight of the jobless following its labor forum in Washington. Only 11,000 jobs disappeared last month and the unemployment rate actually dipped to 10 percent, from 10.2 percent the previous month.
Forecasters suggest that the turning point will come by March, assuming the economy continues to grow, as it finally started to do in the third quarter. If they are right, the beginning of a work force recovery would come more quickly than in the early 1990s and 2001, despite the much greater severity of this downturn.
Stock markets rose sharply last week after the employment report was released and ended the day slightly higher, while the dollar had its biggest one-day rally since January. Although 15.4 million people are struggling to find work, the November report revealed signs of improvement across the country. More than 50,000 temporary workers were hired, the first surge in months.
Read more…
It also depends on business executives feeling confident enough about the economy to invest and expand their operations. That may take months of steady economic growth.
Economists in the Obama administration see the November improvement as payback from the $787 billion stimulus package. In briefings with reporters, they said the federal spending saved or created 1.6 million jobs. Without that lift, the total job loss over the 23 months of recession would have been 8.8 million instead of 7.2 million. Once the economy turns and hiring resumes, nearly 18 million people are likely to be vying for jobs.
Source: New York Times
REGULATORS PULL PLUG ON U.S. BANK
Last week, Federal regulators seized AmTrust Bank, a Cleveland thrift kept alive after local politicians pleaded with the government for a second chance. AmTrust is the fourth-largest U.S. bank to fail this year. A total of 130 lenders collapsed in 2009, the highest number of failures since 1992 as regulators intensified their push to rid the industry of weak institutions.
The family-owned AmTrust, with $12 billion in assets and roots back to 1889, had been in trouble for more than a year. Like many other banks during the housing bubble, AmTrust barreled into unfamiliar areas with aggressive mortgage and construction lending. Net losses of $1 billion since last year's second quarter consumed nearly 80% of its capital.
New York Community Bancorp Inc., Westbury, N.Y., is acquiring AmTrust and its 66 branches. The purchase is a dramatic expansion for New York Community, which runs a handful of banks in New York and New Jersey. The company has made seven acquisitions since 2000, none of them outside the New York City metropolitan area, where it has about 212 branches.
The Federal Deposit Insurance Corp. said the AmTrust failure was expected to cost its deposit-insurance fund about $2 billion. AmTrust's deterioration over the past year likely resulted in the bank selling for a lower price than it would have fetched if the thrift had been seized earlier.
Source: Wall Street Journal
NORTH KOREANS PROTEST CURRENCY ISSUE
This week new reports emerged of protests and violence in North Korea as the country's authoritarian regime has seized most of its citizens' money and savings via a new-currency issue. That action coincided with the arrival of Stephen Bosworth, an American envoy, meeting with North Korean officials to work on the nuclear issue.
The reports suggest that North Korean officials may be experiencing more difficulty than expected in using the currency issuance to collar the expansion of private wealth in the country. "They've tried to wind back the system, but they're potentially teaching the people that markets can't be controlled," says Shaun Cochran, head of Korea research at CLSA Asia-Pacific Markets, who published a report on North Korea's move. "Most damaging to the regime would be if the people learned that it cannot control the real price of goods and that there is economic value to competing with the public system," he said.
Read more…
Separately, North Korea's human-rights abuses also are under scrutiny this week. Diplomats from Pyongyang appeared before the United Nations Human Rights Council in Geneva on Monday to answer questions from delegates from around the world about food deprivation and gulag-style prisons in the country. On Thursday, former North Korean prisoners spoke at an inquiry at the International Criminal Court in The Hague in the first step of a process that could trigger a criminal case against high officials, possibly even the country's dictator, Kim Jong Il.
Source: Wall Street Journal
POLITICS
MONGOLIAN OFFICIALS VISIT RIO TINTO IN LONDON
The Vice Director of Parliament N. Enkhbold, the Head of the Parliament Group of Mongolia and Great Britain R. Amarjargal, MP Kh. Jekey, MP D. Khayankhyarvaa and the Minister of Minerals and Energy D. Zorigt are visiting London. The officials met with the Vice-President of Glaxo SmithKline to discuss the H1N1 vaccine supply. They also met with the executive director of Rio Tinto, Mr. Tom Albanese and advised him to consider implementation of all measures of the contract. The officials proposed that Rio Tinto should involve more national companies in terms of using service and products for the project implementation.
Source: Daily News
WORLD BANK CAPACITY BUILDING FOR LAWS RELATED TO MINING SECTOR
Last April, Parliament Speaker D. Demberel approached World Bank Mongolia Country Representative, Mr. Arshad Sayed with a request that the Parliament was in need of international experts and advisors on international law, finance, accounting, project management and economics for making better laws related to the mining sector. Also the Speaker mentioned that the Center of Research, Analysis and Public Relations needed capacity building to improve law making. The World Bank expressed its willingness to grant technical assistance for the projects within the framework of the Governance Partnership Support Project.
This week, the parties met and were updated on the progress of the projects. The capacity building project of the Center of Research, Analysis and Public Relations will be funded by the World Bank and the sources of funds would be donated from the UK Government (USD 2 million), Canada, Australia and other countries. With regard to the mining sector, the World Bank plans to implement a separate technical assistance project. Next year, it is planning to formulate a project for the infrastructure sector and noted that it would implement a project on capacity building of the Standing Committees of the Parliament in the future.
Source: Ardiin Erkh, Minerals News
CLIMATE CHANGE TALKS OPEN IN COPENHAGEN WITH URGENT CALL FOR ACTION
The much-anticipated meeting of 200 nations on the issue of climate change began in Copenhagen Monday. Until Dec. 18, delegates will hammer out details involved in the pursuit of a global climate accord. Among the most difficult hurdles are achieving adequate cuts in greenhouse gas emissions as well as securing commitments from wealthy nations to deliver financing to poor countries. Both inside and outside the plenary session, the mood among negotiators and other participants was one
of cautious optimism. Alden Meyer, who directs climate policy for the Union of Concerned Scientists, said he was encouraged that the meeting appeared to have nudged previously reluctant nations to begin offering up emissions cuts.
Negotiators who have spent the last year working out the technical details of a potential treaty are now coming up hard against political pressures at much higher levels that will ultimately shape any agreement. Jonathan Pershing, the State Department’s special climate envoy, who represented the United States at the opening plenary, said he saw strong signs that the conference would prove critical in getting traction on curbing emissions and helping poor countries that are urgently threatened by climate change, particularly given the decision by more than 100 leaders, including President Obama, to attend.
Source: New York Times
U.N. PLEA TO CLIMATE CONFERENCE
Dried dung provides winter fuel for some in Mongolia, but even one of the world's most environmentally friendly countries is trying to do more. For example, some nomads attach solar panels to the roofs of their yurts. The UN's Framework Convention on Climate Change would be impressed with their efforts. Its Executive Secretary, Yvo de Boer, is warning delegates at this week's climate conference in Copenhagen real progress must be made. "The scientific community has told us that we have a 5-10 year window of opportunity to turn the upward emission trend into a downward emission trend. That is why we have to act now."
It's hoped the Conference will agree on a pact to replace the 1997 Kyoto Protocol. Mr. de Boer wants to see 30 billion dollars pledged over the next three years. "The money that is tabled here needs to be real, it needs to be significant, it needs to be immediate and it needs to be additional. What I want to see at the end of this conference is a list of rich country targets that are ambitious, clarity on what major developing countries will do to limit the growth of their emissions and a list of financial pledges that will make it possible for the much broader developing nation community both to change the direction of their economic growth and adapt to the inevitable impacts of climate change." But many fear disputes between rich and poor nations about who should pay that may make a binding declaration difficult. Nations like Mongolia can only make small changes. The UN may be urging the conference to have simple goals, but getting it right can be tricky.
Source: NTDTV.com
PASTORALISM UNRAVELING IN MONGOLIA
The wild plant, Sharilj, has taken over Mongolia, a sign of overgrazing as the plant is inedible for sheep and goats. Sukhtseren Sharav has a herd of 150 goats, as they chew their way through everything, the sharilj spreads, and he must find fresh grazing land. The lack of foraging terrain is not Mr. Sharav’s only worry. The price for cashmere has plunged 50 percent from last year, while flour, his main food staple, has more than doubled. These are hard times for Mongolia’s cashmere industry, which provides jobs and income for a third of the country’s population of 2.6 million and supplies 20 percent of the world’s cashmere market. To compensate for low prices, herders have been increasing supply by breeding more goats, a vicious circle. Mongolia’s goat population is now approaching 20 million, the highest ever recorded.
Environmentalists and social scientists say this is destroying biodiversity and pastureland, and undermining herding livelihoods. Mixed into this is climate change. According to Erdene-Ochir Badarch, Environment Officer of the World Bank, rainfall on the Mongolian steppe has become increasingly erratic, resulting in the disappearance of 600 Mongolian rivers and 700 lakes. Increasing aridity and loss of plant species may itself be contributing to the dwindling rains.
Dennis Sheehy, a rancher from Oregon with a doctorate in range management, measured two of Mongolia’s major ecological zones to determine changes in the composition of species compared to a study made in 1997. He found a 34 percent loss in plant species in the Gobi Desert and a 30 percent loss in Mongolia’s forest steppe. ―Two conditions have created this loss: the proportion of goats in the last 10 to 12 years, and the areas are becoming increasingly arid. The plant species that have disappeared were most palatable to goats. There are too many of them.‖
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Yet another layer of the problem is Mongolia’s poor cashmere marketing. China is Mongolia’s largest buyer of cashmere, taking two-thirds of all exports. Mongolian traders tend to get the short end of the bargain, accepting prices far below market value. When the global economic crisis shrank
Chinese clothing exports, Chinese cashmere purchases stopped. Mr. Sheehy says the result is a situation that poses a major risk to sustainability, with too much livestock in general. Mongolian herds number about 44 million animals, but herders are haunted by previous droughts and harsh winters that killed 9 million animals — a disaster many smaller herders have still not recovered. ―With any significant drought, the whole livestock pastoral system will crash,‖ he said. ―Especially in central Mongolia, where there is not much resilience — it is on the verge of a breakdown.‖ But the solution is easier envisaged than done: reduce livestock numbers, when herders are hard up for cash, and introduce modern market management to a country that has never known it.
Source: New York Times
SWITZERLAND GIVES MNT 7 BILLION FOR PASTURE MANAGEMENT
According to the pasture assessment study, 70% of the current pasture land has deteriorated. For improving herders' livelihood and introducing better pasture management, "The Green Gold Pasture Eco-system Governance/Management Project" was implemented during 2004-2008. In order to start the second phase, the Ministry of Food, Agriculture and Light Industry, Ministry of Finance and Mongolia Representative Office for Swiss Cooperation have signed a tri-partite agreement, during which MNT 7 billion was donated from Switzerland. The second phase of the project will be implemented in 40 soums in 6 Western aimags of the country.
Source: Unuudur
PRIME MINISTER CHAIRS MONGOLIAN MILLENNIUM CHALLENGE FOUNDATION BOARD MEETING
The Mongolian Millennium Challenge Foundation (MMCF) board meeting took place at the Government House, chaired by Prime Minister S. Batbold who is the Director of the Board. The board discussed making changes in structure and rules. Since the time of duty for civil representatives has ended, the following were proposed to become representatives: D. Undral, Director of the Democracy Education Center, J. Batbold, Head of Mongolia’s Environment Civil Council, and E. Myagmarpurev, Head of Mongolian Publishing Factory Union. The Minister for Mineral Resources and Energy, D. Zorigt and Minister for Social Security and Labor, T. Gandi were proposed as members, while Government Secretary, N. Batsuuri as a member without suggestion rights. The board approved the new members.
The board expressed its gratitude to the Mongolian Government for working out the railway project’s finances. The Investment Committee was presented a draft developed jointly by the Mongolian Millennium Challenge Foundation and the U.S. Millennium Challenge Corporation (MCC) on 17th of November. The board is waiting for the final answer from MCC’s Board.
MCC’s previous meeting agreed to broaden the investment of projects by USD 50 million. This includes USD 22.1 million of health projects, USD 22.1 million for professional education projects as well as USD 5 million for pastures near the city area. Representative of the MCC asked for cooperation from related ministries on the implementation of the Compact contract and added an announcement of tender for 176.4 kilometer road connecting Choir and Sainshand is planned for 27th of December. Prime Minister S. Batbold thanked the MCC for the Compact contract of approximately USD 300 million. He added that the implementation of the contract will be completed in 3 years and 10 months.
Source: News.mn
MEETING OF DP GROUP DISCUSSES RESPONSIBILITY FOR FINANCIAL INSTABILITY
During the DP Group’s meeting, there was discussion about the celebration of 20th anniversary of democracy. The group discussed their work for the Honorific Conference. Ch. Saikhanbileg said during the Q&A session, letters suggesting the Central Bank president and administration of the Financial Regulation Bureau must take responsibility, were sent to Parliament Speaker D. Demberel and Head of the Standing Committee on Economy, Ts. Bayarsaikhan. Some media have asked if the National Security Council has discussed this issue. If the DP states that the Mongol Bank president and administration of the Financial Regulation Bureau must take responsibility, it will become politicized. In order to prevent this, we are asking the Parliament’s structure organization to take care of this issue.
But the DP members also attended the meeting of the National Security Council and proposed to dismiss the Mongol Bank president. First of all, the meeting of the National Security Council is attended by the President, PM and Parliament speaker. At this meeting were all the MPs who are
working on the subject of matter in the Parliament. Secondly, there is no meaning in not giving responsibility to the Mongol Bank president and authorities of the Financial Regulation Bureau who were not able to take the appropriate measures during the financial instability. The issue must be further discussed by the Standing Committee on Economy. We are talking about curing the banking and financial system, not political responsibility.
Source: Minerals News, News.mn
POPULATION CENSUS POSTPONED FOR 10 MONTHS
Parliament has decided to postpone the population census until October 2010. The postponement was related to the H1N1 virus and cold weather. The Parliament decided that the 30 thousand people working the census must be vaccinated first. The Ministry of Health said it was impossible to fulfill this quest in time. Some MPs indicated next October and November will also be cold. They also pointed out that the population census must be ready in order to give the shares from the mining revenues. MP D. Enkhbat suggested the census could be made in a new way such as via banking or even cell phones. After the discussion, 38 of the MPs who attended the meeting agreed to postpone the census.
Source: News.mn
MINISTER OF HEALTH: TREATMENTS AND INSURANCE FUND WILL INCREASE
A change in the national health system has been made recently. The Health Minister gave some clarification on the change: those hospital patients receiving support from the insurance fund have increased, he says. Before, we used to give between MNT 50-226,000 for 22 different illnesses/diseases, now the amount of funds has increased and to MNT 129.4-536,000 for 107 diagnoses. Tariffs of all treatments were set in last June. However, starting from January 2010, the new tariff will be implemented. For health services MNT 56 billion used to be budgeted, but for the next year MNT 76 billion is budgeted from the insurance fund, due to practices of preventive medicine.
Source: Unuudur
CURRENT STATUS OF PRIVATE SCHOOLS IN MONGOLIA
Since 1992, when the constitution allowed the establishment of private schools, the number of schools has increased to 180, of which 130 are private. The Ministry of Science, Culture and Education has conducted accreditation assessments and reduced the number of private schools to 80. However, the number of youth going to private schools has steadily increased each year, an indication of a growing need for higher education. Private schools have had a great impact on the education sector by creating competition.
Source: Zuunii Medee
NEW MONGOLIAN LAWS
The following law and addenda to current Mongolian laws were published in a recent weekly Government bulletin. Unless otherwise decided by Parliament, the law and addenda take effect (10) days after publication.
Date Law 12.04.2009 Law on Human Development Fund Addendum to Law on Government Special Fund Addendum to Law on Consolidated Budget of Mongolia Addendum to Law on Corporate Income Tax
Please visit BCM’s website, Legislative Committee, for a summary of new Mongolian laws.
BCM members who wish complete versions of the laws in Mongolian language are welcome to call or email the BCM office (332345; [email protected])
ANNOUNCEMENTS OYU TOLGOI PROJECT REQUESTS PROPOSALS
The OT project invites proposals for a Consultancy Service pertaining to the design of a long-term Community Health, Safety & Security Program (CHSSP). Further details are available on the BCM website, Articles/Reports on Mongolia, or at www.ot.mn. All interested bidders are requested to register their intention to submit proposals by sending an email to [email protected]. All proposals must be received at the address listed below before 5 p.m., 26 February 2010. Evaluation of proposals will commence after the close of the bidding period.
Address:
Oyu Tolgoi, LLC
Procurement & Contract Department, Attn: Burmaa
6th Floor, ―Seoul Business Center‖ Complex
Zaluuchuud Avenue-26,
1st Khoroo, Bayanzurkh District
Ulaanbaatar, 13381, Mongolia
_______________________________________
“MM TODAY” ON MNB-TV
BCM is pleased to announce that 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 at 22:25 tonight. Tune in to watch this program that reports stories from today’s BCM NewsWire.
SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended December 4, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled 17,818,000 shares with 33 companies traded. Total market value of transactions was MNT 1.9 billion. Total market capitalization of the 358 stock companies listed on the MSE was MNT 601.2 billion, and decreased by MNT 4 billion or 0.7% from the previous week.
The Top-20 Index decreased by 114.47 points or 1.8% compared to the previous week, closing at 6,094.96 points. The MSE Composite Index decreased by 19.61 points or 0.6% compared to the
previous week, closing at 3,060.48 points.
Most active stocks traded were: Khuh gan (17,716,000 shares), APU (51,800 shares), and Genco tur
buro (29,000 shares).
Major share price percentage gainers were: Mongol alt (15%), Jinst Uvs (14.4%), and APU (7.3%). Major share price percentage losers were: UB buk (11.6%), Monnoos (7.7%), Darkhan nekhii (7.4%), UID (7.4%), and NIC (7.3%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] November 30, 2009 *3.5% [source: NSOM]
*Year-over-year (y-o-y)
CENTRAL BANK POLICY LOAN 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]
CURRENCY RATES – December 10, 2009
Currency name Currency Rate
US dollars USD 1460.88
Euro EUR 2149.39
Japanese yen JPY 16.62
British pound GBP 2367.14
Hong Kong dollar HKD 188.48
Chinese yuan CNY 213.94
Russian ruble RUB 47.55
South Korean won KRW 1.26
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.
