BUSINESS COUNCIL of MONGOLIA NewsWire

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infobcmongoliaorg

Issue 153-154 February 11 2011

This double issue contains a selection of important items of news that we could not give in the two weeks when the Newswire was not published

NEWS HIGHLIGHTS

Business

Russia blocks Khan Resourcesrsquo litigation claim against ARMZ

Xanadu Mines and Noble Group announce alliance in Mongolia

Xanadu sees Noble as ldquobig brother with firepowerrdquo

SouthGobi Resources delivers coal inside China

Hunnu announces initial JORC Resource for Tsant Uul project

Mongolian Mining gets new customers mine operation on schedule

Erdenes MGL to start exporting Tavan Tolgoi coal this month

Ivanhoe Mines rights offering yields USD12 billion in gross proceeds

Centerra warns of Mongolian legal changes

Mongolia agrees not to revoke Central Asia Metalrsquo licenses

Prophecy Resource obtains full mining license for Chandgana Tal Coal Deposit

Hunnu Coal raises stake in Unst Khudag Project to 80

New copper zone found at Erdene Resourcersquos Zuun Mod project

Denison Mines hopes for early resolution of Mongolian issues

US firm to run JV with Mongolian company for rare earth exports

Origo Partners seeks to raise USD60 million through preference shares

Manas Petroleum announces public offering

Silk Road Management launches MongoliaCentral Asia equity indexes

ХacBank appoints new VP of business banking

Anod Bank case file sent to Prosecutorrsquos Office

MCS Holding named organization with best management

MAK Chairman Nyamtaishir lists 3 rules of success

MIH Group and Chinese construction entity form joint venture

BHP Rio Tinto investors reported to want cash not deals

Peabody Energy reports higher earnings y-o-y

Sharp jump in Louis Vuitton profit and sales

Rosneft net profits rise 83

Inner Mongolia now largest producer of raw coal in China

Economy

IMF wants quick curb on imprudent fiscal spending

Two Mongolian bids among 17 reportedly received for Tavan Tolgoi

Central Bank thinks inflation will be below World Bank prediction

Government advised to sell bonds locally

Income from minerals exports likely to exceed estimated MNT600 billion

Miners hope to export 30 million tons of coal

Mongolia 4th largest coal exporter to China

Goldman Sachs sees Australian floods boosting demand for Mongolian coal

Revenue from crude export was MNT572 billion last year

Strategic partnership a boost for MSE and a coup for LSE

Mongolian yak butter futures anyone

Mongoliarsquos pink house of equities

London Stock Exchange to merge with Canadas TMX

Investment banks vie to win mandate for Tavan Tolgoi IPO

Banks pitching for Tavan Tolgoi privatization

Tavan Tolgoi IPO inextricably linked with sale of concession

Indian firm in talks to set up steel plant in Mongolia

Kh Altai named MSE Executive Director

Mongolia to start uranium exploration next year

Mongolia has one million tons of zinc

New norms promised for post-mining reclamation

Plan to produce organic food for export

Mongolia above China Russia in favorable business climate list

PM stresses importance of proper business management

Power stations owe money to coal suppliers

Notice sent to miners failing in environmental rehabilitation

Crackdown on illegal gold mining

Journalists learn about Erdenes Tavantolgoi share issue

Miners in Chile accept raised royalty rates

Analyst says with copper the danger is more toward the downside

Increased global GDP will lead to price rises in 2011 says WTO chief

China in fresh interest rate rise

Inflation worries spread

Yuan rate at record vs dollar

Politics

Party splits mergers bode well for Mongoliarsquos democracy

Enkhbayar elected chairman of new party claiming to be old MPRP

MPP loses 269 members but welcomes 14075 new ones

Green Party leader to head alliance

Khurts again refused bail

Autumn session ends with 60 of planned work done

Minister opposes any amendment to Criminal Law MPs agree

Work on for choosing consultants for Sainshand industrial park

Mongolia has 7 hectares of forest per citizen way above world average

Cold takes toll of 46000 animals so far

Coal stoves give Ulaanbaatar a smog coat

City plans to put 70 of households in apartments by 2030

No first prize for conservation work

Mongolia China want more and stronger cooperation

Mongolia studying New Zealand election system

A new take on the license revocation decision

Click on titles above to link to articles

BCM MONTHLY MEETING RECAP

A total of 95 members attended the first monthly meeting of 2011 held on January 24 with Mr B Byambasaikhan Managing Director Newcom Group in the chair Vice Director Ser-Od Ichinkhorloo reported that renewals to date were 149 as against 119 in the same period last year He noted that members who have not renewed their membership by January 31 2011 will be removed from the BCM mailing list and will not be able to attend BCM monthly meetings and other BCM members-only events Mr Ser-Od added that the BCM Tax working group successfully organized a two-day seminar for senior tax inspectors on January 14-15 He introduced two new working group co-chairs Mr Adam Bornstein Country Director of International Finance Corporation in Mongolia has been elected co-chair of the Capital Markets working group while Mr James Liotta Executive Director of Lehman Lee amp Xu Mongolia is the new co-chair of the Legislative Committee Mr Ser-Od also introduced the seven members who have joined since the last meeting They are 1 The Swedish Trade Council (Beijing Office) supports Swedish companies wanting to establish themselves or grow on the Chinese market Their Beijing office also covers Mongolia 2 Credit Mongol LLC established in April 2000 is one of the pioneering non-bank financial institutions (NBFI) in Mongolia providing micro consumer small and medium enterprise (SME) loans and financial services to customers in 6 provinces including remote rural areas 3 Nomadic Expeditions a leading provider of cultural educational and adventure travel since 1992 offering a diverse selection of trips throughout Mongolia as well as Tibet Bhutan Siberia and China With offices in the US and Ulaanbaatar Nomadic Expeditions has provided travel services for thousands of travelers for nearly two decades 4 Mongolia Property Development a subsidiary of Chuangs Consortium International Limited a Hong Kong based property developer It has purchased the Groups first piece of land in the city center in Ulaanbaatar where it plans to build a Grade A office tower 5 Glogex LLC established in January 2008 and conducting business in ABC (Mongolian Standard) resource estimation feasibility studies due diligence in mining projects detailed engineering of various processing plants market research of various commodities 6 WM Mining LLC owns Ikh Tokhoirol LLC which is the first US-invested mining company in Mongolia and owns a project in the Zaamar Goldfield in north- central Mongolia 7 Absolute Mining LLC provides mining services such as exploitation feasibility study geosypnoptics management professional advice on mining drilling and explosion management mining process optimization mining equipment selling and renting It is an accredited representative of China Coal Mr Byambasaikhan mentioned coming events where BCM will participate Coal Mongolia 2011 Mongolia Economic Forum and Mines amp Money in Hong Kong BCM will also organize missions to two trade shows in March - Toronto and Vancouver Canada and Chicago USA The first presentation of the evening was by Mr O Adiya Head of Secretariat Consultative Council on Investment Climate and Private Sector Development (CCICPSD) Mr Adiya started his presentation by explaining the CCICPSDlsquos composition and structure He listed some issues resolved through the Council One of them related to purchase and sale of power which helped to an agreement between the Energy Regulatory Authority and the Newcom Group the first private company invested in the wind energy sector Next was Mr L Naranbaatar General Director Glogex Group who talked about the upcoming Coal Mongolia 2011 International Conference amp Exhibition to be held on February 24-25 He explained the objectives of the conference and expressed special gratitude to BCM for supporting the event BCM members will get 30 off the registration fee The last presentation of the evening was by US Ambassador Jonathan Addleton who gave his views on US-Mongolia relations in 2010 and on expectations for 2011 The Ambassador urged BCM to strengthen its efforts to present a unified voice to Mongolian politicians as well as to the Mongolian public on the major policy decisions

BUSINESS

RUSSIA BLOCKS KHAN RESOURCESrsquo LITIGATION CLAIM AGAINST ARMZ Russian authorities have blocked a litigation claim against Russian State-owned uranium miner Atomredmetzoloto (ARMZ) the Toronto-listed Khan Resources Company said on Monday Khan filed

a statement of claim against ARMZ and its subsidiary JSC Priargunsky with the Ontario Superior Court of Justice alleging that ARMZ interfered with its uranium interests in Mongolia and is seeking damages of CAD300 million Because ARMZ is a government-owned company the service of claim must go through the Russian Ministry of Justice The statement of claim was translated into Russian and presented to the Ministry on October 28 Khan said ―The Russian Ministry of Justice has notified Khan that it refuses to effect service on ARMZ citing Article 13 of the Hague Convention the firm reported The article states that ―the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security Khan plans to ―vigorously defend its rights and interests the firm said ―We are disappointed that such extraordinary measures have been resorted to in order to shield ARMZ from commercial litigation CEO Grant Edey said ―We are not deterred by this temporary road block and we are considering alternate methods of rendering service to ARMZ

Source Mining Weekly

XANADU MINES AND NOBLE GROUP ANNOUNCE ALLIANCE IN MONGOLIA Mongolia-focused Xanadu Mines has announced a strategic alliance with Asian commodity trader Noble Group to explore and develop coking coal iron-ore and ferroalloy opportunities in Mongolia Subject to the parties executing a formal agreement Xanadu and Noble would participate in the alliance through joint venture (JV) companies with each party holding a 50 interest in them Xanadulsquos existing assets would not form part of the strategic alliance The company said that the initial focus of the JV would be the pursuit of a number of identified opportunities and the alliance would seek to maximize the benefits of each companylsquos respective competencies and strengths Under the agreement Noble would place more than 104 million shares at 70c a share to take its equity stake in Xanadu to 99 The funds from the placement would be used exclusively for exploration and development opportunities in Mongolia ―The strategic alliance with Noble is a significant step forward for Xanadu and an endorsement of our exploration expertise in-country experience and knowledge and the untapped potential that exists for energy and minerals in neighboring markets particularly China said Xanadu chairman Brian Thornton He noted that the alliance while focusing on coking coal iron-ore and ferroalloys would also allow Xanadu to continue to advance its existing Galshar and Khar Tarvaga thermal coal projects and its copper gold assets in the southeast Gobi region Source Mining Weekly

XANADU SEES NOBLE AS ldquoBIG BROTHER WITH FIREPOWERrdquo

Little-known Xanadu Mines of Australia is counting on an alliance forged with international commodities trader Noble Group to provide a leg up in Mongolia where it is exploring for minerals alongside sector behemoths including Rio Tinto Xstrata and Vale We are looking at a number of coking coal projects right now which are both existing projects and new prospects Xanadu chairman Brian Thornton has said We would hope in the next three months to have identified a couple of serious projects

Noble last week increased its stake in Xanadu to 10 per cent and agreed to jointly pursue opportunities in Mongolia on a 50-50 basis The partnership will rely on Nobles core business of commodities trading to market anything they find to Asian markets hungry for imported coal iron ore and other industrial staples Mr Thornton said

Marketing raw materials from Mongolia is say very different than from Australia and a very big task and frankly not Xanadus business Mr Thornton saidThere are big issues getting coal through China to the ports The China rail network is very heavily congested and thats not going to change Getting your coal from the Mongolian border to the big coal ports is a bloody big task and thats where Noble can help

Mongolia sits on vast quantities of mineral wealth and analysts predict it could be one of the fastest growing economies of the next decade Mr Thornton said Mongolian iron ore was more apt to be sold to Chinese steel firms because of its magnetite-type composition requiring beneficiation while coking coal would find a broader market given the similarities to prized Australian coal

The beauty about Mongolia for us is you can find projects sitting side by side be they coking coal or copper finds he said You wouldnt find such contiguous geology in Australia

Read morehellip

Only a handful of small-to mid-capped companies are prospecting in Mongolia mostly from Australia Canada and Russia Big mining houses while watching to see whether Mongolias fledgling

democratic government can build needed infrastructure to support widespread mining and negotiate its way through geopolitical pressures exerted by Russia and China are circling rich deposits that until recently fell under the radar of most geologists

We recognize we are a small exploration play in Mongolia and up against the bigger guys such as Rio Vale and Xstrata Mr Thornton said This alliance with Noble will put us in another league in Mongolia to be able to acquire and develop opportunities in the coking coal and iron ore space It gives us a big brother in the game - a partner that has the firepower and the balance sheet to make things work Mr Thornton said

Noble is one of the worlds biggest commodities trading houses with revenue in the nine months to September 30 exceeding USD39 billion It also has a record of acquiring interests in everything from iron ore and coal mines to grain crushing businesses to fuel terminals as part of an integrated commodities business

The Xanadu-Noble alliance while focusing on coking coal iron ore and ferro alloys will also allow Xanadu to continue to independently pursue its existing Galshar and Khar Tarvaga thermal coal mining projects and its plans for copper and gold in the south east Gobi according to Mr Thornton He said Mongolias emergence as a mining destination has led to several unusual alliances including a rumored tie-up between Peabody and Chinas largest metals refiner Jinchua to co-develop Tavan Tolgoi Russian companies are also becoming more active 22 years after the former Soviet Union finalized plans to withdraw its troops from the country There appears to be some activity by Russia to retrieve some of that lost mineral potential Mr Thornton said

Source Business Spectator

SOUTHGOBI RESOURCES DELIVERS COAL INSIDE CHINA SouthGobi Resources Ltd has completed its first direct delivery coal sale from its Ovoot Tolgoi coal mine in southern Mongolia to Risun Mining Co All previous coal sales by SouthGobi were mine-gate sales in which customers took delivery and ownership of the coal at the Ovoot Tolgoi mine site and made their own arrangements to transport the coal to China The initial delivery to Risun was the first delivery under a 500000-ton 2011 sales contract Using a logistics service provider SouthGobi transported coal to a customs bonded yard at Ceke China approximately 50 km south of the mine Ceke is a major Chinese coal distribution terminal with rail connections to key coal markets in China Risun then undertook its own logistics from there with the coal destined for use in coke-making This coal delivery is significant because it establishes that SouthGobi can offer customers coal inside China at the Ceke rail terminal as an alternative to mine-gate collection said Mr Alexander Molyneux Were also delighted to welcome Risun as a new customer Source SouthGobi Resources

HUNNU ANNOUNCES INITIAL JORC RESOURCE FOR TSANT UUL PTOJECT Hunnu Coal has announced an initial Coal Resource to JORC Code reporting standards for the Tsant Uul Coking Coal Project ―ideally and strategically located for the development of a coal mine being within 40 km of the giant Tavan Tolgoi Coking Coal Field in the South Gobi Province of southern Mongolia The key points in the report are

Initial Coal Resource of approximately 90Mt with 61Mt in the Measured and Indicated JORC categories (34Mt Measured 27Mt Indicated)

Operating road coal haulage to China peripheral to project

Proposed rail line to China peripheral to project

Extensive drilling program under way with six drilling rigs operating on site An additional two drilling rigs are being mobilized to site

With further drilling considerable potential exists to both expand and increase the Coal Resource at the Tsant Uul Project

The process for the application of a Mining License has commenced Hunnu is completing a study with the aim of generating initial production in the latter half of 2011 Hunnu Coal now has total coal resources to JORC Code reporting standards of over 400Mt across its projects with new resources currently being estimated for both the Unst Khudag and Tenuun-2 Projects The company has a 90 interest in the Tsant Uul Coking Coal Project which covers over 59000Ha It has now completed a total of 28029 meters of drilling for 187 drill holes targeting coking coal

Source Hunnu Coal

MONGOLIAN MINING GETS NEW CUSTOMERS MINE OPERATION ON SCHEDULE Mongolian Mining has indicated that it expects 7Mt of raw coal production in 2011 The first phase of washing plant (5Mtpa) will complete construction by the end of 1Q11 and will officially commence operation in April 2011 The second phase of washing plant (5Mtpa) will commence in September While December 2010 and January 2011 production is low the company is confident of keeping production at normal level from February Apart from existing customers such as Baotou Iron and Steel Group and Qinghua the company has signed off-take volume contracts with Shagang the largest privately-owned Chinese steelmaker in China the coke unit of China Gas and coke producer Risun Mongolian Mining will deliver 05Mtpa to 2Mtpa washed coking coal for each of the above key customers to the Sino-Mongolian border

Source CPS International

ERDENES MGL TO START EXPORTING TAVAN TOLGOI COAL THIS MONTH Mr BEnebish Executive Director of Erdenes MGL which operates a small part of the Tavan Tolgoi deposit has said that all arrangements are now in place to export coal from there to both Russia and China from this month Shafts have been built and good quality coking coal layers have been reached after clearing the surface Production and sale will start in a small way but the company expects to put 535000 cubic meters under mining in the course of the year and raise 2-3 Mt of coal

Source Zuunii Medee

IVANHOE MINES RIGHTS OFFERING YIELDS USD12 BILLION IN GROSS PROCEEDS Final closing results of Ivanhoe Mineslsquo strategic rights offering that expired on January 26 confirmed initial estimates that it generated USD118 billion in gross proceeds to be used to advance development of the Oyu Tolgoi project Upon the closing of the rights offering the company issued a total of 84867671 common shares which represents 995 of the maximum number of common shares that were available under the rights offering Mr Friedland and Rio Tinto Ivanhoe Mines two largest shareholders both exercised all of their respective rights that were issued to them in the rights offering Mr Friedland also purchased an additional 15 million rights on the open market and exercised them to acquire additional common shares Mr Friedlands ownership stake in Ivanhoe Mines now is 155 Rio Tinto has maintained its current ownership at 403 The virtually universal support of our eligible shareholders and the backing of the international investment community have made this rights offering another landmark event in the history of our company said Mr Robert Friedland Executive Chairman and Chief Executive Officer of Ivanhoe Mines The funds that have been raised significantly enhance Ivanhoe Mines capital position and our ability to sustain the pace of full-scale construction at Oyu Tolgoi toward our target of initial production next year

Source Ivanhoe Mines

CENTERRA WARNS OF MONGOLIAN LEGAL CHANGES

Centerra Gold Monday announced it has increased the companys total proven and probable gold reserves by 17 million ounces or 24 to 82 million ounces up from 73 million gold ounces as of the end of 2009 The company also cautioned investors about changes in Mongolian law which could eventually revoke mining licenses Mining operations in Mongolia now also face a new sliding scale of mining taxation

Updating the status of Mongolias Water and Forest Law Centerra has advised that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation

The company understands that Mongolias Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement Centerra said in a news release The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion which is about equal to Mongolias annual gross domestic product

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Goldman Sachs sees Australian floods boosting demand for Mongolian coal

Revenue from crude export was MNT572 billion last year

Strategic partnership a boost for MSE and a coup for LSE

Mongolian yak butter futures anyone

Mongoliarsquos pink house of equities

London Stock Exchange to merge with Canadas TMX

Investment banks vie to win mandate for Tavan Tolgoi IPO

Banks pitching for Tavan Tolgoi privatization

Tavan Tolgoi IPO inextricably linked with sale of concession

Indian firm in talks to set up steel plant in Mongolia

Kh Altai named MSE Executive Director

Mongolia to start uranium exploration next year

Mongolia has one million tons of zinc

New norms promised for post-mining reclamation

Plan to produce organic food for export

Mongolia above China Russia in favorable business climate list

PM stresses importance of proper business management

Power stations owe money to coal suppliers

Notice sent to miners failing in environmental rehabilitation

Crackdown on illegal gold mining

Journalists learn about Erdenes Tavantolgoi share issue

Miners in Chile accept raised royalty rates

Analyst says with copper the danger is more toward the downside

Increased global GDP will lead to price rises in 2011 says WTO chief

China in fresh interest rate rise

Inflation worries spread

Yuan rate at record vs dollar

Politics

Party splits mergers bode well for Mongoliarsquos democracy

Enkhbayar elected chairman of new party claiming to be old MPRP

MPP loses 269 members but welcomes 14075 new ones

Green Party leader to head alliance

Khurts again refused bail

Autumn session ends with 60 of planned work done

Minister opposes any amendment to Criminal Law MPs agree

Work on for choosing consultants for Sainshand industrial park

Mongolia has 7 hectares of forest per citizen way above world average

Cold takes toll of 46000 animals so far

Coal stoves give Ulaanbaatar a smog coat

City plans to put 70 of households in apartments by 2030

No first prize for conservation work

Mongolia China want more and stronger cooperation

Mongolia studying New Zealand election system

A new take on the license revocation decision

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BCM MONTHLY MEETING RECAP

A total of 95 members attended the first monthly meeting of 2011 held on January 24 with Mr B Byambasaikhan Managing Director Newcom Group in the chair Vice Director Ser-Od Ichinkhorloo reported that renewals to date were 149 as against 119 in the same period last year He noted that members who have not renewed their membership by January 31 2011 will be removed from the BCM mailing list and will not be able to attend BCM monthly meetings and other BCM members-only events Mr Ser-Od added that the BCM Tax working group successfully organized a two-day seminar for senior tax inspectors on January 14-15 He introduced two new working group co-chairs Mr Adam Bornstein Country Director of International Finance Corporation in Mongolia has been elected co-chair of the Capital Markets working group while Mr James Liotta Executive Director of Lehman Lee amp Xu Mongolia is the new co-chair of the Legislative Committee Mr Ser-Od also introduced the seven members who have joined since the last meeting They are 1 The Swedish Trade Council (Beijing Office) supports Swedish companies wanting to establish themselves or grow on the Chinese market Their Beijing office also covers Mongolia 2 Credit Mongol LLC established in April 2000 is one of the pioneering non-bank financial institutions (NBFI) in Mongolia providing micro consumer small and medium enterprise (SME) loans and financial services to customers in 6 provinces including remote rural areas 3 Nomadic Expeditions a leading provider of cultural educational and adventure travel since 1992 offering a diverse selection of trips throughout Mongolia as well as Tibet Bhutan Siberia and China With offices in the US and Ulaanbaatar Nomadic Expeditions has provided travel services for thousands of travelers for nearly two decades 4 Mongolia Property Development a subsidiary of Chuangs Consortium International Limited a Hong Kong based property developer It has purchased the Groups first piece of land in the city center in Ulaanbaatar where it plans to build a Grade A office tower 5 Glogex LLC established in January 2008 and conducting business in ABC (Mongolian Standard) resource estimation feasibility studies due diligence in mining projects detailed engineering of various processing plants market research of various commodities 6 WM Mining LLC owns Ikh Tokhoirol LLC which is the first US-invested mining company in Mongolia and owns a project in the Zaamar Goldfield in north- central Mongolia 7 Absolute Mining LLC provides mining services such as exploitation feasibility study geosypnoptics management professional advice on mining drilling and explosion management mining process optimization mining equipment selling and renting It is an accredited representative of China Coal Mr Byambasaikhan mentioned coming events where BCM will participate Coal Mongolia 2011 Mongolia Economic Forum and Mines amp Money in Hong Kong BCM will also organize missions to two trade shows in March - Toronto and Vancouver Canada and Chicago USA The first presentation of the evening was by Mr O Adiya Head of Secretariat Consultative Council on Investment Climate and Private Sector Development (CCICPSD) Mr Adiya started his presentation by explaining the CCICPSDlsquos composition and structure He listed some issues resolved through the Council One of them related to purchase and sale of power which helped to an agreement between the Energy Regulatory Authority and the Newcom Group the first private company invested in the wind energy sector Next was Mr L Naranbaatar General Director Glogex Group who talked about the upcoming Coal Mongolia 2011 International Conference amp Exhibition to be held on February 24-25 He explained the objectives of the conference and expressed special gratitude to BCM for supporting the event BCM members will get 30 off the registration fee The last presentation of the evening was by US Ambassador Jonathan Addleton who gave his views on US-Mongolia relations in 2010 and on expectations for 2011 The Ambassador urged BCM to strengthen its efforts to present a unified voice to Mongolian politicians as well as to the Mongolian public on the major policy decisions

BUSINESS

RUSSIA BLOCKS KHAN RESOURCESrsquo LITIGATION CLAIM AGAINST ARMZ Russian authorities have blocked a litigation claim against Russian State-owned uranium miner Atomredmetzoloto (ARMZ) the Toronto-listed Khan Resources Company said on Monday Khan filed

a statement of claim against ARMZ and its subsidiary JSC Priargunsky with the Ontario Superior Court of Justice alleging that ARMZ interfered with its uranium interests in Mongolia and is seeking damages of CAD300 million Because ARMZ is a government-owned company the service of claim must go through the Russian Ministry of Justice The statement of claim was translated into Russian and presented to the Ministry on October 28 Khan said ―The Russian Ministry of Justice has notified Khan that it refuses to effect service on ARMZ citing Article 13 of the Hague Convention the firm reported The article states that ―the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security Khan plans to ―vigorously defend its rights and interests the firm said ―We are disappointed that such extraordinary measures have been resorted to in order to shield ARMZ from commercial litigation CEO Grant Edey said ―We are not deterred by this temporary road block and we are considering alternate methods of rendering service to ARMZ

Source Mining Weekly

XANADU MINES AND NOBLE GROUP ANNOUNCE ALLIANCE IN MONGOLIA Mongolia-focused Xanadu Mines has announced a strategic alliance with Asian commodity trader Noble Group to explore and develop coking coal iron-ore and ferroalloy opportunities in Mongolia Subject to the parties executing a formal agreement Xanadu and Noble would participate in the alliance through joint venture (JV) companies with each party holding a 50 interest in them Xanadulsquos existing assets would not form part of the strategic alliance The company said that the initial focus of the JV would be the pursuit of a number of identified opportunities and the alliance would seek to maximize the benefits of each companylsquos respective competencies and strengths Under the agreement Noble would place more than 104 million shares at 70c a share to take its equity stake in Xanadu to 99 The funds from the placement would be used exclusively for exploration and development opportunities in Mongolia ―The strategic alliance with Noble is a significant step forward for Xanadu and an endorsement of our exploration expertise in-country experience and knowledge and the untapped potential that exists for energy and minerals in neighboring markets particularly China said Xanadu chairman Brian Thornton He noted that the alliance while focusing on coking coal iron-ore and ferroalloys would also allow Xanadu to continue to advance its existing Galshar and Khar Tarvaga thermal coal projects and its copper gold assets in the southeast Gobi region Source Mining Weekly

XANADU SEES NOBLE AS ldquoBIG BROTHER WITH FIREPOWERrdquo

Little-known Xanadu Mines of Australia is counting on an alliance forged with international commodities trader Noble Group to provide a leg up in Mongolia where it is exploring for minerals alongside sector behemoths including Rio Tinto Xstrata and Vale We are looking at a number of coking coal projects right now which are both existing projects and new prospects Xanadu chairman Brian Thornton has said We would hope in the next three months to have identified a couple of serious projects

Noble last week increased its stake in Xanadu to 10 per cent and agreed to jointly pursue opportunities in Mongolia on a 50-50 basis The partnership will rely on Nobles core business of commodities trading to market anything they find to Asian markets hungry for imported coal iron ore and other industrial staples Mr Thornton said

Marketing raw materials from Mongolia is say very different than from Australia and a very big task and frankly not Xanadus business Mr Thornton saidThere are big issues getting coal through China to the ports The China rail network is very heavily congested and thats not going to change Getting your coal from the Mongolian border to the big coal ports is a bloody big task and thats where Noble can help

Mongolia sits on vast quantities of mineral wealth and analysts predict it could be one of the fastest growing economies of the next decade Mr Thornton said Mongolian iron ore was more apt to be sold to Chinese steel firms because of its magnetite-type composition requiring beneficiation while coking coal would find a broader market given the similarities to prized Australian coal

The beauty about Mongolia for us is you can find projects sitting side by side be they coking coal or copper finds he said You wouldnt find such contiguous geology in Australia

Read morehellip

Only a handful of small-to mid-capped companies are prospecting in Mongolia mostly from Australia Canada and Russia Big mining houses while watching to see whether Mongolias fledgling

democratic government can build needed infrastructure to support widespread mining and negotiate its way through geopolitical pressures exerted by Russia and China are circling rich deposits that until recently fell under the radar of most geologists

We recognize we are a small exploration play in Mongolia and up against the bigger guys such as Rio Vale and Xstrata Mr Thornton said This alliance with Noble will put us in another league in Mongolia to be able to acquire and develop opportunities in the coking coal and iron ore space It gives us a big brother in the game - a partner that has the firepower and the balance sheet to make things work Mr Thornton said

Noble is one of the worlds biggest commodities trading houses with revenue in the nine months to September 30 exceeding USD39 billion It also has a record of acquiring interests in everything from iron ore and coal mines to grain crushing businesses to fuel terminals as part of an integrated commodities business

The Xanadu-Noble alliance while focusing on coking coal iron ore and ferro alloys will also allow Xanadu to continue to independently pursue its existing Galshar and Khar Tarvaga thermal coal mining projects and its plans for copper and gold in the south east Gobi according to Mr Thornton He said Mongolias emergence as a mining destination has led to several unusual alliances including a rumored tie-up between Peabody and Chinas largest metals refiner Jinchua to co-develop Tavan Tolgoi Russian companies are also becoming more active 22 years after the former Soviet Union finalized plans to withdraw its troops from the country There appears to be some activity by Russia to retrieve some of that lost mineral potential Mr Thornton said

Source Business Spectator

SOUTHGOBI RESOURCES DELIVERS COAL INSIDE CHINA SouthGobi Resources Ltd has completed its first direct delivery coal sale from its Ovoot Tolgoi coal mine in southern Mongolia to Risun Mining Co All previous coal sales by SouthGobi were mine-gate sales in which customers took delivery and ownership of the coal at the Ovoot Tolgoi mine site and made their own arrangements to transport the coal to China The initial delivery to Risun was the first delivery under a 500000-ton 2011 sales contract Using a logistics service provider SouthGobi transported coal to a customs bonded yard at Ceke China approximately 50 km south of the mine Ceke is a major Chinese coal distribution terminal with rail connections to key coal markets in China Risun then undertook its own logistics from there with the coal destined for use in coke-making This coal delivery is significant because it establishes that SouthGobi can offer customers coal inside China at the Ceke rail terminal as an alternative to mine-gate collection said Mr Alexander Molyneux Were also delighted to welcome Risun as a new customer Source SouthGobi Resources

HUNNU ANNOUNCES INITIAL JORC RESOURCE FOR TSANT UUL PTOJECT Hunnu Coal has announced an initial Coal Resource to JORC Code reporting standards for the Tsant Uul Coking Coal Project ―ideally and strategically located for the development of a coal mine being within 40 km of the giant Tavan Tolgoi Coking Coal Field in the South Gobi Province of southern Mongolia The key points in the report are

Initial Coal Resource of approximately 90Mt with 61Mt in the Measured and Indicated JORC categories (34Mt Measured 27Mt Indicated)

Operating road coal haulage to China peripheral to project

Proposed rail line to China peripheral to project

Extensive drilling program under way with six drilling rigs operating on site An additional two drilling rigs are being mobilized to site

With further drilling considerable potential exists to both expand and increase the Coal Resource at the Tsant Uul Project

The process for the application of a Mining License has commenced Hunnu is completing a study with the aim of generating initial production in the latter half of 2011 Hunnu Coal now has total coal resources to JORC Code reporting standards of over 400Mt across its projects with new resources currently being estimated for both the Unst Khudag and Tenuun-2 Projects The company has a 90 interest in the Tsant Uul Coking Coal Project which covers over 59000Ha It has now completed a total of 28029 meters of drilling for 187 drill holes targeting coking coal

Source Hunnu Coal

MONGOLIAN MINING GETS NEW CUSTOMERS MINE OPERATION ON SCHEDULE Mongolian Mining has indicated that it expects 7Mt of raw coal production in 2011 The first phase of washing plant (5Mtpa) will complete construction by the end of 1Q11 and will officially commence operation in April 2011 The second phase of washing plant (5Mtpa) will commence in September While December 2010 and January 2011 production is low the company is confident of keeping production at normal level from February Apart from existing customers such as Baotou Iron and Steel Group and Qinghua the company has signed off-take volume contracts with Shagang the largest privately-owned Chinese steelmaker in China the coke unit of China Gas and coke producer Risun Mongolian Mining will deliver 05Mtpa to 2Mtpa washed coking coal for each of the above key customers to the Sino-Mongolian border

Source CPS International

ERDENES MGL TO START EXPORTING TAVAN TOLGOI COAL THIS MONTH Mr BEnebish Executive Director of Erdenes MGL which operates a small part of the Tavan Tolgoi deposit has said that all arrangements are now in place to export coal from there to both Russia and China from this month Shafts have been built and good quality coking coal layers have been reached after clearing the surface Production and sale will start in a small way but the company expects to put 535000 cubic meters under mining in the course of the year and raise 2-3 Mt of coal

Source Zuunii Medee

IVANHOE MINES RIGHTS OFFERING YIELDS USD12 BILLION IN GROSS PROCEEDS Final closing results of Ivanhoe Mineslsquo strategic rights offering that expired on January 26 confirmed initial estimates that it generated USD118 billion in gross proceeds to be used to advance development of the Oyu Tolgoi project Upon the closing of the rights offering the company issued a total of 84867671 common shares which represents 995 of the maximum number of common shares that were available under the rights offering Mr Friedland and Rio Tinto Ivanhoe Mines two largest shareholders both exercised all of their respective rights that were issued to them in the rights offering Mr Friedland also purchased an additional 15 million rights on the open market and exercised them to acquire additional common shares Mr Friedlands ownership stake in Ivanhoe Mines now is 155 Rio Tinto has maintained its current ownership at 403 The virtually universal support of our eligible shareholders and the backing of the international investment community have made this rights offering another landmark event in the history of our company said Mr Robert Friedland Executive Chairman and Chief Executive Officer of Ivanhoe Mines The funds that have been raised significantly enhance Ivanhoe Mines capital position and our ability to sustain the pace of full-scale construction at Oyu Tolgoi toward our target of initial production next year

Source Ivanhoe Mines

CENTERRA WARNS OF MONGOLIAN LEGAL CHANGES

Centerra Gold Monday announced it has increased the companys total proven and probable gold reserves by 17 million ounces or 24 to 82 million ounces up from 73 million gold ounces as of the end of 2009 The company also cautioned investors about changes in Mongolian law which could eventually revoke mining licenses Mining operations in Mongolia now also face a new sliding scale of mining taxation

Updating the status of Mongolias Water and Forest Law Centerra has advised that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation

The company understands that Mongolias Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement Centerra said in a news release The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion which is about equal to Mongolias annual gross domestic product

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

BCM MONTHLY MEETING RECAP

A total of 95 members attended the first monthly meeting of 2011 held on January 24 with Mr B Byambasaikhan Managing Director Newcom Group in the chair Vice Director Ser-Od Ichinkhorloo reported that renewals to date were 149 as against 119 in the same period last year He noted that members who have not renewed their membership by January 31 2011 will be removed from the BCM mailing list and will not be able to attend BCM monthly meetings and other BCM members-only events Mr Ser-Od added that the BCM Tax working group successfully organized a two-day seminar for senior tax inspectors on January 14-15 He introduced two new working group co-chairs Mr Adam Bornstein Country Director of International Finance Corporation in Mongolia has been elected co-chair of the Capital Markets working group while Mr James Liotta Executive Director of Lehman Lee amp Xu Mongolia is the new co-chair of the Legislative Committee Mr Ser-Od also introduced the seven members who have joined since the last meeting They are 1 The Swedish Trade Council (Beijing Office) supports Swedish companies wanting to establish themselves or grow on the Chinese market Their Beijing office also covers Mongolia 2 Credit Mongol LLC established in April 2000 is one of the pioneering non-bank financial institutions (NBFI) in Mongolia providing micro consumer small and medium enterprise (SME) loans and financial services to customers in 6 provinces including remote rural areas 3 Nomadic Expeditions a leading provider of cultural educational and adventure travel since 1992 offering a diverse selection of trips throughout Mongolia as well as Tibet Bhutan Siberia and China With offices in the US and Ulaanbaatar Nomadic Expeditions has provided travel services for thousands of travelers for nearly two decades 4 Mongolia Property Development a subsidiary of Chuangs Consortium International Limited a Hong Kong based property developer It has purchased the Groups first piece of land in the city center in Ulaanbaatar where it plans to build a Grade A office tower 5 Glogex LLC established in January 2008 and conducting business in ABC (Mongolian Standard) resource estimation feasibility studies due diligence in mining projects detailed engineering of various processing plants market research of various commodities 6 WM Mining LLC owns Ikh Tokhoirol LLC which is the first US-invested mining company in Mongolia and owns a project in the Zaamar Goldfield in north- central Mongolia 7 Absolute Mining LLC provides mining services such as exploitation feasibility study geosypnoptics management professional advice on mining drilling and explosion management mining process optimization mining equipment selling and renting It is an accredited representative of China Coal Mr Byambasaikhan mentioned coming events where BCM will participate Coal Mongolia 2011 Mongolia Economic Forum and Mines amp Money in Hong Kong BCM will also organize missions to two trade shows in March - Toronto and Vancouver Canada and Chicago USA The first presentation of the evening was by Mr O Adiya Head of Secretariat Consultative Council on Investment Climate and Private Sector Development (CCICPSD) Mr Adiya started his presentation by explaining the CCICPSDlsquos composition and structure He listed some issues resolved through the Council One of them related to purchase and sale of power which helped to an agreement between the Energy Regulatory Authority and the Newcom Group the first private company invested in the wind energy sector Next was Mr L Naranbaatar General Director Glogex Group who talked about the upcoming Coal Mongolia 2011 International Conference amp Exhibition to be held on February 24-25 He explained the objectives of the conference and expressed special gratitude to BCM for supporting the event BCM members will get 30 off the registration fee The last presentation of the evening was by US Ambassador Jonathan Addleton who gave his views on US-Mongolia relations in 2010 and on expectations for 2011 The Ambassador urged BCM to strengthen its efforts to present a unified voice to Mongolian politicians as well as to the Mongolian public on the major policy decisions

BUSINESS

RUSSIA BLOCKS KHAN RESOURCESrsquo LITIGATION CLAIM AGAINST ARMZ Russian authorities have blocked a litigation claim against Russian State-owned uranium miner Atomredmetzoloto (ARMZ) the Toronto-listed Khan Resources Company said on Monday Khan filed

a statement of claim against ARMZ and its subsidiary JSC Priargunsky with the Ontario Superior Court of Justice alleging that ARMZ interfered with its uranium interests in Mongolia and is seeking damages of CAD300 million Because ARMZ is a government-owned company the service of claim must go through the Russian Ministry of Justice The statement of claim was translated into Russian and presented to the Ministry on October 28 Khan said ―The Russian Ministry of Justice has notified Khan that it refuses to effect service on ARMZ citing Article 13 of the Hague Convention the firm reported The article states that ―the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security Khan plans to ―vigorously defend its rights and interests the firm said ―We are disappointed that such extraordinary measures have been resorted to in order to shield ARMZ from commercial litigation CEO Grant Edey said ―We are not deterred by this temporary road block and we are considering alternate methods of rendering service to ARMZ

Source Mining Weekly

XANADU MINES AND NOBLE GROUP ANNOUNCE ALLIANCE IN MONGOLIA Mongolia-focused Xanadu Mines has announced a strategic alliance with Asian commodity trader Noble Group to explore and develop coking coal iron-ore and ferroalloy opportunities in Mongolia Subject to the parties executing a formal agreement Xanadu and Noble would participate in the alliance through joint venture (JV) companies with each party holding a 50 interest in them Xanadulsquos existing assets would not form part of the strategic alliance The company said that the initial focus of the JV would be the pursuit of a number of identified opportunities and the alliance would seek to maximize the benefits of each companylsquos respective competencies and strengths Under the agreement Noble would place more than 104 million shares at 70c a share to take its equity stake in Xanadu to 99 The funds from the placement would be used exclusively for exploration and development opportunities in Mongolia ―The strategic alliance with Noble is a significant step forward for Xanadu and an endorsement of our exploration expertise in-country experience and knowledge and the untapped potential that exists for energy and minerals in neighboring markets particularly China said Xanadu chairman Brian Thornton He noted that the alliance while focusing on coking coal iron-ore and ferroalloys would also allow Xanadu to continue to advance its existing Galshar and Khar Tarvaga thermal coal projects and its copper gold assets in the southeast Gobi region Source Mining Weekly

XANADU SEES NOBLE AS ldquoBIG BROTHER WITH FIREPOWERrdquo

Little-known Xanadu Mines of Australia is counting on an alliance forged with international commodities trader Noble Group to provide a leg up in Mongolia where it is exploring for minerals alongside sector behemoths including Rio Tinto Xstrata and Vale We are looking at a number of coking coal projects right now which are both existing projects and new prospects Xanadu chairman Brian Thornton has said We would hope in the next three months to have identified a couple of serious projects

Noble last week increased its stake in Xanadu to 10 per cent and agreed to jointly pursue opportunities in Mongolia on a 50-50 basis The partnership will rely on Nobles core business of commodities trading to market anything they find to Asian markets hungry for imported coal iron ore and other industrial staples Mr Thornton said

Marketing raw materials from Mongolia is say very different than from Australia and a very big task and frankly not Xanadus business Mr Thornton saidThere are big issues getting coal through China to the ports The China rail network is very heavily congested and thats not going to change Getting your coal from the Mongolian border to the big coal ports is a bloody big task and thats where Noble can help

Mongolia sits on vast quantities of mineral wealth and analysts predict it could be one of the fastest growing economies of the next decade Mr Thornton said Mongolian iron ore was more apt to be sold to Chinese steel firms because of its magnetite-type composition requiring beneficiation while coking coal would find a broader market given the similarities to prized Australian coal

The beauty about Mongolia for us is you can find projects sitting side by side be they coking coal or copper finds he said You wouldnt find such contiguous geology in Australia

Read morehellip

Only a handful of small-to mid-capped companies are prospecting in Mongolia mostly from Australia Canada and Russia Big mining houses while watching to see whether Mongolias fledgling

democratic government can build needed infrastructure to support widespread mining and negotiate its way through geopolitical pressures exerted by Russia and China are circling rich deposits that until recently fell under the radar of most geologists

We recognize we are a small exploration play in Mongolia and up against the bigger guys such as Rio Vale and Xstrata Mr Thornton said This alliance with Noble will put us in another league in Mongolia to be able to acquire and develop opportunities in the coking coal and iron ore space It gives us a big brother in the game - a partner that has the firepower and the balance sheet to make things work Mr Thornton said

Noble is one of the worlds biggest commodities trading houses with revenue in the nine months to September 30 exceeding USD39 billion It also has a record of acquiring interests in everything from iron ore and coal mines to grain crushing businesses to fuel terminals as part of an integrated commodities business

The Xanadu-Noble alliance while focusing on coking coal iron ore and ferro alloys will also allow Xanadu to continue to independently pursue its existing Galshar and Khar Tarvaga thermal coal mining projects and its plans for copper and gold in the south east Gobi according to Mr Thornton He said Mongolias emergence as a mining destination has led to several unusual alliances including a rumored tie-up between Peabody and Chinas largest metals refiner Jinchua to co-develop Tavan Tolgoi Russian companies are also becoming more active 22 years after the former Soviet Union finalized plans to withdraw its troops from the country There appears to be some activity by Russia to retrieve some of that lost mineral potential Mr Thornton said

Source Business Spectator

SOUTHGOBI RESOURCES DELIVERS COAL INSIDE CHINA SouthGobi Resources Ltd has completed its first direct delivery coal sale from its Ovoot Tolgoi coal mine in southern Mongolia to Risun Mining Co All previous coal sales by SouthGobi were mine-gate sales in which customers took delivery and ownership of the coal at the Ovoot Tolgoi mine site and made their own arrangements to transport the coal to China The initial delivery to Risun was the first delivery under a 500000-ton 2011 sales contract Using a logistics service provider SouthGobi transported coal to a customs bonded yard at Ceke China approximately 50 km south of the mine Ceke is a major Chinese coal distribution terminal with rail connections to key coal markets in China Risun then undertook its own logistics from there with the coal destined for use in coke-making This coal delivery is significant because it establishes that SouthGobi can offer customers coal inside China at the Ceke rail terminal as an alternative to mine-gate collection said Mr Alexander Molyneux Were also delighted to welcome Risun as a new customer Source SouthGobi Resources

HUNNU ANNOUNCES INITIAL JORC RESOURCE FOR TSANT UUL PTOJECT Hunnu Coal has announced an initial Coal Resource to JORC Code reporting standards for the Tsant Uul Coking Coal Project ―ideally and strategically located for the development of a coal mine being within 40 km of the giant Tavan Tolgoi Coking Coal Field in the South Gobi Province of southern Mongolia The key points in the report are

Initial Coal Resource of approximately 90Mt with 61Mt in the Measured and Indicated JORC categories (34Mt Measured 27Mt Indicated)

Operating road coal haulage to China peripheral to project

Proposed rail line to China peripheral to project

Extensive drilling program under way with six drilling rigs operating on site An additional two drilling rigs are being mobilized to site

With further drilling considerable potential exists to both expand and increase the Coal Resource at the Tsant Uul Project

The process for the application of a Mining License has commenced Hunnu is completing a study with the aim of generating initial production in the latter half of 2011 Hunnu Coal now has total coal resources to JORC Code reporting standards of over 400Mt across its projects with new resources currently being estimated for both the Unst Khudag and Tenuun-2 Projects The company has a 90 interest in the Tsant Uul Coking Coal Project which covers over 59000Ha It has now completed a total of 28029 meters of drilling for 187 drill holes targeting coking coal

Source Hunnu Coal

MONGOLIAN MINING GETS NEW CUSTOMERS MINE OPERATION ON SCHEDULE Mongolian Mining has indicated that it expects 7Mt of raw coal production in 2011 The first phase of washing plant (5Mtpa) will complete construction by the end of 1Q11 and will officially commence operation in April 2011 The second phase of washing plant (5Mtpa) will commence in September While December 2010 and January 2011 production is low the company is confident of keeping production at normal level from February Apart from existing customers such as Baotou Iron and Steel Group and Qinghua the company has signed off-take volume contracts with Shagang the largest privately-owned Chinese steelmaker in China the coke unit of China Gas and coke producer Risun Mongolian Mining will deliver 05Mtpa to 2Mtpa washed coking coal for each of the above key customers to the Sino-Mongolian border

Source CPS International

ERDENES MGL TO START EXPORTING TAVAN TOLGOI COAL THIS MONTH Mr BEnebish Executive Director of Erdenes MGL which operates a small part of the Tavan Tolgoi deposit has said that all arrangements are now in place to export coal from there to both Russia and China from this month Shafts have been built and good quality coking coal layers have been reached after clearing the surface Production and sale will start in a small way but the company expects to put 535000 cubic meters under mining in the course of the year and raise 2-3 Mt of coal

Source Zuunii Medee

IVANHOE MINES RIGHTS OFFERING YIELDS USD12 BILLION IN GROSS PROCEEDS Final closing results of Ivanhoe Mineslsquo strategic rights offering that expired on January 26 confirmed initial estimates that it generated USD118 billion in gross proceeds to be used to advance development of the Oyu Tolgoi project Upon the closing of the rights offering the company issued a total of 84867671 common shares which represents 995 of the maximum number of common shares that were available under the rights offering Mr Friedland and Rio Tinto Ivanhoe Mines two largest shareholders both exercised all of their respective rights that were issued to them in the rights offering Mr Friedland also purchased an additional 15 million rights on the open market and exercised them to acquire additional common shares Mr Friedlands ownership stake in Ivanhoe Mines now is 155 Rio Tinto has maintained its current ownership at 403 The virtually universal support of our eligible shareholders and the backing of the international investment community have made this rights offering another landmark event in the history of our company said Mr Robert Friedland Executive Chairman and Chief Executive Officer of Ivanhoe Mines The funds that have been raised significantly enhance Ivanhoe Mines capital position and our ability to sustain the pace of full-scale construction at Oyu Tolgoi toward our target of initial production next year

Source Ivanhoe Mines

CENTERRA WARNS OF MONGOLIAN LEGAL CHANGES

Centerra Gold Monday announced it has increased the companys total proven and probable gold reserves by 17 million ounces or 24 to 82 million ounces up from 73 million gold ounces as of the end of 2009 The company also cautioned investors about changes in Mongolian law which could eventually revoke mining licenses Mining operations in Mongolia now also face a new sliding scale of mining taxation

Updating the status of Mongolias Water and Forest Law Centerra has advised that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation

The company understands that Mongolias Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement Centerra said in a news release The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion which is about equal to Mongolias annual gross domestic product

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

a statement of claim against ARMZ and its subsidiary JSC Priargunsky with the Ontario Superior Court of Justice alleging that ARMZ interfered with its uranium interests in Mongolia and is seeking damages of CAD300 million Because ARMZ is a government-owned company the service of claim must go through the Russian Ministry of Justice The statement of claim was translated into Russian and presented to the Ministry on October 28 Khan said ―The Russian Ministry of Justice has notified Khan that it refuses to effect service on ARMZ citing Article 13 of the Hague Convention the firm reported The article states that ―the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security Khan plans to ―vigorously defend its rights and interests the firm said ―We are disappointed that such extraordinary measures have been resorted to in order to shield ARMZ from commercial litigation CEO Grant Edey said ―We are not deterred by this temporary road block and we are considering alternate methods of rendering service to ARMZ

Source Mining Weekly

XANADU MINES AND NOBLE GROUP ANNOUNCE ALLIANCE IN MONGOLIA Mongolia-focused Xanadu Mines has announced a strategic alliance with Asian commodity trader Noble Group to explore and develop coking coal iron-ore and ferroalloy opportunities in Mongolia Subject to the parties executing a formal agreement Xanadu and Noble would participate in the alliance through joint venture (JV) companies with each party holding a 50 interest in them Xanadulsquos existing assets would not form part of the strategic alliance The company said that the initial focus of the JV would be the pursuit of a number of identified opportunities and the alliance would seek to maximize the benefits of each companylsquos respective competencies and strengths Under the agreement Noble would place more than 104 million shares at 70c a share to take its equity stake in Xanadu to 99 The funds from the placement would be used exclusively for exploration and development opportunities in Mongolia ―The strategic alliance with Noble is a significant step forward for Xanadu and an endorsement of our exploration expertise in-country experience and knowledge and the untapped potential that exists for energy and minerals in neighboring markets particularly China said Xanadu chairman Brian Thornton He noted that the alliance while focusing on coking coal iron-ore and ferroalloys would also allow Xanadu to continue to advance its existing Galshar and Khar Tarvaga thermal coal projects and its copper gold assets in the southeast Gobi region Source Mining Weekly

XANADU SEES NOBLE AS ldquoBIG BROTHER WITH FIREPOWERrdquo

Little-known Xanadu Mines of Australia is counting on an alliance forged with international commodities trader Noble Group to provide a leg up in Mongolia where it is exploring for minerals alongside sector behemoths including Rio Tinto Xstrata and Vale We are looking at a number of coking coal projects right now which are both existing projects and new prospects Xanadu chairman Brian Thornton has said We would hope in the next three months to have identified a couple of serious projects

Noble last week increased its stake in Xanadu to 10 per cent and agreed to jointly pursue opportunities in Mongolia on a 50-50 basis The partnership will rely on Nobles core business of commodities trading to market anything they find to Asian markets hungry for imported coal iron ore and other industrial staples Mr Thornton said

Marketing raw materials from Mongolia is say very different than from Australia and a very big task and frankly not Xanadus business Mr Thornton saidThere are big issues getting coal through China to the ports The China rail network is very heavily congested and thats not going to change Getting your coal from the Mongolian border to the big coal ports is a bloody big task and thats where Noble can help

Mongolia sits on vast quantities of mineral wealth and analysts predict it could be one of the fastest growing economies of the next decade Mr Thornton said Mongolian iron ore was more apt to be sold to Chinese steel firms because of its magnetite-type composition requiring beneficiation while coking coal would find a broader market given the similarities to prized Australian coal

The beauty about Mongolia for us is you can find projects sitting side by side be they coking coal or copper finds he said You wouldnt find such contiguous geology in Australia

Read morehellip

Only a handful of small-to mid-capped companies are prospecting in Mongolia mostly from Australia Canada and Russia Big mining houses while watching to see whether Mongolias fledgling

democratic government can build needed infrastructure to support widespread mining and negotiate its way through geopolitical pressures exerted by Russia and China are circling rich deposits that until recently fell under the radar of most geologists

We recognize we are a small exploration play in Mongolia and up against the bigger guys such as Rio Vale and Xstrata Mr Thornton said This alliance with Noble will put us in another league in Mongolia to be able to acquire and develop opportunities in the coking coal and iron ore space It gives us a big brother in the game - a partner that has the firepower and the balance sheet to make things work Mr Thornton said

Noble is one of the worlds biggest commodities trading houses with revenue in the nine months to September 30 exceeding USD39 billion It also has a record of acquiring interests in everything from iron ore and coal mines to grain crushing businesses to fuel terminals as part of an integrated commodities business

The Xanadu-Noble alliance while focusing on coking coal iron ore and ferro alloys will also allow Xanadu to continue to independently pursue its existing Galshar and Khar Tarvaga thermal coal mining projects and its plans for copper and gold in the south east Gobi according to Mr Thornton He said Mongolias emergence as a mining destination has led to several unusual alliances including a rumored tie-up between Peabody and Chinas largest metals refiner Jinchua to co-develop Tavan Tolgoi Russian companies are also becoming more active 22 years after the former Soviet Union finalized plans to withdraw its troops from the country There appears to be some activity by Russia to retrieve some of that lost mineral potential Mr Thornton said

Source Business Spectator

SOUTHGOBI RESOURCES DELIVERS COAL INSIDE CHINA SouthGobi Resources Ltd has completed its first direct delivery coal sale from its Ovoot Tolgoi coal mine in southern Mongolia to Risun Mining Co All previous coal sales by SouthGobi were mine-gate sales in which customers took delivery and ownership of the coal at the Ovoot Tolgoi mine site and made their own arrangements to transport the coal to China The initial delivery to Risun was the first delivery under a 500000-ton 2011 sales contract Using a logistics service provider SouthGobi transported coal to a customs bonded yard at Ceke China approximately 50 km south of the mine Ceke is a major Chinese coal distribution terminal with rail connections to key coal markets in China Risun then undertook its own logistics from there with the coal destined for use in coke-making This coal delivery is significant because it establishes that SouthGobi can offer customers coal inside China at the Ceke rail terminal as an alternative to mine-gate collection said Mr Alexander Molyneux Were also delighted to welcome Risun as a new customer Source SouthGobi Resources

HUNNU ANNOUNCES INITIAL JORC RESOURCE FOR TSANT UUL PTOJECT Hunnu Coal has announced an initial Coal Resource to JORC Code reporting standards for the Tsant Uul Coking Coal Project ―ideally and strategically located for the development of a coal mine being within 40 km of the giant Tavan Tolgoi Coking Coal Field in the South Gobi Province of southern Mongolia The key points in the report are

Initial Coal Resource of approximately 90Mt with 61Mt in the Measured and Indicated JORC categories (34Mt Measured 27Mt Indicated)

Operating road coal haulage to China peripheral to project

Proposed rail line to China peripheral to project

Extensive drilling program under way with six drilling rigs operating on site An additional two drilling rigs are being mobilized to site

With further drilling considerable potential exists to both expand and increase the Coal Resource at the Tsant Uul Project

The process for the application of a Mining License has commenced Hunnu is completing a study with the aim of generating initial production in the latter half of 2011 Hunnu Coal now has total coal resources to JORC Code reporting standards of over 400Mt across its projects with new resources currently being estimated for both the Unst Khudag and Tenuun-2 Projects The company has a 90 interest in the Tsant Uul Coking Coal Project which covers over 59000Ha It has now completed a total of 28029 meters of drilling for 187 drill holes targeting coking coal

Source Hunnu Coal

MONGOLIAN MINING GETS NEW CUSTOMERS MINE OPERATION ON SCHEDULE Mongolian Mining has indicated that it expects 7Mt of raw coal production in 2011 The first phase of washing plant (5Mtpa) will complete construction by the end of 1Q11 and will officially commence operation in April 2011 The second phase of washing plant (5Mtpa) will commence in September While December 2010 and January 2011 production is low the company is confident of keeping production at normal level from February Apart from existing customers such as Baotou Iron and Steel Group and Qinghua the company has signed off-take volume contracts with Shagang the largest privately-owned Chinese steelmaker in China the coke unit of China Gas and coke producer Risun Mongolian Mining will deliver 05Mtpa to 2Mtpa washed coking coal for each of the above key customers to the Sino-Mongolian border

Source CPS International

ERDENES MGL TO START EXPORTING TAVAN TOLGOI COAL THIS MONTH Mr BEnebish Executive Director of Erdenes MGL which operates a small part of the Tavan Tolgoi deposit has said that all arrangements are now in place to export coal from there to both Russia and China from this month Shafts have been built and good quality coking coal layers have been reached after clearing the surface Production and sale will start in a small way but the company expects to put 535000 cubic meters under mining in the course of the year and raise 2-3 Mt of coal

Source Zuunii Medee

IVANHOE MINES RIGHTS OFFERING YIELDS USD12 BILLION IN GROSS PROCEEDS Final closing results of Ivanhoe Mineslsquo strategic rights offering that expired on January 26 confirmed initial estimates that it generated USD118 billion in gross proceeds to be used to advance development of the Oyu Tolgoi project Upon the closing of the rights offering the company issued a total of 84867671 common shares which represents 995 of the maximum number of common shares that were available under the rights offering Mr Friedland and Rio Tinto Ivanhoe Mines two largest shareholders both exercised all of their respective rights that were issued to them in the rights offering Mr Friedland also purchased an additional 15 million rights on the open market and exercised them to acquire additional common shares Mr Friedlands ownership stake in Ivanhoe Mines now is 155 Rio Tinto has maintained its current ownership at 403 The virtually universal support of our eligible shareholders and the backing of the international investment community have made this rights offering another landmark event in the history of our company said Mr Robert Friedland Executive Chairman and Chief Executive Officer of Ivanhoe Mines The funds that have been raised significantly enhance Ivanhoe Mines capital position and our ability to sustain the pace of full-scale construction at Oyu Tolgoi toward our target of initial production next year

Source Ivanhoe Mines

CENTERRA WARNS OF MONGOLIAN LEGAL CHANGES

Centerra Gold Monday announced it has increased the companys total proven and probable gold reserves by 17 million ounces or 24 to 82 million ounces up from 73 million gold ounces as of the end of 2009 The company also cautioned investors about changes in Mongolian law which could eventually revoke mining licenses Mining operations in Mongolia now also face a new sliding scale of mining taxation

Updating the status of Mongolias Water and Forest Law Centerra has advised that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation

The company understands that Mongolias Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement Centerra said in a news release The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion which is about equal to Mongolias annual gross domestic product

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

democratic government can build needed infrastructure to support widespread mining and negotiate its way through geopolitical pressures exerted by Russia and China are circling rich deposits that until recently fell under the radar of most geologists

We recognize we are a small exploration play in Mongolia and up against the bigger guys such as Rio Vale and Xstrata Mr Thornton said This alliance with Noble will put us in another league in Mongolia to be able to acquire and develop opportunities in the coking coal and iron ore space It gives us a big brother in the game - a partner that has the firepower and the balance sheet to make things work Mr Thornton said

Noble is one of the worlds biggest commodities trading houses with revenue in the nine months to September 30 exceeding USD39 billion It also has a record of acquiring interests in everything from iron ore and coal mines to grain crushing businesses to fuel terminals as part of an integrated commodities business

The Xanadu-Noble alliance while focusing on coking coal iron ore and ferro alloys will also allow Xanadu to continue to independently pursue its existing Galshar and Khar Tarvaga thermal coal mining projects and its plans for copper and gold in the south east Gobi according to Mr Thornton He said Mongolias emergence as a mining destination has led to several unusual alliances including a rumored tie-up between Peabody and Chinas largest metals refiner Jinchua to co-develop Tavan Tolgoi Russian companies are also becoming more active 22 years after the former Soviet Union finalized plans to withdraw its troops from the country There appears to be some activity by Russia to retrieve some of that lost mineral potential Mr Thornton said

Source Business Spectator

SOUTHGOBI RESOURCES DELIVERS COAL INSIDE CHINA SouthGobi Resources Ltd has completed its first direct delivery coal sale from its Ovoot Tolgoi coal mine in southern Mongolia to Risun Mining Co All previous coal sales by SouthGobi were mine-gate sales in which customers took delivery and ownership of the coal at the Ovoot Tolgoi mine site and made their own arrangements to transport the coal to China The initial delivery to Risun was the first delivery under a 500000-ton 2011 sales contract Using a logistics service provider SouthGobi transported coal to a customs bonded yard at Ceke China approximately 50 km south of the mine Ceke is a major Chinese coal distribution terminal with rail connections to key coal markets in China Risun then undertook its own logistics from there with the coal destined for use in coke-making This coal delivery is significant because it establishes that SouthGobi can offer customers coal inside China at the Ceke rail terminal as an alternative to mine-gate collection said Mr Alexander Molyneux Were also delighted to welcome Risun as a new customer Source SouthGobi Resources

HUNNU ANNOUNCES INITIAL JORC RESOURCE FOR TSANT UUL PTOJECT Hunnu Coal has announced an initial Coal Resource to JORC Code reporting standards for the Tsant Uul Coking Coal Project ―ideally and strategically located for the development of a coal mine being within 40 km of the giant Tavan Tolgoi Coking Coal Field in the South Gobi Province of southern Mongolia The key points in the report are

Initial Coal Resource of approximately 90Mt with 61Mt in the Measured and Indicated JORC categories (34Mt Measured 27Mt Indicated)

Operating road coal haulage to China peripheral to project

Proposed rail line to China peripheral to project

Extensive drilling program under way with six drilling rigs operating on site An additional two drilling rigs are being mobilized to site

With further drilling considerable potential exists to both expand and increase the Coal Resource at the Tsant Uul Project

The process for the application of a Mining License has commenced Hunnu is completing a study with the aim of generating initial production in the latter half of 2011 Hunnu Coal now has total coal resources to JORC Code reporting standards of over 400Mt across its projects with new resources currently being estimated for both the Unst Khudag and Tenuun-2 Projects The company has a 90 interest in the Tsant Uul Coking Coal Project which covers over 59000Ha It has now completed a total of 28029 meters of drilling for 187 drill holes targeting coking coal

Source Hunnu Coal

MONGOLIAN MINING GETS NEW CUSTOMERS MINE OPERATION ON SCHEDULE Mongolian Mining has indicated that it expects 7Mt of raw coal production in 2011 The first phase of washing plant (5Mtpa) will complete construction by the end of 1Q11 and will officially commence operation in April 2011 The second phase of washing plant (5Mtpa) will commence in September While December 2010 and January 2011 production is low the company is confident of keeping production at normal level from February Apart from existing customers such as Baotou Iron and Steel Group and Qinghua the company has signed off-take volume contracts with Shagang the largest privately-owned Chinese steelmaker in China the coke unit of China Gas and coke producer Risun Mongolian Mining will deliver 05Mtpa to 2Mtpa washed coking coal for each of the above key customers to the Sino-Mongolian border

Source CPS International

ERDENES MGL TO START EXPORTING TAVAN TOLGOI COAL THIS MONTH Mr BEnebish Executive Director of Erdenes MGL which operates a small part of the Tavan Tolgoi deposit has said that all arrangements are now in place to export coal from there to both Russia and China from this month Shafts have been built and good quality coking coal layers have been reached after clearing the surface Production and sale will start in a small way but the company expects to put 535000 cubic meters under mining in the course of the year and raise 2-3 Mt of coal

Source Zuunii Medee

IVANHOE MINES RIGHTS OFFERING YIELDS USD12 BILLION IN GROSS PROCEEDS Final closing results of Ivanhoe Mineslsquo strategic rights offering that expired on January 26 confirmed initial estimates that it generated USD118 billion in gross proceeds to be used to advance development of the Oyu Tolgoi project Upon the closing of the rights offering the company issued a total of 84867671 common shares which represents 995 of the maximum number of common shares that were available under the rights offering Mr Friedland and Rio Tinto Ivanhoe Mines two largest shareholders both exercised all of their respective rights that were issued to them in the rights offering Mr Friedland also purchased an additional 15 million rights on the open market and exercised them to acquire additional common shares Mr Friedlands ownership stake in Ivanhoe Mines now is 155 Rio Tinto has maintained its current ownership at 403 The virtually universal support of our eligible shareholders and the backing of the international investment community have made this rights offering another landmark event in the history of our company said Mr Robert Friedland Executive Chairman and Chief Executive Officer of Ivanhoe Mines The funds that have been raised significantly enhance Ivanhoe Mines capital position and our ability to sustain the pace of full-scale construction at Oyu Tolgoi toward our target of initial production next year

Source Ivanhoe Mines

CENTERRA WARNS OF MONGOLIAN LEGAL CHANGES

Centerra Gold Monday announced it has increased the companys total proven and probable gold reserves by 17 million ounces or 24 to 82 million ounces up from 73 million gold ounces as of the end of 2009 The company also cautioned investors about changes in Mongolian law which could eventually revoke mining licenses Mining operations in Mongolia now also face a new sliding scale of mining taxation

Updating the status of Mongolias Water and Forest Law Centerra has advised that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation

The company understands that Mongolias Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement Centerra said in a news release The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion which is about equal to Mongolias annual gross domestic product

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Source Hunnu Coal

MONGOLIAN MINING GETS NEW CUSTOMERS MINE OPERATION ON SCHEDULE Mongolian Mining has indicated that it expects 7Mt of raw coal production in 2011 The first phase of washing plant (5Mtpa) will complete construction by the end of 1Q11 and will officially commence operation in April 2011 The second phase of washing plant (5Mtpa) will commence in September While December 2010 and January 2011 production is low the company is confident of keeping production at normal level from February Apart from existing customers such as Baotou Iron and Steel Group and Qinghua the company has signed off-take volume contracts with Shagang the largest privately-owned Chinese steelmaker in China the coke unit of China Gas and coke producer Risun Mongolian Mining will deliver 05Mtpa to 2Mtpa washed coking coal for each of the above key customers to the Sino-Mongolian border

Source CPS International

ERDENES MGL TO START EXPORTING TAVAN TOLGOI COAL THIS MONTH Mr BEnebish Executive Director of Erdenes MGL which operates a small part of the Tavan Tolgoi deposit has said that all arrangements are now in place to export coal from there to both Russia and China from this month Shafts have been built and good quality coking coal layers have been reached after clearing the surface Production and sale will start in a small way but the company expects to put 535000 cubic meters under mining in the course of the year and raise 2-3 Mt of coal

Source Zuunii Medee

IVANHOE MINES RIGHTS OFFERING YIELDS USD12 BILLION IN GROSS PROCEEDS Final closing results of Ivanhoe Mineslsquo strategic rights offering that expired on January 26 confirmed initial estimates that it generated USD118 billion in gross proceeds to be used to advance development of the Oyu Tolgoi project Upon the closing of the rights offering the company issued a total of 84867671 common shares which represents 995 of the maximum number of common shares that were available under the rights offering Mr Friedland and Rio Tinto Ivanhoe Mines two largest shareholders both exercised all of their respective rights that were issued to them in the rights offering Mr Friedland also purchased an additional 15 million rights on the open market and exercised them to acquire additional common shares Mr Friedlands ownership stake in Ivanhoe Mines now is 155 Rio Tinto has maintained its current ownership at 403 The virtually universal support of our eligible shareholders and the backing of the international investment community have made this rights offering another landmark event in the history of our company said Mr Robert Friedland Executive Chairman and Chief Executive Officer of Ivanhoe Mines The funds that have been raised significantly enhance Ivanhoe Mines capital position and our ability to sustain the pace of full-scale construction at Oyu Tolgoi toward our target of initial production next year

Source Ivanhoe Mines

CENTERRA WARNS OF MONGOLIAN LEGAL CHANGES

Centerra Gold Monday announced it has increased the companys total proven and probable gold reserves by 17 million ounces or 24 to 82 million ounces up from 73 million gold ounces as of the end of 2009 The company also cautioned investors about changes in Mongolian law which could eventually revoke mining licenses Mining operations in Mongolia now also face a new sliding scale of mining taxation

Updating the status of Mongolias Water and Forest Law Centerra has advised that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation

The company understands that Mongolias Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement Centerra said in a news release The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion which is about equal to Mongolias annual gross domestic product

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

mining operations Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Companys Mongolian activities Centerra management advised

Read morehellip

The company also cautioned investors about Mongolias new graduated royalty that will apply to all mining projects as of January 1 2011 including Centerras Gatsuurt project The graduated fee replaces the previous flat 5 gold royalty levy Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement Gatsuurt has proven and probable reserves of 15 million ounces of gold while Boroo has 392000 ounces of proven and probable gold reserves

Source Mineweb

MONGOLIA AGREES NOT TO REVOKE CENTRAL ASIA METALSrsquo LICENSES Central Asia Metalslsquo gold exploration projects in Mongolia have been removed from the list of licenses the government was considering revoking The countrylsquos government on 17 November published a list of 254 mineral licenses that it intended to revoke including three of CAMlsquos prompting a letter from CAM questioning the inclusion of its licenses The list was drawn up in response to a law that would prohibit mineral exploration and mining in water basins and forest areas The government responded to CAMlsquos letter saying that the companylsquos licenses were removed from the list because they were considered hard rock deposits and therefore not defined as alluvial ―It is pleasing to see the speed with which the Ministry responded to our request to review their decision on our Ereen license and gratifying to receive such a favorable response said CAM chief executive Nick Clarke ―Mongolia remains a key region for CAM and we remain committed to our exploration projects namely Alag Bayan coppergold Handgait molybdenum and the Ereen gold projects

Source Central Asia Metals

PROPHECY RESOURCE OBTAINS FULL MINING LICENSE FOR CHANDGANA TAL COAL DEPOSIT Prophecy Resource Corp has received the full mining license from the Mineral Resources Authority of Mongolia for the Chandgana Tal Deposit containing 141 million tons of Measured coal and located 9 km north of Prophecys Chandgana Khavtgai project Previously only a small portion of Tal possessed mining license status The full mining license represents the second significant milestone granted to Prophecy towards its planned 600-MW mine mouth power plant in the Chandgana Projects area

Source Prophecy Resource

HUNNU COAL RAISES STAKE IN UNST KHUDAG PROJECT TO 80 Hunnu Coal now has an 80 interest in the Unst Khudag Coal Project after acquiring a further 15 interest in the Unst Khudag Coal Mine and surrounding licenses including the new Har Toirom Coal Discovery An updated JORC Resource is currently being calculated for the project but an initial JORC based on less than 30 of the available data puts the Measured Indicated and Inferred Resource at 324 million tons to a depth of 140 meters Analysis reveals a high quality thermal coal with an average calorific value of 6784 kcalkg dry ash free (daf) The Unst Khudag Coal Project is located in Dundgobi province and is situated about 180 km from the Mongolian railway grid The project consists of two exploration licenses and one mining license covering 59000 hectares

Source Proactive Investors Australia

NEW COPPER ZONE FOUND AT ERDENE RESOURCErsquoS ZUUN MOD PROJECT Erdene Resource Development Corp has discovered a new copper zone located over two km northwest of the existing Zuun Mod molybdenumcopper resource ―We look forward to the resumption of drilling in the near future said President and CEO Peter Akerley ―This intersection of significant copper mineralization further illustrates the potential for new discoveries within the large porphyry system at Zuun Mod Erdene controls the Zuun Mod deposit through a single exploration license totaling 30650 hectares located in Bayankhongor province approximately 950 km southwest of Ulaanbaatar

Source Erdene Resource Development Corp

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

DENISON MINES HOPES FOR EARLY RESOLUTION OF MONGOLIAN ISSUES Denison Mines CEO Ron Hochstein has said that the companylsquos 2011 plan and budget was focused on growth as it aims to increase its uranium production to at least 10 million pounds a year by 2020 In Mongolia a USD74-million exploration and development program was in the pipeline A USD3-million 38000-meter exploration program was anticipated to be undertaken on license areas that currently do not have defined resources to confirm resources and support future work Development activities on more advanced license areas would include drilling of initial test patterns and pilot plant design The implementation of the Mongolian program was contingent on resolution of outstanding issues with the Mongolian government regarding the Nuclear Energy Law and the structure of the Gurvan Saihan joint venture ―The company remains hopeful that these issues would be resolved early in 2011 such that the planned programs can be completed said Mr Hochstein Source Mining Weekly

US FIRM TO RUN JV WITH MONGOLIAN COMPANY FOR RARE EARTH EXPORTS

California-based Green Technology Solutions Inc has entered into a joint venture agreement with Rare Earth Exporters of Mongolia (REE) ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination the company has said

The vast majority of Chinalsquos rare earths are mined in the countrylsquos Inner Mongolia region which lies along the southern border of the nation of Mongolia Many experts believe that Mongolia contains rare earth deposits that rival those of China

Domestic usage and environmental concerns in China are leading to fewer mining permits fewer exports and rising prices GTSO President and CEO John Shearer said the company formed the joint venture with REE in order to capitalize on these market dynamics ―Stable supplies of rare earths are vital to the security and economy of the US Japan and South Korea Mr Shearer said ―By acquiring mining claims and operations in Mongolia we believe we can help solve the global supply crisis while instituting cleaner mining technology to minimize environmental contamination

According to the joint venture agreement GTSO will contribute the operating capital for the endeavor with REE contributing its knowledge and product development skills as consideration The joint venture plans to convey Mongolian mining products overland to railway for transport to the seaport of Vladivostok Russia in order to avoid shipping through China Destination ports for these mining products are set to include the US Japan and South Korea

Source Green Technology Solutions

ORIGO PARTNERS SEEKS TO RAISE USD60 MILLION THROUGH PREFERENCE SHARES Origo Partners plc an investment company focused on China and Mongolia aims to raise USD60 million to USD80 million via a placing of convertible zero-dividend preference shares to take advantage of newly identified investment opportunities The company feels this route would diversify its sources of funding while minimizing dilution of existing shareholders CEO Chris Rynning has said the fund-raising would provide new and existing investors with an opportunity to participate in Origos success ―The placing will strengthen our balance sheet broaden our shareholder base and enable us to accelerate our strategy of investing in new and existing opportunities in China and Mongolia he said Source StockMarketWirecom

MANAS PETROLEUM ANNOUNCES PUBLIC OFFERING Manas Petroleum Corporation has proposed a public offering of common shares to raise between CAD20000000 and CAD30000000 at a price to be determined near the closing date of the offering which is likely to be in late March or early April It intends to use the net proceeds to fund its exploration and development programs in Mongolia for working capital and general corporate purposes The offering is subject to certain conditions including completion of a due diligence review by the agent the listing of the common shares on the TSX Venture Exchange regulatory approvals and final formal documentation Manas Petroleum is an international oil and gas company with primary focus on exploration and development in South-Eastern Europe Central Asia and in Mongolia where it owns record title to the two Production Sharing Contracts covering Blocks XIII and XIV through its wholly-owned

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

subsidiary DWM Petroleum AG with 26 of the beneficial ownership interest in these blocks held in trust for others Source Manas Petroleum Corp

SILK ROAD MANAGEMENT LAUNCHES MONGOLIACENTRAL ASIA EQUITY INDEXES Silk Road Management a Mongolia and Central Asia-focused investment management firm last month launched the Silk Road Composite Index (SRCI) and the Silk Road Central Asia (SRCA) Index debut benchmarks that include local and international listed companies with assets and operations in Mongolia and Central Asia The Composite Index is represented by 60 companies with over USD100 billion in market capitalization making the region one of the largest frontier markets globally It includes members of both the Silk Road Central Asia Index and the Silk Road Mongolia Index (the recently acquired MonBiz Mongolia Index) and is effectively the largest equity index focused on Eurasian frontier markets The SRCA Index covers 33 companies worth USD66 billion in market capitalization with operations in Central Asia encompassing Kazakhstan Kyrgyzstan Uzbekistan Tajikistan and Turkmenistan The Index is set to become an effective benchmark for global portfolio investors seeking exposure to these frontier markets that are poised to benefit from the growing markets in neighboring large emerging economies including China Russia India and South Korea The Silk Road Mongolia Index (SRMI) tracks the share price performance of 30 local and international listed companies with assets and operations in Mongolia with a total market capitalization of USD34 billion Mongolia-focused companies represent 33 of SRCIs market capitalization SRMI gained 31 in 2010

Source Silk Road Management

XACBANK APPOINTS NEW VP OF BUSINESS BANKING ХacBank one of the top 5 banks in Mongolia with an award winning corporate governance and corporate social responsibility program has appointed Tim OlsquoNeill as Vice President of Business Banking Mr ONeilllsquos latest job was as Deputy Project Director and Senior Financial Markets Advisor on the USAID Mongolia Economic Policy Reform and Competitiveness Project (EPRC) from 2005 through 2010 providing support to the Mongolian financial services industry to increase access to finance for SME and lower and middle income families XacBank Chief Executive Bat-Ochir said Mr OlsquoNeilllsquos ―considerable experience and expertise will benefit the Bank greatly as it aims ―to become the leading provider of business banking Mr OlsquoNeill says the Mongolian economy ―is going through considerable change and he is convinced that XacBank is ―uniquely placed to offer the best value-added banking services to businesses that are becoming the backbones of the countrylsquos economy Source XacBank

ANOD BANK CASE FILE SENT TO PROSECUTORrsquoS OFFICE The National Investigation Bureau (NIB) has submitted a 117-page file on the Anod Bank Case to the Prosecutorlsquos Office NIBlsquos Economic Crimes Department began investigations in early December 2008 in a criminal case against senior functionaries of the bank including CEO DEnkhtur Chairman of Governing Board EGur-Aranz Governing Board member NDavaa and Human Resource Manager LUlambayar Some officials of the Central Bank and of the Financial Regulatory Authority have also been probed

Source UB Post

MCS HOLDING NAMED ORGANIZATION WITH BEST MANAGEMENT MCS Holding has been named the Organization with the Best Management in the country in 2010 by the Mongolian Management Association Apart from selecting several such awardees every year the Association also popularizes modern management concepts through meetings and seminars and helps business organizations develop their management capacity in various ways It recently organized a seminar on Management Capacity of Business Organizations in cooperation with the Academy of Public Management the Mongolian National Chamber of Commerce and Industry the Development Center for Company Development and Mongolian Tax Administration Golomt Bank Mobicom Corporation and UB Railway JV Participants noted how Mongolia has raised its ranking in the Forbes list of business favorable countries and said this was largely because of more efficient management practices in business organizations Source Udriin Sonin

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

MAK CHAIRMAN NYAMTAISHIR LISTS 3 RULES OF SUCCESS Mr BNyamtaishir Chairman of the Policy Committee and President of Mongolyn Alt Company or MAK feels success in mining depends on ―sticking to environmentally sound mining techniques right from the exploration stage choice of the best and most apt equipment regardless of initial cost and use of competent and committed human resources Even with substantial diversification in mind Mr Nyamtaishir does not plan to raise funds at the global capital market ―There are many other ways he says adding ―We are not in favor of involving the public in risks Opposing the decision to distribute cash allowances to every citizen he says it is ―imperative for our small population to abandon the mindset of socialist times and expect free food on the table When the need is for everybody to understand that one has to work hard to improve onelsquos life in a competitive society politicians have started talking about the socialist equality system and promising cash This is very dangerous The matter of distributing shares is more complex and needs to be considered carefully ―if we are not to repeat our experience of keeping blue and pink pieces of paper in the safe that we soon forgot about― As Mongolians have little understanding of how best to use shares and such market securities holding on to shares could turn out to be unprofitable Regretting that not one power station has been constructed in the last 20 years Mr Nyamtaishir says Mongolia has abundant brown coal used to generate power― but the state has failed to make use of this advantage This has to change as industries cannot develop without electricity and infrastructure Source The Mongolian Mining Journal

MIH GROUP AND CHINESE CONSTRUCTION ENTITY FORM JOINT VENTURE NFC of China and Mongolialsquos MIH Group have jointly established the Industrial Construction Corporation to work in mining and construction NFC successfully built Tumurtiin-Ovoo zinc factory in Sukhbaatar province while the MIH Group is one of the fastest growing companies of Mongolia It is active in the construction construction material insurance and financing services and geology sectors and has so far built two construction material factories A sister concern of the Group Bolo LLC is taking part in Oyu Tolgoi construction

Source Newsmn

BHP RIO TINTO INVESTORS REPORTED TO WANT CASH NOT DEALS Investors have written to BHP Billiton and Rio Tinto to say the miners should ditch ambitions for mega deals in favor of multi-billion pound share buyback schemes The Sunday Telegraph reported The British newspaper said shareholders whom it did not name have asked for commitments from the groups boards that they use their strong balance sheets to return cash to investors It said the investors have moved to pre-empt another spate of deals in the mining sector that analysts and investment bankers have predicted The paper said some shareholders have told the companies they were prepared to vote down the re-election of key board members if they did not agree to the commitments Over the last five years BHP has returned USD257 billion to shareholders in dividends and buybacks Source Mining Weekly

PEABODY ENERGY REPORT HIGHER EARNINGS Y-O-Y Top US coal producer Peabody Energy reported fourth-quarter income of USD2157 million from continuing operations compared with USD1135 million a year earlier helped by higher coal prices For the full year in 2010 the company reported earnings before interest tax depreciation and amortization (ebitda) of USD182 billion an increase of 41 over 2009 while revenue rose to a record USD686 billion Peabody expects to report earnings before interest tax depreciation and amortization of between USD325 million and USD425 million in the first quarter excluding the impact of foreign tax remeasurement For the full year in 2011 the company is targeting total sales of 245 million to 265 million tons Source Mining Weekly

SHARP JUMP IN LOUIS VUITTON PROFIT AND SALES LVMH Moeumlt Hennessy Louis Vuitton posted a sharp jump in 2010 profit and sales a clear sign that global demand for high-fashion expensive watches and other luxury goods is strong again including

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

in the still-ailing economies of the US and Europe LVMH which has a store in Ulaanbaatar said profit rose 73 to USD413 billion last year Source The Wall Street Journal Asia

ROSNEFT NET PROFITS RISE 83 Russias largest oil producer OAO Rosneft which sells Mongolia almost all its oil has said its fourth-quarter net profit rose 83 from a year earlier on higher oil prices and greater crude oil production London-listed Rosneft said net profit rose to USD306 billion from USD167 billion in the fourth quarter of 2009 The companys capital spending will increase by 24 this year to about USD11 billion this year It will spend USD26 billion to increase production at the Vankor field and about USD21 billion on refinery upgrades Rosneft also expects to raise oil production around 1 this year from a daily average of 232 million barrels last year Source The Wall Street Journal Asia

INNER MONGOLIA NOW LARGEST PRODUCER OF RAW COAL IN CHINA In 2010 the Inner Mongolia Autonomous Region produced 78665 million tons of raw coal 46 million tons more than Shanxi Province the largest producer of raw coal in China in 2009 The Coal Industry Bureau of Inner Mongolia has reported that in 2010 the output of raw coal there increased by 170 million tons representing a 278 percent year-on-year growth Source Peoples Daily Online

ECONOMY

IMF WANTS QUICK CURB ON IMPRUDENT FISCAL SPENDING A statement issued by an International Monetary Fund (IMF) mission after a visit to Mongolia says that the country ―is in the midst of a robust economic recovery and growth this year is projected to top 10 percent but warns that ―the large increase in fiscal spending this year will actually do more economic harm than good The IMF team held talks with Mongolian authorities the private sector and academics on macroeconomic developments and policies since Mongolias successful completion of the Stand-By Arrangement (SBA) last year The statement calls the current fiscal policy ―highly expansionary and warns that the economy is showing ―signs of overheating with inflation already too high and likely to reach 20 percent before the end of the year It says ―The Government expenditure already amounts to nearly two-thirds of the non-mineral economy and the 35 percent spending increase in this years budget will generate much more demand than can plausibly be met by an increase in domestic production As a result any immediate benefits of higher spending will be dissipated through higher inflation faster real exchange rate appreciation that draws in imports and hurts local producers and ultimately a crowding out of private sector activity International experience also shows that such high inflation -- particularly given its concentration in staple food items -- will have an especially hard impact on the poor It says unequivocally and bluntly ―The 2011 budget should be amended to reduce spending substantially Asserting that ―there are limits to what monetary policy can achieve if budget spending this year is not scaled back the IMF team feels that nonetheless the Central Bank should be ―more proactive in fighting inflation and promptly initiate a tightening cycle starting with an up-front hike in interest rates The central bank policy rate is already negative in real terms and will become even more so as inflation rises Read morehellip It feels the flexible exchange rate regime ―has been working well and is ―well suited for the Mongolian economy which ―has a bright future as development of the mineral sector will lead to a substantial growth and an opportunity to spread prosperity to all Mongolian citizens Such prosperity however is not guaranteed and will require structural reforms -- with a top priority being introduction of a targeted poverty benefit-and disciplined macroeconomic policies These include (i) containing fiscal spending pressures and strictly adhering to the fiscal stability law (ii) gearing monetary policy toward containing inflation including by timely adjusting interest rates in line with the evolving price pressures (iii) maintaining a flexible exchange rate regime and (iv) safeguarding the banking system through prudential regulation and supervision Pursuing such a combination of policies would leave Mongolia well poised to ensure that its mineral wealth translates into strong sustained and equitable growth

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Source Montsame

TWO MONGOLIAN BIDS AMONG 17 REPORTEDLY RECEIVED FOR TAVAN TOLGOI Resource-hungry Asian private and state-linked firms scrambling for raw materials to produce steel are locking horns with the worlds top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi the worlds largest untapped coking coal deposit No official list has been issued by the Government of Mongolia which on January 31 closed proposals to develop the deposit but it is believed the following are in the race The composition of some of the consortia is uncertain

1 ArcelorMittal SA registered in Luxemburg 2 Vale of Brazil 3 Xstrata of Australia 4 Peabody Energy of the USA 5 State-run Korea Resources Corp consortium formed of nine Korean firms 6 Shenhua Energy of China and Mitsui Corporation of Japan

7 Mongolian Gold of Mongolia

8 E-Tai Group of Inner Mongolia China

9 EN+ Group of Russia

10 Signum Industrial

11 Fortescue Metal of Australia

12 Russian Railways and North Ural Energy Company of Russia

13 Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan

14 Mesco Steel Ltd of India

15 International Coal Venture Ltd consortium of India

16 Mongolian Roads Consortium of Mongolia

17 Erdos Chenglon Group of China

The government plans to keep ownership of the mine estimated to house a total 64 billion tons of coal reserves and give strategic investors a chance to develop its western block on a contract basis The Mongolian Government will now review these initial proposals and will decide which are qualified to proceed before launching the official bidding process The proposals must also include offers of an upfront payment to win the deal said Mr ChBaatbayar a senior official at Erdenes MGL the government entity that owns the mine

The auction faces uncertainty as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea Japan and Russia as well as mining giants such as BHP Vale Indias Jindal and China Shenhua Energy But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine

Source Reuters Mongolian media

CENTRAL BANK THINKS INFLATION WILL BE BELOW WORLD BANK PREDICTION The Central Bank Deputy Governor Mr NZoljargal has disagreed with a World Bank survey prediction that inflation in Mongolia could reach 25 in 2011 The Central Bank feels inflation can be kept below 10 percent but Mr Zoljargal said no one could be certain about the ultimate impact on the Mongolian economy of substantial cash allocation to citizens and of global price rise However he discounted the World Banklsquos prediction and did not foresee inflation going beyond 20 The Central Bank feels that 2010 was ―a very good year with clear signs of recovery from the economic crisis Money supply rose by 62 foreign currency reserves reached USD2 billion and the USD flow into the market exceeded MNT one billion The Bank will consider reducing interest rates but Mr Zoljargal thinks it unlikely that it will be brought down under 10 as the goal is to keep money supply below 40 Source Newsmn

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

GOVERNMENT ADVISED TO SELL BONDS LOCALLY A recent meeting of the Financial Stability Committee concluded that the best way for the Government to secure capital would be to sell medium- and long-term bonds locally instead of going to the international market This will help mop up funds accumulated in domestic commercial banks and have the added benefit of easing the pressure of foreign debts and will ensure economic growth The Central Bank will help the Ministry of Finance to prepare for the bonds issue The meeting called for closer coordination among the Ministry of Finance the Central Bank and the Financial Regulatory Authority (FRA) to facilitate correspondence between monetary and fiscal policies and to plan more efficient ways of financing major infrastructure projects A joint working group was set up to recommend how this can be done The National Development and Innovation Committee will also be represented in the group to help formulate a proper macro-economic policy The Central Bank and the FRA would from now on monitor the financial activities of non-banking financial organizations to enforce provisions of the law against money laundering and terrorism financing The meeting was attended by among others Central Bank President LPurevdorj Minister for Finance SBayartsogt FRA Chief DBayarsaikhan Chief of Monetary Policy and Research Board DBoldbaatar and Chief of the Economic Policy Board of the Ministry of Finance BBatbayar

Source Udriin Sonin Ardiin Erkh

INCOME FROM MINERALS EXPORTS LIKELY TO EXCEED ESTIMATED MNT600 BILLION There is every reason to feel optimistic that the Government will earn considerably more than the estimated MNT600 billion from export of mineral resources in 2011 The General Budget was prepared on the basis that the global price of gold will be USD1250 per ounce and that of copper USD8425 per ton Both have so far fetched higher prices and the trend is likely to continue Source Zuunii Medee

MINERS HOPE TO EXPORT 30 MILLION TONS OF COAL In 2010 Mongolia earned more from its export of 18 million tons of coal than it did from selling copper concentrate This yearlsquos target for miners is 30 million tons of coal and to that end the Mongolian Coal Association recently concluded a cooperation agreement with the Tianjin Coal Union in China to enable Mongolian coal companies to sell to southern Chinese provinces This followed a recent visit to Tianjin port by a Mongolian coal mining team which held talks with officials of the port on several issues relating to transportation processing of payments and fixing coal price in line with world standards Apart from representatives of the coal association those who participated in the talks included officials from the Ulaanbaatar Representative Office in Tianjin and from the Ministry of Mineral Resources and Energy the Mineral Resources Authority Energy Resources LLC Tavan Tolgoi LC Erdenes MGL LLC MAK LLC Shariin Gol LLC Hunnu Resources LLC Taliin Gal LLC Ilchit Metal LLC Gan Ilch LLC and Sojitsu LLC

Source Undesnii Shuudan

MONGOLIA 4TH LARGEST COAL EXPORTER TO CHINA China imported 16483 million tons of coal in 2010 up 3099 percent on the previous year and coal exports declined 1503 percent for the same period to 1903 million tons The National Development and Reform Commission said Indonesia was the largest coal exporter to China followed by Australia Vietnam Mongolia and Russia The five accounted for 84 percent of the nations coal imports Last years coal net imports stood at 1458 million tons up 4237 million tons or 29 percent from the previous year Citibank predicts Chinas net coal imports will surge to 63 percent this year to over 200 million tons due to the nations strong demand and high dependence on coal as energy

Source Xinhuanet

GOLDMAN SACHS SEES AUSTRALIAN FLOODS BOOSTING DEMAND FOR MONGOLIAN COAL Goldman Sachs believes extensive flooding in Queensland may curb Australian coking coal exports (Australia is the largest exporter of coking coal in the world) and boost demand for alternative sources of coking coal including Mongolian Goldman also raised its 2011 global coking coal price forecasts by 11 to USD254ton (from USD229MT) on weaker production from Australia

Source CPS Securities

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

REVENUE FROM CRUDE EXPORT WAS MNT572 BILLION LAST YEAR Reporting on the sector to the Standing Committee on the Economy the Chief of the Petroleum Authority Mr JAmarsaikhan said on Tuesday that 25 fields have been identified for oil exploration and product sharing agreements have been signed for 18 of them until the end of last month ―Of the 13 companies working in oil exploration and production 33 are Mongolian 39 Chinese and the remaining 28 are from other countries― he said

A million tons of oil has been produced since 1998 and 975600 tons of this has been exported to China The state budget has so far earned MNT1441 billion from sale of crude and other oil-related sources In 2010 295100 tons of oil was exported for MNT572 billion This was 18 times more than in 2008

Mongolia imports all the petroleum it uses The import figures for 2008 2009 and 2010 were respectively 884100 tons 779600 tons and 886400 tons Russia was the source for 982 of this last year while 1 came from China and 08 from South Korea With growing industrial demand it is estimated that Mongolian consumption will increase to 1200000 tons in 2015

Source EnglishNewsmn

STRATEGIC PARTNERSHIP A BOOST FOR MSE AND A COUP FOR LSE The exclusive Strategic Partnership Agreement signed between the London Stock Exchange Group (LSE) and the Mongolian State Property Committee (SPC) to restructure and develop the Mongolian Stock Exchange (MSE) is an important milestone in the development of the Mongolian securities market with long term positive impact According to the agreement LSE will appoint a management team to oversee MSE development and privatization and will provide trading and surveillance infrastructure The MSE is expected to go through a comprehensive reform and upgrade as LSE plans to be involved from advisory and training on capital markets infrastructure and legislative framework modernisation of market rules and operations to expansion of tradable asset classes (derivatives and ETFs) and introduction of international standard Mongolian market index Both LSE and MSE will benefit from this partnership Under LSE management MSE should become an effective source of capital for Mongolia companies and widen opportunities for local and international investors with expected IPOs and increased market size At the same time with its expertise and technology LSE will gain access to the resource-rich frontier market and should be able to compete effectively with large regional stock exchanges such as the Hong Kong Stock Exchange (HKEx) especially for international IPOs and dual listings of major Mongolian state-owned enterprises (SOEs) most importantly Erdenes Tavan Tolgoi This partnership increases LSEs chances to become a strategic shareholder when the Mongolian government proceeds with the MSE privatization The partnership will help MSE become one of the best performing stock markets in 2011 and beyond following its impressive performance in 2010 Such outperformance over the next several years would be based on the expectation that LSE would be able to assist in unlocking the huge potential of the Mongolia capital markets -- valuation rerating boost in liquidity improvement in corporate governance stronger pipeline of IPOs and equity offerings as well as dual listings by international listed companies with operations in Mongolia Major IPOs by the Mongolian SOEs and large private sector companies coupled with possible dual listings by Mongolia-focused international listed companies with their current USD33-billion in market capitalization may catapult MSE into one of the largest frontier markets globally in the next 4-5 years Read more This partnership should accelerate the process of MSE becoming a viable source of capital for Mongolian companies and an efficient channel for wealth distribution from mineral resources among the Mongolian population Over the longer term LSE may assist MSE to become a regional hub for capital raising by resource companies attracting listings from neighboring countries We expect Mongolia to emerge firmly on the map of international investors and join the MSCI frontier market index perhaps as early as this year We reiterate our key recommendation for investors to gain exposure to the Mongolian local equities as Mongolia is still in the early stage of its 2010-2020 period of the world beating economic growth Source Eurasia Capital

MONGOLIAN YAK BUTTER FUTURES ANYONE The London Stock Exchange has agreed a ―strategic partnership with the Mongolian Stock Exchange The what Does the LSE really share any strategic interests with a tiny stock exchange on the outer fringes of the world ndash- one established only in 1991 Actually yes

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

The LSE is together with the Canadian exchanges operated by TMX Group the biggest home to mining and energy company listings in the world And Mongolia has vast untapped reserves of coal copper and gold as investors and prospectors are realizing Mongolia is the latest frontier market du jour Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building a variety of infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project of the technocratic government The prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the Mongolian Stock Exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange The Mongolian government foresees a wave of capital inflows that is has no capacity to cope with unless it starts building now That includes a stock exchange that by global standards is third-rate today although it does already have 358 company listings according to Mondo Visione which tracks these things Read more D Sugar chairman of the Mongolian State Property Committee which owns the Mongolian bourse said the London exchange would help create ―a new capital markets infrastructure worthy of Mongolialsquos increasing significance on the world stage The agreement provides for the usual technical assistance and advice But it also stipulates interestingly that the LSE will ―appoint a management team at the Mongolian Stock Exchange to oversee its development and privatization Millennium IT the Sri Lankan company that the LSE bought in 2009 is to provide trading technology and surveillance systems So this looks quite involved In future it may not be far-fetched to see the Mongolian exchange trading in securities of Rio Tinto the mining giant that is building a vast new copper mine in the country as well as the many smaller miners who see Mongolia as the ―next great frontier of the industry And for the LSE the obvious long-term goal is to attract Mongolian energy and mining companies to list in London The LSE already has one Mongolian company listing Petro Matad an oil and gas explorer which listed on LSElsquos AIM in May 2008 Can it be long before we see yurts erected in Paternoster Square

Source The Financial Times

MONGOLIArsquoS PINK HOUSE OF EQUITIES The worldlsquos best-performing stock market last year was of course in an emerging economy But rather than a steel-and-glass tower rising above a heaving megalopolis it was in a cheerful pink former childrenlsquos cinema in Ulan Bator This is the Mongolian Stock Exchange where share prices climbed 121 percent in local currency terms in 2010 and have jumped another 50 percent this year The exchange has 340 or so listed companies 45 brokers and sees turnover of about USD200000 on a fast day Mongolia itself has vast untapped reserves of coal copper and gold and because the exchange is open to foreign investment ndash- unlike those in neighboring China ndash- the Soviet-styled cinema house has become a focal point for investors betting that Chinalsquos growth will continue to fuel a commodities supercycle throughout the region Total capitalization is now USD14 billionmdashor roughly one-fifth of Mongolialsquos GDP Driving this growth has been an inflow of new capital say investors primarily from foreign funds that are looking to increase their exposure to the Mongolia story ―Welsquove been getting a lot of orders over the last month from our clients and pushing [the exchange] up says Mr Lee Cashell chairman of Asia Pacific Investment Partners a Mongolia-focused investment group Because of the small volumes on the exchange ―when you get up to a million USD you can really move the market So is Ulaanbaatar the next big bubble Not according to Mr Cashell ―Itlsquos not that the stock market is a bubble itlsquos more that there is a bottleneck there he says citing the lack of new issuance during the last 18 months ―There is not a lot for sale right now because people expect that prices will continue to go up this year he explains Anticipating enormous copper and gold revenues over the next decade the Mongolian state is building infrastructure to cope with rising investment While this includes physical infrastructure in the form of roads and railways financial infrastructure is also an important project for the technocratic government Mongolialsquos prime minister has over the past year repeatedly stressed the need to deepen the capitalization of the stock exchange in part through privatizing state-owned assets and listing them on both the Hong Kong and the Mongolian exchange Read morehellip

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Mr Sardor Koshnazarov head of research for Eurasia Capital says ―Fresh capital and new investors both institutional and individuals are coming into the Mongolia equities markets we will not be surprised if Mongolia keeps its title [as best performing stock market] for the whole year again According to some analysts foreign investment accounts for between 10 and 30 per cent of the value of the exchange The exchange could be getting an overhaul soon thanks to a partnership agreement with the London Stock Exchange In Ulaanbaatar traders are already buzzing about the idea of a 24-hour exchange linked with London traders that could boost liquidity in the market But for now the pink house seems to be doing just fine

Source The Financial Times blog

LONDON STOCK EXCHANGE TO MERGE WITH CANADArsquoS TMX The London Stock Exchange (LSE) which recently took over responsibility for restructuring the Mongolian Stock Exchange has agreed to a merger with TMX Group which operates the Toronto Stock Exchange The merged group would be co-headquartered in London and Toronto and would become the worlds largest exchange for mining companies The group would have a combined value of about pound55 billion More than 6700 companies will be listed on the combined exchanges with a market capitalization of about USD59 trillion the firms said These are arguably two of the most important mining exchanges in the world Mr Douglas Porter at BMO Capital Markets has said Of course some of the worlds biggest mining companies are on the LSE and some of the worlds biggest gold companies and hundreds if not thousands of smaller mining companies are in the TMX Group So certainly it brings together some of the most important mining groups in the world under one broad umbrella

Source BBC News

INVESTMENT BANKS VIE TO WIN MANDATE FOR TAVAN TOLGOI IPO Itlsquos one of the hottest prizes in investment banking in Asia this year the initial public offering of Erdenes Tavan Tolgoi a Mongolian state company that owns a vast coal deposit in the Gobi Desert On Thursday the Mongolian government started formal interviews with many of the 18 banks ndash including Goldman Sachs UBS and Deutsche Bank ndash that are fighting for a role in the IPO expected to take place in Hong Kong or London in 2012 Competition for the deal is fierce So which banks are in prime position to win the mandate With so many groups in the running ndash rumored to include Citigroup JPMorgan Morgan Stanley Merrill Lynch BNP Paribas and ING as well as the three banks mentioned above ndash the answer is far from clear According to one source the Mongolian government is struggling to cope with the number of pitches it has received or even understand the financial intricacies of the proposals ndash leaving the playing field wide open Whatever the case dealmakers reckon the government may end up mandating as many as five or six banks for the IPO which would be consistent with many recent Hong Kong deals Of course appointing lots of banks to the deal team wonlsquot put an end to the competition Then comes the tricky decision of which bank is in charge Read morehellip Some suggest that Morgan Stanley may have an edge because the son of Mr S Batbold Mongolialsquos Prime Minister works for the company (as an analyst in Chicago) Then there is the fact that John Mack Morgan Stanley chairman visited Ulaanbaatar last autumn and met Mr Batbold Others reckon that JPMorgan and Deutsche Bank are in a good position since both banks were hired by the Mongolian government for its original plan ndash now scrapped ndash to sell as much as 49 per cent of the Tavan Tolgoi coal deposit to a foreign bidder JPMorgan and Citigroup can also tout the fact that they arranged the Hong Kong IPO of Mongolia Mining Corp in October MMC Mongolialsquos largest privately held producer of coking coal raised about USD700 million in the deal Insiders feel Goldman Sachs and UBS have positioned themselves well with the Mongolian officials Source The Financial Times blog

BANKS PITCHING FOR TAVAN TOLGOI PRIVATIZATION More than 20 of the worlds biggest investment banks are now pitching for roles in a potential USD8-billion London listing of Tavan Tolgoi Bankers from HSBC Deutsche Credit Suisse Citi and Macquarie are among those who have submitted written proposals for the privatization of the deposit Face-to-face presentations are taking place between February 10 and 15 in Ulaanbaatar This is a fantastic high-quality metallurgical coal asset for the steel industry said one banker The issue is infrastructure to get the coal out of the landlocked country

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Banks have submitted options to list the coal group in either Hong Kong or London Some are likely to have suggested a dual listing perhaps with London -ndash the financial capital of world mining -ndash trading the bulk of the shares Up to six banks are expected to win roles on the flotation The Mongolian government prepared for a listing in December when it added Mr Peter Bacchus one of minings elite dealmakers as an advisor The Morgan Stanley mining boss is currently on leave before joining Jefferies as head of European investment banking later this year A listing is expected to take place by the first half of next year Up to 25 per cent of the coal groups shares will be listed raising up to USD2 billion and valuing Tavan Tolgoi between USD5 billion and USD8 billion The mines name means five heads referring to the number of small hills on the landscape around the 6 billion tons of coal Source The Independent

TAVAN TOLGOI IPO INEXTRICABLY LINKED WITH SALE OF CONCESSION Mongolian officials are sitting down with bankers in the coming days to discuss the multibillion-dollar sale of shares in the worlds largest coking coal deposit said people familiar with the matter Mongolia plans to sell about half of state-owned holding company Erdenes-Tavan Tolgoi Co which controls the massive deposit located in the South Gobi desert near Chinas northern border The initial public offering would value the holding company between USD10 billion and USD15 billion said one of the people familiar with the matter The bankers meeting with Mongolian officials this weekend and early next week are hoping the complicated deal doesnt get mired in a political quagmire The sale of Mongolias resources is fraught with tension as the impoverished nation struggles to balance selling its resources while staying independent of its larger more powerful neighbors China and Russia Chinas voracious appetite for commodities gives neighboring Mongolia a ready-made nearby market for its exports though other countries in the region also are eager to gain access to its natural resources Coking coal from Tavan Tolgoi is particularly sought after because it is considered of high quality for use in making steel The IPO of Erdenes-TT as it is known is inextricably linked with the sale of a concession to develop half of the deposit for a set period Competing bidders for the license come from China Russia Japan India South Korea and elsewhere The holding company is likely to receive royalties from the concession operator Read morehellip The bankers who are officially mandated to sell the shares plan to sell 30 of Erdenes TT to international investors 10 to domestic professional investors and give 10 free to Mongolian citizens The domestic share sale could take place later this year followed by the international share sale early in 2012 the person said But many details of the deal remain uncertain which makes bankers nervous Mongolia still has to award the license to develop roughly half the deposit A preferred bidder may be named in the coming weeks and finalized over the next six months the person said Chinas Shenhua Group and Peabody Energy Corp of the US are among the leading contenders said another person familiar with the matter Its unclear how the coking coal from the estimated 64 billion metric tons of reserves will be exported from the land-locked nation as railroad links directly from the mines into Russia and China have yet to be completed Bankers also find the prospect of distributing shares in the worlds most sparsely populated nation a daunting prospect A large percentage of Mongolias 27 million population is nomadic Its also unclear on which exchange the 30 of shares will be sold Coking-coal producer Mongolia Mining Corp chose to go public in Hong Kong in October and raised USD7452 million That deal was managed by Citigroup Inc and JP Morgan Chase amp Co One banker said news that the stock markets of London and Toronto are in advanced talks to merge would give them an edge over Hong Kong as a destination The London-Toronto combination would produce a mining- and resource-exchange giant that would rank No 2 globally in terms of the value of the companies traded Also London also has a strategic partnership with the tiny Mongolian stock exchange

Source The Wall Street Journal Asia

INDIAN FIRM IN TALKS TO SET UP STEEL PLANT IN MONGOLIA State-run Steel Authority of India Ltd SAIL is in talks to set up a 3 million-ton steel plant in Mongolia with an investment of at least USD300 million ―Besides the bid for Tavan Tolgoi we are also simultaneously interacting with the Mongolian government and have offered to set up a 3-million

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

ton steel plant as a separate project said its chairman ―The government will have to provide land iron and coking coal for the plant and we will make the overall investment

Source Hindustan Times

KH ALTAI NAMED MSE EXECUTIVE DIRECTOR Mr Kh Altai who joined the Mongolian Stock Exchange as First Deputy Executive Director in February 2010 has been named its Acting Executive Director He has a degree in law and was Government Liaison Officer for Boroo Gold and Personal Aide to the Prime Minister Source Mongolian Stock Exchange

MONGOLIA TO START URANIUM EXPLORATION NEXT YEAR Prime Minister S Batbold has told Parliament that Mongolia plans to commence uranium exploration by 2012 ―With nearly one million tons of reasonably assured reserve of uranium we need to speed up production to make uranium the most ambitious mining project in Mongolia after Oyu Tolgoi and Tavan Tolgoi he said The reserves of the Mardai deposit in Dornod and in Kharaat in Dundgobi have been established and feasibility studies for them are under way ―Exploration will start by 2012 and Mongolia will begin selling uranium from 2013 or 2014 Mr Batbold said ―As regards nuclear energy production there is a lot to do and we are proceeding step by step Altogether 107 prospecting licenses have been granted to 17 entities and their work is being strictly monitored by the Government pursuant to the Nuclear Energy Law of Mongolia Speaking after the Prime Ministerlsquos report some MPs criticized the Government and related agencies for their failure to decide on making the projected fifth power plant a nuclear one The Nuclear Energy Agency has tentative plans for developing nuclear power using either Korean Smart reactors or Toshiba 4S types from 2021 Three sites under consideration are Ulaanbaatar western Mongolia and Dornod province

Source UB Post

MONGOLIA HAS ONE MILLION TONS OF ZINC Mongolia has confirmed reserves of one million tons of zinc and annually exports 50000 tons of zinc concentrate which is 042 of the world production

Source Newsmn

NEW NORMS PROMISED FOR POST-MINING RECLAMATION Mr DEnkhbat recently left a university teaching job to take charge of the Department of Environment and Natural Resources in the Ministry of Environment and Tourism He promises ―to put things in order after they have been neglected for the last 15-20 years and to adopt methods practiced ―in countries which truly care for the environment Mr Enkhbat feels the ―entire reclamation methodology and standards (in Mongolia) are outdated but it is ―not too late to shift to the right principles as the really big mining is just starting to develop Equal emphasis has to be given to the two aspects of reclamation technical and biological What mining companies do in Mongolia is that they fill up the mined pit and scatter seeds hoping long-life plants bushes and trees will grow from seeds on a thin layer of soil That is not the way of true reclamation as there is no relationship of cooperation between the soil and what grows in it A detailed analysis of the soil has to be made first and then appropriate reclamation techniques followed Mongolians take the soil and the plants separately and then bring them together ignoring the fact that soil characteristics completely change following mining In this connection he says Boroo Gold used seeds from the USA in its reclamation work ―but we shall not allow introduction of foreign species Read morehellip Since proper procedures were not in place and strict enforcement was also missing many areas have been destroyed with no one to be charged now ―We should ensure compliance from major mining companies from this very moment if these past mistakes are not to be repeated Mr Enkhbat said Future reclamation can be successful ―only if procedures are followed right from the beginning when mining production starts to the time when mine closure is determined Also different types of production cannot have one reclamation standard Each individual practice will need its own standards and compliances he said ―We have been careless about the larger principles while insisting on small details All this will change Source The Mongolian Mining Journal

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

PLAN TO PRODUCE ORGANIC FOOD FOR EXPORT The Ministry of Food Agriculture and Light Industry plans to expand the scope of the Atar III program adopted during the prime ministership of Mr S Bayar and carried on to bigger success under his successor Mr S Batbold Meeting domestic demand to reduce dependence on import and assuring national food security remain the primary goals of the program but the Ministry also feels that proper training and motivation of farmers and use of progressive techniques can help produce enough organic food to be sold in the ever increasing organic food market all over the world The Ministry is setting up guidelines and regulations to ensure product quality and hygienic guarantees It will also have to arrange for finance and supportive legislation

Source Udriin Sonin

MONGOLIA ABOVE CHINA RUSSIA IN FAVORABLE BUSINESS CLIMATE LIST Mongolia has been ranked 68th among 129 countries in the latest Forbes Magazine list of countries according to how favorable their business is Denmark topped the list for the third year in a row followed by Hong Kong New Zealand Canada and Singapore The second best country for business in 2009 the USA stepped backwards to 9th place Interestingly GDP growth of all the top 10 countries was in the negative thanks to the global recession On the other hand some of the countries which saw fast growth in their GDP are languishing quite low India is ranked at 77th China 90th and Russia 97th

Source Onoodor

PM STRESSES IMPORTANCE OF PROPER BUSINESS MANAGEMENT Inaugurating the first national conference of management in business organizations Prime Minister SBatbold recently underlined the importance of proper management practices in developing any business and urged companies to formulate prudent management plans and to follow them with care The conference was organized jointly by the Government and the National Chamber of Trade and Industry Several speakers representing leading economic entities referred to how the present taxation policy and continued control and interference by state organizations force businesses to deviate from proper and effective management capacity

Source Newsmn

POWER STATIONS OWE MONEY TO COAL SUPPLIERS State-owned coal producers continue to suffer from non-payment of dues by power stations Some power stations cleared up to 70 of their last yearlsquos dues in January but one in Darkhan-Uul province owes its coal suppliers MNT48 million and another in Erdenet MNT58 million Source Zuunii Medee

NOTICE SENT TO MINERS FAILING IN ENVIRONMENTAL REHABILITATION A survey by the Ministry of Nature Environment and Tourism and related organizations reveals that 81 sites covering over 2100 hectares in 15 provinces were not rehabilitated in 2010 by mining companies following exploitation Action will be taken against the offending entities Minister LGansukh assured media adding that official notice has already been sent to them He also said entities that renege on environmental commitments would be blacklisted and not granted any fresh exploitation license These figures do not include the damage done by illegal gold diggers activities which would substantially increase the extent of devastation Source Newsmn

CRACKDOWN ON ILLEGAL GOLD MINING Mongolian authorities have taken steps to stop illegal gold mining operations in an eastern province Two illegal gold miners popularly called ninja miners were detained by police in Batshireet soum of Khentii province for allegedly extracting gold in a mining companys exploration areas according to the reports Police also seized a large amount of dirt with gold ore transported from the area by ninja miners and confiscated eight vehicles The provincial police force worked with local officials in the investigation interrogating 54 local residents over six days regarding illegal gold mining activities Ninja miners are unlicensed individuals who look for gold mainly in abandoned gold fields and unauthorized locations Many are unemployed youths students and impoverished herders Some reports said there are as many as

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

100000 ninja miners throughout Mongolia A bill to regulate ninja mining activities is pending in the Mongolian Parliament

Source Xinhua

JOURNALISTS LEARN ABOUT ERDENES TAVANTOLGOI SHARE ISSUE Officials from the State Property Committee the Erdenes Tavantolgoi LLC the Mongolian Stock Exchange the Erdenes MGL LLC and the Center for Bond Payment Accounting and Central Deposit recently interacted with journalists and answered their questions on various aspects of the proposed distribution of shares in the state-owned Erdenes Tavantolgoi to citizens and economic entities The event was organized by the Press Institute as part of the training project for economic journalists planned by USAID The discussions sought to dispel uncertainties and speculation explaining how shares in a company are issued the role of the State Property Committee in this particular case and the policy of the Government and Parliament The participating journalists also received detailed information about how Erdenes Tavantolgoi planned to raise capital how its shares will be registered in the name of all citizens the role of the Mongolian Stock Exchanges in the entire process and its cooperation with the London Stock Exchange Source Ardiin Erkh

MINERS IN CHILE ACCEPT RAISED ROYALTY RATES The Chilean Mining Minister Mr Laurence Golborne has said that all major private mining companies have agreed to a tax hike aimed at funding post-quake reconstruction The companies that adopted the new royalty scheme are expected to extract about 94 percent of the countrys copper output this year Chile is the worldlsquos top copper producer accounting for about a third of the global output The new royalty will generate USD1 billion in additional revenue to the state from 2011-2014 Finance Minister Felipe Larrain told reporters in a joint briefing He added that some of those funds could be used to replenish sovereign funds held abroad by the government The bulk of the additional revenue will be used to fund the reconstruction of cities ravaged by a massive earthquake last year Global miners Anglo American BHP Billiton Xstrata and Freeport-McMoRan have adopted the new royalty scheme The industry initially criticized the royalty hike which links payments to companies margins but experts say the new scheme is unlikely to hit future investment in the mining powerhouse Mining companies in Chile currently pay a royalty of between 4 and 5 percent on operating profits The new scheme initially sets the royalty at 4 percent to 9 percent on a sliding scale and raises this to 5 to 14 percent starting in 2018 The percentage will depend on margins

Source Mining Weekly

ANALYST SAYS WITH COPPER THE DANGER IS MORE TOWARD THE DOWNSIDE Copper prices have risen dramatically on the back of among other things expectations of a supply squeeze in the medium term And while the market is currently in deficit and likely to remain there for at least 2011 there is some concern about whether or not the expected squeeze will be quite as dramatic as investors in the market are expecting Mr Edward Meir senior commodity analyst at MF Global feels ―the danger of any of these price spirals including copper is if you keep ramping up the prices - either through speculative buying or just general investor interest - youre going to inevitably trigger demand instruction or where applicable some product substitution He adds In coppers case we can conceivably see the possibility of the Chinese for example buying much less copper cathode and instead increasing their purchase of scrap or alternatively postponing their purchasesSome manufacturers may start tinkering around with other metal substitutes - for example - aluminum has some substitutes and some copper applications so youre going to definitely get an impact as these prices continue to rise higher By way of example Mr Meir points out that currently Chinas physical market is quite well supplied which indicates that much of the latest increase is really fund and investor-related Asked what he sees happening if the expected supply squeeze doesnt materialize Mr Meir says the result would be a very nasty sell-off Mr Meir believes that prices are likely to be pretty steady in the short term and could push as high as USD11 000 over the course of the year But he cautions markets are quite overbought and the downside should there be a sell-off could take the red metal as low as USD7 500 Source Mineweb

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

INCREASED GLOBAL GDP WILL LEAD TO PRICE RISES IN 2011 SAYS WTO CHIEF Economic recovery will make food metals and other raw materials more expensive in 2011 the head of the World Trade Organization has said Addressing a United Nations conference WTO Director-General Pascal Lamy said the prices of crude oil copper gold corn and soybeans would rise most this year with less pronounced increases in natural gas zinc and cattle 2011 will see the prices of most commodities rise as the rise in global GDP bolsters demand led by emerging economies he said estimating worldwide economic output would increase 4 percent in 2011 Over 70 percent of the growth will come from commodity-intensive emerging markets China India and Latin America in particular will be acting as a pull for global commodities Mr Lamy said Rising commodity prices could be a boon for countries where raw materials are grown mined produced and refined But higher food prices can also pinch the worlds poorest people who spend almost all of their income on basic staples said Mr David Nabarro the UNs special representative on food security and nutrition Rise in agricultural goods prices will have an inflationary effect felt hardest in poorer countries Mr Nabarro said But he urged countries to avoid blocking food exports in response to price spikes or worries about supplies The imposition of export bans though it may make political sense can have a very detrimental impact on markets for coarse grains and other basic foodstuffs he said Mr Supachai Panitchpakdi head of the UN trade and development agency UNCTAD warned that commodity traders and a growing number of investors in agricultural goods were causing speculative distortions in many markets Such volatility makes it hard for governments to budget and plan their spending and makes countries vulnerable to a shock if commodity prices that once filled coffers fall again the former deputy Thai prime minister said UNCTAD remains concerned about the possible lopsided development consequences of undue reliance on the commodity economy in many countries he said Source Mineweb

CHINA IN FRESH INTEREST RATE RISE China has raised benchmark interest rates for the third time since October as Beijing intensifies its battle against stubbornly high inflation The benchmark one-year lending rate will rise 25 basis points to 606 per cent the Peoplelsquos Bank of China said on Tuesday The timing of the increase which came on the final day of the week-long Chinese New Year holiday appeared to be aimed at avoiding unsettling global and domestic markets The previous increase was announced on Christmas Day China is trying to curb rising prices particularly for foodstuffs following a big expansion in the money supply to counteract the effects of the global financial crisis Goldman Sachs forecasts that year-on-year consumer price inflation in China is likely to have risen to 53 per cent in January up from 46 per cent in December Beijing remains nervous about the political impact of inflation although the rise in consumer prices lags far behind average annual wage growth of 10 per cent for the past few years The rate rise was widely expected and most economists expect at least one further increase in coming months along with another rise in the amount of deposits Chinalsquos biggest lenders must hold on reserve with the central bank Raising long-term rates will help lock up deposits in the banking system Source The Financial Times

INFLATION WORRIES SPREAD Inflation jitters are spreading through emerging markets as Chinas central bank raised interest rates for the third time in four months amid worries that a drought threatening the countrys wheat crop will put further pressure on global food prices It was just the latest move by an emerging-market governmentmdashseveral of which are deploying panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity Few emerging-market countries have a firm grip on the inflation problem Just last week Mr John Lipsky the International Monetary Funds No 2 said many emerging economies are running out of excess capacity and yet most of them still have in place the expansionaryhellipmonetary and budgetary policies The cure is clear he said Everybody is going to need to tighten monetary policy reduce budgetary stimulus and continue with the process of structural reforms Further central bank rate hikes in emerging markets are widely anticipated Those expectationsmdashalong with a flood of money fleeing low interest rates in the US Europe and Japanmdashare contributing to upward pressure on emerging-market currencies Several currencies have rallied to

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

multiyear highs Authorities in South Korea and Malaysia recently have intervened in foreign-exchange markets to slow the appreciation of their currencies So far the tightening hasnt hurt Chinas growth much The countrys economy grew by 103 in 2010 although there are some signs that growth is beginning to slow from recent torrid levels With the government reluctant to allow a sharp increase in the value of its currency the yuanmdashwhich would tend to brake the economy and reduce the price of imported goods and thus dampen inflationmdashthe PBOC relies mainly on two anti-inflationary tools interest rates and bank reserve requirements Since the start of last year China has lifted reserve requirements seven times to a level of 19 More increases are expected in coming months Read morehellip Interest rates do play an important symbolic role in China They are an important signal of the governments intentions but do not have a significant practical effect especially when inflation-adjusted lending rates are so low said Mr Eswar Prasad a China scholar at the Brookings Institution in Washington Thats because much lending is done to large state-owned enterprises which arent especially sensitive to changes in interest rates he said and small firms cant get much lending from banks anyway Despite exhortations from the US Europe Brazil and others that it let the yuan move higher faster Chinese officials are reluctant They worry that too rapid a rise could undermine the countrys export sector and be destabilizing The yuan has gained about 35 against the dollar since June Source The Wall Street Journal Asia

YUAN RATE AT RECORD VS DOLLAR Chinas central bank fixed the yuans exchange rate at a record against the dollar Wednesday setting the tone for a rise in Asian currencies as authorities aim to quell rising inflation Central banks in South Korea and Malaysia were again selling their currencies for dollars to keep them from rising too quickly traders said showing authorities are taking care not to damage their export industries Hours after raising interest rates to cool the economy the Peoples Bank of China set its parity rate for the dollar at 65850 yuan compared with the Feb 1 close of 65938 yuan in the over-the-counter market and that days fixing rate of 65860 yuan Chinas markets reopened Wednesday after being closed since last week for Lunar New Year holidays and the currency ended over-the-counter trading unchanged from the Feb 1 level Chinas currency is now up 37 since the PBOC ended the yuans two-year peg to the dollar in mid-June Trading in yuan derivatives offshore show investors now expect the dollar to fall to 642706430 yuan in the coming year compared with the 6449364728 yuan implied by one-year non-deliverable forwards before the Lunar New Year holidays Other Asian currencies which have marked modest gains so far this year continued to rise Wednesday With China playing such a large role in the regions economy other Asian nations watch Beijings foreign-exchange policy closely seeking to ensure that their own currencies dont rise so much that their exporters become uncompetitive

Source The Wall Street Journal Asia

POLITICS PARTY SPLITS MERGERS BODE WELL FOR MONGOLIArsquoS DEMOCRACY The renaming and subsequent split of the governing Mongolian Peoplelsquos Party the merger of the Civil Will Party with the Green Party and current discussions about changes in electoral laws suggest a maturing of the party system in Mongolia which is Asialsquos only post-socialist democracy and also one of the few on the continent In late Fall 2010 the former socialist ruling party the Mongolian Peoplelsquos Revolutionary Party (MPRP) continued its ―transmogrification process by dropping ―Revolutionary from its name to become just MPP Prime Minister S Batbold was among the most prominent supporters of this decision Some party members were opposed and on January 28 2011 they organized themselves into a reborn MPRP headed by former President NEnkhbayar A reconstituted MPRP could weaken the MPP significantly as it might take over some of its strong organization in the countryside and veer towards populism But it may also ideologically refocus both the MPP and MPRP On January 31 2011 two small opposition parties announced their merger into the Civil Will-Green Party Both parties emphasized their proximity to voters without patronage structures They are represented in Parliament by Dr SOyun a former Foreign Minister and sister of the slain

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

democracy leader Zorig and Dr Enkhbat an early Internet entrepreneur The merger might inspire a sharpening of the partylsquos political profile by focusing on anti-corruption measures and giving a voice to ordinary Mongolians Read morehellip Discussions of changes to the electoral system are likely to benefit smaller parties The impetus behind these changes is the unwieldy multi-member plurality system (or block voting) adopted for the 2008 parliamentary election Current proposals focus on a mix of direct and proportional representation While some independent MPs like Drs Oyun and Enkhbat have fared well in direct elections less prominent members of their parties will certainly benefit from the introduction of some elements of proportional representation for the 2012 parliamentary election Depending on decisions about the electoral system this spring the current convulsions could lead to more ideologically defined parties that will contribute to a vibrant public discourse about some of the difficult policy choices that Mongolia faces But changes can also bolster populist tendencies and keep the countrylsquos political class mired in corrupt structures of patronage Source Asia Pacific Memo

ENKHBAYAR ELECTED CHAIRMAN OF NEW PARTY CLAIMING TO BE OLD MPRP Former President and Prime Minister NEnkhbayar has returned to active politics after nearly two years He was recently elected head of the 18th political party in Mongolia at a special conference of its members They have named the party the Mongolian Peoplelsquos Revolutionary Party (MPRP) a name the major partner of the ruling coalition discarded in November to be known as the Mongolian Peoplelsquos Party (MPP) It now remains to be seen if the Supreme Court will allow the name MPRP to be used by the new party all of whose members were in what is now the MPP

Mr Enkhbayar was one of three candidates nominated by conference participants for the chairmanship He received 687 of the 913 votes Delegates at the two-day conference also elected four Secretaries and established a five-member Executive Committee I was never for the name change of the party and the MPP leadership has been against me for this Mr Enkhbayar said I will fight for justice as the party chairman

Mr Enkhbayar who has publicly blamed former Prime Minister SBayar for colluding with other party leaders to ensure his defeat at the hands of Mr Ts Elbegdorj at the last Presidential election has since then made several attempts to come back into the power circle but has always been thwarted by his former colleagues His new move could cause them some worry as many party oldtimers in the provinces have an emotional association with the name MPRP Political observers foresee considerable realignment of political loyalties if the Supreme Court most of whose members were nominated by Mr Enkhbayar when he held power decides to allot the name to the new party The MPP has asserted that the use of its old name by the group would be illegal

Source The Mongolian media

MPP LOSES 269 MEMBERS BUT WELCOMES 14075 NEW ONES MPP leaders have revealed that while 269 members have cancelled their party membership since it changed its name 14075 new members have so far joined it in 2011 indicating wide support for the MPPlsquos policies and activities Asked about the MPRPlsquos announcement that it will observe the 90th anniversary of the founding of the party on the same day that the MPP will Prime Minister S Batbold who is also Chairman of the MPP said that would be breaking the law as the Supreme Courtlsquos official register indicates that the MPP is the legal successor of the MPRP and the law on political parties is clear that the name MPRP cannot be used again by any organization Source Newsmn

GREEN PARTY LEADER TO HEAD ALLIANCE The Civil Will-Green Party alliance has decided to have Mr DEnkhbat a Green Party MP as its Chairman This was somewhat unexpected as Mr Enkhbat is a newer entrant to politics than Mrs SOyun who has been the Civil Will head for 10 years She is also a four-term MP and has been Deputy Speaker as also Minister of Foreign Affairs and Trade

Source Onoodor

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

KHURTS AGAIN REFUSED BAIL A London court has refused an application for bail for Mr B Khurts the 41-year-old head of the executive office of Mongolias National Security Council who was arrested at Londons Heathrow Airport in September and has been in police custody since He was arrested on a European Arrest Warrant dating back to 2003 that according to his lawyers he had no idea existed They say he was told he would be attending high-level government talks on intelligence co-operation They have accused the British Foreign Office of duplicitously luring Mr Khurts to his arrest and imprisonment at the behest of the German government A lawyer for German authorities seeking Mr Khurts extradition told the court the charge was baseless and the UK government did not lure the Mongolian official to the country to be arrested and extradited He said there was no evidence of such a plan Mr Khurts thought he was arriving for government talks his lawyers say when he was arrested over an alleged role in kidnapping and false imprisonment Judgment on extradition was reserved to February 18 Read morehellip Lawyer Aaron Watkins for the German authorities said There is no evidence of the judicial authority cooking up a plan with the government This warrant was issued some time ago and has been live pending execution in every single jurisdiction where it sits for many years All of that is entirely inconsistent with some Machiavellian conspiracy to procure Bat Khurts surrender and ultimate extradition The Foreign Office has previously said the arrest in no way amounts to a diplomatic or political statement by the British government adding Judicial authorities which are wholly independent of the government are carrying out their independent legal function in accordance with the law Mr Khurts is accused of involvement in the kidnapping in France in 2003 of Mongolian national D Enkhbat driving him to Berlin drugging him and flying him back to Mongolia

Source BBC News

AUTUMN SESSION ENDS WITH 60 OF PLANNED WORK DONE The autumn session of Parliament ended on February 10 as prescribed by the law that is being followed from January 1 It had started on October 1 and finished 60 of the planned work according to the Secretary of the Parliament Office Mr SMagnaisuren

Asked why so much remained undone he told media that some draft laws including those on police organizations and on advocates could not be taken up because party groups wanted more time to consider them Discussion of several others including those on the budget on agricultural goods and on the raw material exchange was postponed because the views of budget organizations citizens particularly of herders are being sought About the draft law on elections Mr Magnaisuren said a designated group of MPs is still working on preparing a synthesis of two drafts They also want to receive the opinion of the managing officials of political parties and analysts and would also like to hold some public debate

Source Ardiin Erkh

MINISTER OPPOSES ANY AMENDMENT TO CRIMINAL LAW Forceful opposition by Minister for Justice TsNyamdorj to amending the Criminal Law led members of the Standing Committee on Justice to reject on Tuesday by 13 votes to 1 any further discussion of a draft law proposing some changes to the present Law in force since 1992 Mr Nyamdorj said the law has stood the test of time ―causing no social discord and the proposed amendments cite no opinion from experts in related fields justifying a change He also said law-enforcing organizations and sentenced prisoners suffer stress when such an amendment is made He added that the crime situation is getting worse and the number of serous crimes has been increasing in recent years More people are also found to be returning to crime after serving a sentence It was not a time for amendments that could have more negative results he asserted Source EnglishNewsmn

WORK ON FOR CHOOSING CONSULTANTS FOR SAINSHAND INDUSTRIAL PARK Mr BGanbaatar head of the development and investment policy department of the National Development and Innovation Committee (NDIC) has revealed that two international consultants -- one for technical matters and the other for legal aspects -- will be appointed to help develop the proposed Sainshand industrial complex the first such enterprise in Mongolia since the setting up of the Erdenet Mining Corporation An engineering company is likely to be selected to study the

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

technical and economic aspects of the whole project and the legal consultant will handle the work on the agreements to be made with the various companies that will build and run the planned plants A total of seven companies have applied and six of them are being reviewed Four of these are interested in the engineering and technical aspects and two in legal consultancy The first four are US Bechtel Corp Fluor Inc Worley Parsons and Hatch Corp while the other two are Hogan Lovells LeeampLee a consortium of two companies and Liberty Partners a consortium of three companies The Government will pay them for their consultancy services ―They have submitted their rates and these are negotiable There will be the usual terms and conditions Maybe the technical consultants will also like to build one or some or all of the units MrGanbaatar said Source The Mongolian Mining Journal

MONGOLIA HAS 7 HECTARES OF FOREST PER CITIZEN WAY ABOVE WORLD AVERAGE In his address to the 9th UN Forum on Forests in New York Deputy Minister for Nature Environment and Tourism ChJargalsaikhan said that Mongolia has 7 hectares of forest per citizen while the world average is 06 hectares The main reason for this abundance is that very little of the forest is used commercially he said Some 92 of the forest area is protected and only the rest is allowed to be used for various purposes This year is being observed as the International Year of Forests Mr Jargalsaikhan who led the Mongolian delegation to the UN Forum explained the countrylsquos policy on forests The harsh climate wildfire and insects cause regular damage and impair natural regeneration Mongolia took various measures last year to improve forest management The incidence of disease was brought down to a quarter of the 2009 figures there were 133 fewer cases of wildfire and illegal felling was reduced by 623 He said Mongolia plans to implement further measures in cooperation with UN and other international organizations It is already participating in the Green Wall and Green Belt programs run by South Korea to protect forests and arrest desertification His Ministry was committed to framing its policy and strategy in accordance with decisions at the Rio summit Source EnglishNewsmn

COLD TAKES TOLL OF 48500 ANIMALS SO FAR The loss of livestock continues unabated Following the depredation of last yearlsquos dzud severe winter conditions have led to the death of 48496 animals all over the country until February 8 when the last reports were compiled Most of Mongolia remains under heavy snow and the winter appears to be worsening in 88 soums of 15 provinces

Source Montsame

COAL STOVES GIVE ULAANBAATAR A SMOG COAT As her seven children scamper in and out of the small door of their traditional felt hut in Ulaanbaatar Narantuya sits over the stove pouring blocks of black coal onto the fire In a city where average winter temperatures hover at a punishing minus 20 degrees Celsius (minus 4 Fahrenheit) the stove is the only source of heat for the 39-year-old unemployed single mother and her children The family burns through two bags of coal and half a bag of wood each day to stay warm But Narantuya says she still does not understand why the capital is blanketed in thick smog -- and how she is part of the problem I dont know why it happens but I know it affects my children In winter they are constantly sick with colds and coughs Im always afraid one of them will get a serious illness the diminutive woman says Despite its population of just one million people Ulaanbaatar is one of the worlds most polluted cities sparking mounting concern about spiraling health care costs -- and tough criticism of a government scrambling to respond Last month President Ts Elbegdorj admitted the situation had reached disaster status The World Bank says pollution levels are among the highest in any urban area worldwide Research by the National University of Mongolia carried out in areas of the city where people live in felt huts -- gers -- shows pollution massively exceeds Mongolian air quality standards and World Health Organization guidelines Late last year the government enacted legislation that would force heavy polluters such as power plants coal mines and even car drivers to pay fines but the modalities of the law are unclear and loopholes remain Ts Munkhbat who works in the environment ministrys air pollution department said the

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

government hoped to raise MNT30 billion (USD242 million) in 2011 alone -- money to be reinvested in clean energy technologies But analysts say the plan is misguided and does not address the real problem -- how to phase out the inefficient stoves used by the citys tens of thousands of poor families which are churning out thick black smoke 24 hours a day Read morehellip Ninety percent of our urban air pollution is from the ger stoves and less than 10 percent from cars and power plants S Lodoysamba an expert on urban air pollution at the National University of Mongolia says The government spent MNT7 billion between 2007 and 2009 to produce briquettes and pressed coal Unfortunately they dont reduce the smog because the ger stoves arent designed to use them he said The tens of thousands of families living in Ulaanbaatars ger districts -- a number that increases regularly as rural poverty drives people into the city -- have no access to the central heating grid that warms high-cost flats downtown Narantuya spends MNT2500 a day to heat her felt home explaining Coal keeps the fire going longer so its cheaper and better to use International organizations such as the Asian Development Bank and Germanys development agency GTZ are working with local bodies and researchers to design energy-efficient ger stoves and make them widely available -- not an easy task Ger area families are very poor To change the ger stoves they need money Lodoysamba said But money is not the problem The international organizations are willing to invest but when the government gets the money it goes the wrong way While acknowledging that the new legislation is ambitious Munkhbat insists it will help noting that part of the funds collected will be reinvested in ger areas Onno van den Heuvel a programme officer for biodiversity conservation at the UN Development Program warns the full impact of the pollution may not be known for decades The main problems are still to come In the long term we will see the impacts but now people dont seem convinced its a danger Van Den Heuvel said noting that barely anyone in Mongolia wears protective face masks The ADB estimates that health costs linked to pollution-related illnesses already account for as much as four percent of Mongolias GDP -- an expense the country one of the poorest in Asia cannot afford Narantuya says she believes the best way to protect her children from the smog is to keep them close to home Fortunately they dont have any serious health problems yet she said Source AFP

CITY PLANS TO PUT 70 OF HOUSEHOLDS IN APARTMENTS BY 2030 The Mayorlsquos Office is at work on a revised general development plan for Ulaanbaatar City to remain in force until 2030 The hope is to get it approved by Parliament before the 2012 elections A major feature of the plan is to have 60-70 of households in Ulaanbaatar living in apartments connected to the central engineering infrastructure network This is a tall order as 62 of total households at present live in ger districts beyond that network but the planners are confident the relocation is possible Details are not available but some specialists who claim to know how the plan is being prepared are skeptical of its success as they say it depends on present figures and does not provide for continued migration from the countryside The planners apparently hope that national plans for regional development will curb this trend of concentration in the capital Critics also feel that the city authorities consistently ignore the presence in Ulaanbaatar of a sizable number of non-registered people from the provinces and make no provision for them Source ResCap

NO FIRST PRIZE FOR CONSERVATION WORK The Ministry of Nature Environment and Tourism has failed to identify any clear winner in the Nymphean Hosts contest for conservation work Reviewing 80 applications with the help of six basic indicators it found none was substantially better than others to deserve the USD5000 first prize The second prize of MNT900000 each was won by 15 So was the third prize for MNT450000 while 20 received the fourth prize of MNT270000 and 20 more the fifth prize of MNT180000 The Denver Zoo of the USA provided USD25000 for the prize money

Source EnglishNewsmn

MONGOLIA CHINA WANT MORE AND STRONGER COOPERATION China hopes to promote political mutual trust and deepen pragmatic cooperation with Mongolia Ms Yan Junqi vice chairwoman of the Standing Committee of the National Peoples Congress (NPC) Chinas top legislative body said this when meeting with Mongolian Parliament Speaker D

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Demberel and Prime Minister S Batbold on the sidelines of the recent 19th Annual Meeting of Asia-Pacific Parliamentary Forum She noted how China and Mongolia have been friendly neighbors and important cooperation partners adding that China is willing to work together with Mongolia to achieve mutually beneficial cooperation and common development so as to bring more benefits to both sides and the two peoples Mr Demberel and Mr Batbold said that consolidating and promoting good-neighborliness and friendly cooperation with China is one of the priorities of Mongolias foreign policy Mongolia is willing to enhance high-level exchanges with China and deepen their pragmatic cooperation in various fields to raise bilateral ties to a higher level

Source Xinhua

MONGOLIA STUDYING NEW ZEALAND ELECTION SYSTEM Mongolia is looking to learn from New Zealands experience of MMP as it considers changing to a proportional electoral system A New Zealand parliamentary delegation attending the recent Asia Pacific Parliamentary Forum meeting in Ulaanbaatar was told by Parliament Speaker D Demberel when it called on him that Mongolia seeking electoral reforms was keenly studying New Zealands MMP experience In 1993 New Zealanders voted in a referendum to change their voting system from the traditional first-past-the-post (FPP) method to a German-type Mixed Member Proportional representation (MMP) Although Mongolia only became a fully democratic state in 1990 it is already looking at changing its current simple majority voting system to a proportional system delegation leader Lindsay Tisch told media on return home New Zealands experiences of the implementation of MMP were of great interest to Mr Demberel The New Zealand MPs sought Mongolialsquos support for its bid for a non-permanent seat in the UN Security Council for 2015-16 Source National Business Review

A NEW TAKE ON THE LICENSE REVOCATION DECISION As mining is not necessarily on the forefront of our thoughts here in Florida we generally donlsquot see too much information about the dirtylsquo side of industrial production So when the Mongolian government lobbed a large artillery shell into the center of the international mining camp last November the message did little to upset us and was probably not even reported at all by mainstream media here Nevertheless by announcing that it was suspending close to 1800 mining licenses it put nearly half of the countrylsquos total of 4000 licenses at stake including 254 gold mining licenses And funnily enough that got me thinking about the James Bond classic ―Goldfinger Mr Goldfinger in the movie gave the impression that he was going to steal all the gold in Fort Knox presumably the place where the US Federal Reserve holds its reserves in the precious metal ndash well at least in 1964 when the movie came out But Mr Goldfinger was smarter than that he was going to contaminate Fort Knoxlsquos reserves for 56 years which would drive up the price of gold as a result of the law of supply and demand Obviously he had previously done some heavy investing in gold himself so he would be the beneficiary of the skyrocketing gold prices Of course Mr Bond foiled the attempt so that President Nixon less than 8 years later took America out of the gold standard and introduced the paper standard ndash or in laymanlsquos terms he said ―This paper represents the US Government and is therefore as good as gold As they say the rest is basically history so I wonlsquot have to further go into that Back to Mongolia the birth ground of warriors and conquerors spearheaded by the notorious Genghis Kahn several centuries ago now seemingly has turned into a Desert Nation of Green hippies At issue is a law passed in July 2009 that prohibits mining in forests and river basins Although such areas account for less than 10 of a country that is largely desert many Mongolians consider the ground sacred and are reluctant to dig fearing it may upset the balance of nature In October green groups staged protests in Ulan Bator demanding that the government resign if it did not crack down on environmental offenders The Resources and Energy Ministry which is conducting the review stated that the names of the affected companies would be released within a few days but so far that information has not been forthcoming Read morehellip No doubt nerves are starting to fray in some quarters Mongolia ndash with its rich deposits of copper gold uranium silver and oil ndash has attracted increasing investment interest in recent years

Companies from the worldlsquos largest miners to small Canadian startups have set up shop there Just last year after years of negotiations the government agreed to a multi-billion-dollar deal with Ivanhoe Mines and Rio Tinto to develop one of the planetlsquos premier copper deposits Might even that be in jeopardy Nobody knows What we do know is that welsquove seen this movie before Mongolia has had an on-againoff-again relationship with the mining business ever since the underground goodies were first discovered Licenses have been revoked in the past and reinstated as officials seemingly have struggled to balance development with preservation of the countrylsquos unique culture When I grew up in the 60s in Western Europe I learned that what seems obvious is not always a clear representation of the truth We saw urban terrorist groups such as the Baader Meinhoff group and Brigati Rossi being heavily financed by the Soviet Union to create chaos and mayhem far beyond their support in the streets You start thinking a bit differently after those experiences I wonder if Mongolia is not having a couple of aces up their sleeves when it comes to manipulating the gold and copper prices Just a thought

Source Amelia Island Florida News

ANNOUNCEMENTS

COAL MONGOLIA CONFERENCE ULAANBAATAR FEBRUARY 24-25 Coal Mongolia will be holding a conference of international investors in the coal sector in Ulaanbaatar on February 24-25 to focus on the huge potential of Mongolian coal its diverse qualities size of deposits accessibility and what is required to bring the coal to market China may look the most logical destination for Mongolian coal but great efforts are being made to open up links to Russian as well as to Chinese eastern sea ports and on to other Asian countries The Coal Mongolia Conference will discuss all these through speeches and panel discussions BCM is the supporting organization of the event The objectives of the conference are - To put Mongolian coal on the international market and to expand channels of coal sales - Internationally to open up corridors of coal transport - To attract investment in coal exploration and extraction projects - To develop coal supply networks - To publicize the coal sector policy and plans to investors For further information please contact through 7011-5590 Website wwwcoalmongoliamn ___________________________________________ MONGOLIA INVESTMENT FORUM ULAANBAATAR MARCH 4 The Mongolia Economic Forum is organizing the Mongolia Investment Forum 2011 on March 4 following the second Mongolia Economic Forum on March 2-3 to be held in cooperation with the Foreign Investment and Foreign Trade Agency (FIFTA) the Mongolian National Chamber of Commerce and Industry the Business Council of Mongolia the CEO Club of Mongolia and other partners from the private sector The Mongolia Investment Forum is strongly supported by the Government The event will provide an excellent opportunity to gain an in-depth understanding of the current macroeconomic and political dynamics of the country and to interact with high-ranking policy-makers opinion-shapers and business leaders The agenda of the Investment Forum is centered on the following two subjects Mining Sector and Related Opportunities and Stock Market Reform and Privatization of State-owned Assets In addition to these discussions it will provide an opportunity to Mongolian business owners and investment banks to showcase specific investment-seeking projects to international investors The Organizing Committee of the Mongolia Investment Forum cordially invites you to submit your expression of interest in attending You may alternately consider expressing interest in attending the Mongolia Economic Forum Mongolia Economic Forum participants will also be entitled to attend the Mongolia Investment Forum For details please consult with the Forum website wwwmeforummn Coordinator ndash Bat-Erdene ndash 99009797 ndash Contact baterdenemongolfundcom __________________________________________________

MINES amp MONEY HONG KONG 2011 MARCH 22-25 Asialsquos premier and largest mining investment event already has 600 people confirmed to attend and looks set to attract well over 1500 attendees making it THE event where miners and investors

come together to do business Over 150 mining companies are exhibiting The Business Council of Mongolia is a supporting association of this event and as such this entitles all its members to a 15 discount on the conference price The event has a strong focus on Mongolia again this year with Robert Friedland Executive Chairman of Ivanhoe Mines giving a keynote address and both South Gobi Resources and Hunnu Coal are Gold Sponsors On top of this there is a morning on the 25 March dedicated to Mongolian Mining Investment This special session highlights key developments in Mongolialsquos mining industry and the investment opportunities that reside there Book before the 18th February to take advantage of the final early bird price This event promises to deliver a large number of investors all looking for their next big opportunity For registration simply visit the website wwwminesandmoneycomhongkong and click on the registration button If you are interested in sponsorship opportunities then please contact Toby Duckworth on +44 20 7216 6074 or tobyduckworthaspermontukcom Among the speakers are Robert Friedland Executive Chairman Ivanhoe Mines Andrew Forrest CEO Fortescue Metals Group Zheng Zhi Chairman China Mining United Fund Jing Ulrich MD amp Chairman China Equities amp Commodities JP Morgan Bernard J Guarnera President amp CEO Behre Dolbear amp Company B Enebish Executive Director Erdenes MGL Peter C Akerley CEO Erdene Resource Development __________________________________________________

ldquoBSPOT on B-TV Monday to Friday at 2130 BTV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 2130 taking most of the stories from the BCM NewsWire ___________________________________________ ldquoMM TODAYrdquo on MNB-TV Fridays at 2115 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 for 2115 tonight Tune in to watch this program that reports stories from todaylsquos BCM NewsWire ___________________________________________ NEW POSTINGS ON BCM WEBSITES PRESENTATIONS AND MONGOLIAN BUSINESS NEWS From the successful Mining Investment Summit UK 2010 in London on November 24-25 2010 posted are 15 featured speaker presentations on BCMs website (wwwbcmongoliaorg) in the Resource Presentations section for your review In addition presentations from BCMlsquos January 24 2011 monthly meeting and the BCM Environmental working group meeting of February 2 2011 are also posted We are now posting some news stories and analyses relevant to Mongolia on the BCM websites Mongolian Business Newslsquo as they come instead of waiting until 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 weeklsquos events

ECONOMIC INDICATORS

INFLATION

Year 2006 60 [source National Statistical Office of Mongolia (NSOM)]

Year 2007 151 [source NSOM]

Year 2008 221 [source NSOM]

Year 2009 42 [source NSOM]

December 31 2010 130 [source NSOM]

Year-over-year (y-o-y)

CENTRAL BANK POLICY LOAN RATE

December 31 2008 975 [source IMF]

March 11 2009 1400 [source IMF]

May 12 2009 1275 [source IMF]

June 12 2009 1150 [source IMF]

September 30 2009 1000 [source IMF]

May 12 2010 1100 [source IMF]

CURRENCY RATES ndash February 10 2011

Currency Name Currency Rate

US dollar USD 125621

Euro EUR 171303

Japanese yen JPY 1524

British pound GBP 201854

Hong Kong dollar HKD 16132

Chinese Yuan CNY 19068

Russian Ruble RUB 4286

South Korean won KRW 113

Disclaimer Except for reporting on BCMlsquos activities all information in the BCM NewsWire is selected from various news sources Opinions are those of the respective news sources

ECONOMIC INDICATORS

INFLATION

Year 2006 60 [source National Statistical Office of Mongolia (NSOM)]

Year 2007 151 [source NSOM]

Year 2008 221 [source NSOM]

Year 2009 42 [source NSOM]

December 31 2010 130 [source NSOM]

Year-over-year (y-o-y)

CENTRAL BANK POLICY LOAN RATE

December 31 2008 975 [source IMF]

March 11 2009 1400 [source IMF]

May 12 2009 1275 [source IMF]

June 12 2009 1150 [source IMF]

September 30 2009 1000 [source IMF]

May 12 2010 1100 [source IMF]

CURRENCY RATES ndash February 10 2011

Currency Name Currency Rate

US dollar USD 125621

Euro EUR 171303

Japanese yen JPY 1524

British pound GBP 201854

Hong Kong dollar HKD 16132

Chinese Yuan CNY 19068

Russian Ruble RUB 4286

South Korean won KRW 113

Disclaimer Except for reporting on BCMlsquos activities all information in the BCM NewsWire is selected from various news sources Opinions are those of the respective news sources

INFLATION

Year 2006 60 [source National Statistical Office of Mongolia (NSOM)]

Year 2007 151 [source NSOM]

Year 2008 221 [source NSOM]

Year 2009 42 [source NSOM]

December 31 2010 130 [source NSOM]

Year-over-year (y-o-y)

CENTRAL BANK POLICY LOAN RATE

December 31 2008 975 [source IMF]

March 11 2009 1400 [source IMF]

May 12 2009 1275 [source IMF]

June 12 2009 1150 [source IMF]

September 30 2009 1000 [source IMF]

May 12 2010 1100 [source IMF]

CURRENCY RATES ndash February 10 2011

Currency Name Currency Rate

US dollar USD 125621

Euro EUR 171303

Japanese yen JPY 1524

British pound GBP 201854

Hong Kong dollar HKD 16132

Chinese Yuan CNY 19068

Russian Ruble RUB 4286

South Korean won KRW 113

Disclaimer Except for reporting on BCMlsquos activities all information in the BCM NewsWire is selected from various news sources Opinions are those of the respective news sources