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Swine Flu (H1N1) Pandemic in Mongolia Over 1,000 [Updated]

tomongolia@gmail.com (tomongolia) — Wed, 11 Nov 2009 22:09:54 +0000

By Dan and Unuruu (Last updated 20 November)

The number of reported swine flu (H1N1 influenza) cases in Mongolia has reached 1106 (as of November 20, 2009). There are 782 confirmed cases in the capital city Ulaanbaatar and 324 confirmed cases throughout the country provinces. 18 deaths have been attributed to the H1N1 pandemic, including 2 pregnant women. Ovorkhangai province has reported 48 cases, with 3 deaths, the highest in the country. (Source: Mongolian Ministry of Health).

The Mongolian government is taking severe precautions to prevent further spread of the flu.

President Tsakhia Elbegdorj said: "We must recognize that the situation has reached the level of disaster. I am concerned about the rate of spread of the disease, which began to encroach on people's lives."
Following his statement, a state of emergency was declared. All public transportation out of Ulaanbaatar to the provinces was halted, affecting the routine daily travel of thousands.

This precaution has slowed down the fast spread of the virus to the provinces.
Autumn school holiday has been extended; students will study at home via TV channels. Some markets have been closed. Public gathering has been banned.

The first case of H1N1 was reported on October 12th; within a month, over 900 cases were reported. Ulaanbaatar was the first places to be hit; the virus quickly spreading to the neighboring provinces.

The pandemic is not confined to Mongolia, it is a global pandemic with reported laboratory confirmed cases in 199 countries worldwide, including in the neighboring countries Russia and China.

The virus is a strain of the H1N1 virus that hit a third of the world population in 1918 with estimated 50-100 million dead.

Vaccines will be imported from Russia, China and from WHO (World Health Organization). A budget of MNT 753 million was allocated for purchasing medication.
The first batch of 45,000 vaccine doses is expected to arrive this week, from a total of 450,000.
The main manufacturer of H1N1 vaccine is the United Kingdom company GlaxoSmithKline (NYSE: GSK) It is the world's second largest pharmaceutical company. The company has announced it had production difficulties that limited the available supply of the vaccine. Shortages were reported globally.

The first round of vaccinations will be given to medical teams, emergency workers, border employees. The second round will include citizens at medical high risk, pregnant women, children and adults with chronic illnesses.

A total of MNT 6.4 billion was allocated from the CCF (Crisis Capital Fund) to purchase medicine, medical apparatuses, equipment for intensive care, disinfectants, ensure readiness of border checkpoints, grant the overtime payment and allowances to medical doctors and workers.

The autumn holiday started earlier, from 26 October rather than 4th November and continued until November 17th.
A team of about 100 teachers and experts was assigned to teach lessons via TV channels. Pupils of primary grades will learn Mongolian language and math; older children will study math, Mongolian language, chemistry, physics, biology, geography, history, English and Russian.

The Mongolian National Influenza center has published a set of personal precautions to prevent the spread of the H1N1 infection:

Early signs of influenza A(H1N1) are flu-like, including fever, cough, headache, muscle and joint pain, sore throat and runny nose, and sometimes vomiting or diarrhea.The main route of transmission of the new influenza A(H1N1) virus seems to be similar to seasonal influenza, via droplets that are expelled by speaking, sneezing or coughing. You can prevent getting infected by avoiding close contact with people who show influenza-like symptoms (trying to maintain a distance of about 1 meter if possible) and taking the following measures:
• Avoid touching your mouth and nose;
• Clean hands thoroughly with soap and water, or cleanse them with an alcohol-based hand rub on a regular basis (especially if touching the mouth and nose, or surfaces that are potentially contaminated);
• Avoid close contact with people who might be ill;
• Reduce the time spent in crowded settings if possible;
• Improve airflow in your living space by opening windows;
• Practice good health habits including adequate sleep, eating nutritious food, and keeping physically active.

Update 13 November 2009

973 total number of H1N1 in Mongolia
741 total number of confirmed H1N1 cases in Ulaanbaatar
232 total number of confirmed H1N1 cases in the provinces
15 number of death attributed to H1N1

(not including Ulaanbaatar with 741 cases)

Source: ToMongolia ToMongolia@Gmail.com

The information published in this article can be freely copied from ToMongolia

Discover Mongolia 2009 Mining Conference Commences Despite Fear of H1N1 Flu

tomongolia@gmail.com (Dan and Unuruu) — Thu, 05 Nov 2009 08:03:12 +0000

By Dan and Unuruu ToMongolia@Gmail.com

Discover Mongolia 2009, The 7th International Mining Investors Forum opening ceremony was held today Thursday November 5, at the Children's Palace in Ulaanbaatar.

The Mongolian government has banned all public gatherings for two weeks in an effort to prevent the spread of the H1N1 flu. Discover Mongolia Conference was granted special permission to open its doors due to the importance of the conference.

This conference is the most significant of its kind in Mongolia. It follows the Oyu Tolgoi agreement signed last month between the Mongolian government, Ivanhoe mines and Rio Tinto to develop what will become the largest copper and gold mine in the world.

The annual Discover Mongolia Conference, first held in 2002, aims to introduce the Mongolian mining sector to the world. Domestic mining companies and mining license holders will come face to face with foreign investors and government officials.

The Investor forum on 6-7 November attracts international interest from Canada, France, Russia, China, South Korea, Japan and the United States. A significant Russian delegation is expecting to discuss at the forum previous uncompleted agreements and hopes to increase its hold in several mining projects.

New geological exploration results will be revealed for the first time during the conference. These new survey results will show that the size of "treasures" under the Mongolian surface is much larger than ever predicted before.

Discover Mongolia-2009 promises to be a success, following recent law and investment regulation amendments. These changes have made Mongolia an attractive location for mining investors, while retaining a significant share of profits for Mongolia.

The unprecedented new opportunities for Mongolian businesses are guaranteed by the new laws which ensure that the mining sector use Mongolian services and employees whenever possible.

The conference sponsors include some of the leading companies in the mining sector.

The Platinum Sponsors include the leading trio - Ivanhoe, the developer of the Oyu Tolgoi mine, it's main partner Rio Tinto a global mining company and the Mongolian Oyu Tolgoi company operating the mine.

The Gold Sponsors are - Monnis, originally known in Mongolia as the Nissan supplier. In the past years Monnis has extended its activities to include supply and maintenance of other machinery including Liebherr heavy mining equipment. Geosan is a Mongolian provider of ground and fixed wing airborne geophysical surveys. Geosan employes 40 professional geophysicists and surveyors. Erdene is listed on the Toronto Stock Exchange (TSX:ERD) and has several mining projects (coal and copper) in Mongolia. Erdene President and CEO Peter Akerley will be giving a presentation at the Discover Mongolia Conference. Centerra is a Canadian company that holds 100% interest in the Mongolian Boroo gold mine in Mongolia. SouthGobi Energy Resources is the developer of the large Ovoot Tolgoi coal mine. Redpath is a global mining contractor. In the past years Redpath was involved in sinking multiple shafts and provide primary mine development services at Oyu Tolgoi. In January, 2008, and at a depth of 1385 meters, the company completed the sinking of the deepest mine shaft ever sunk in Mongolia.

Sponsors include - Khan Resources is developing the Dornod uranium mine in eastern Mongolia. Mongolia Energy Corporation is developing the Khushuut coal mine in western Mongolia and several other mines.

Event sponsors are - GOLOMT bank one of the leading Mongolian banks. MobiCom a large mobile supplier in Mongolia. Runge provides software for the mining industry. Mongolian Star Melchers is a major importer of consumer goods.

partners of the event are - Business Council of Mongolia represents the views of investors in Mongolia's economy. Mining.mn a Mongolian mining portal, publishes the latest mining news. Mongolian Mining Journal covers Mongolian mining issues. Asia Miner a magazine covering mining in Asia.

Khan Bank is the bank of the event, and Kempinski hotel Is the hotel of the event, one of the best in Ulaanbaatar.

Source: ToGobi

Is Mongolia now open for business?

chris@degruben.com (Christopher de Gruben) — Wed, 14 Oct 2009 21:53:12 +0000

This article was written by Christopher de Gruben.

We have recently witnessed an historic moment; the long awaited ratification of the Oyu Tolgoi Investment Agreement. It is widely expected that this agreement will have a strong impact on all aspects of the Mongolian economy. It is meant by the Mongolian Government to send a strong signal to foreign institutional investors that the country is once again open for business as an attractive foreign investment destination.

Is that really the case? What is the investment climate now and how is it likely to change?

Mongolia has always been an attractive investment destination; it is a fast growing economy with easy access to its importing client’s base. It is one of the very few functioning democracies in the region, with an attractive tax regime coupled with few restrictions placed on foreign investors. Mongolia boasts high literacy rates, a young dynamic population and an openness to the outside world seldom seen in other Asian countries.

Mongolia’s economy is centered on agriculture and mining. It has rich mineral resources, and copper, coal, molybdenum, tin, tungsten, and gold account for a large part of industrial production, GDP per capita in 2006 was $2,100. It’s GDP has risen steadily since 2002 at a mean rate of 7.5% according to an official 2006 estimate.

When I first arrived in Mongolia, the signs of transition from a centrally planned economy to a market driven system were obvious for all to see, the cars were getting bigger (and shinier), the clothes more colourful, the shops were being filled with exotic products, skirts were getting smaller (and still are) and property prices were exploding.

Mongolia has moved incredibly fast in terms of progress since then but despite it being less exotic now, it is still the country of all opportunities, the start up costs to business are still very low, the cost of corruption is relatively small and the absence of organized crime is welcomed. The quality of services and the availability of products have improved immeasurably, I currently have Dutch cheeses, Perrier water and Spanish ham in my fridge, the restaurants are world class and international 5 star hotel chains such as Shangri-La are being established in Ulaanbaatar. Louis Vuitton is opening this month its flagship store while Ferragamo is getting ready to move in, Mongolia has finally joined the globalization game, albeit with some reluctance.

This breakneck speed of progress is being sustained by wide ranging speculations in the upcoming mining boom. Mining itself is a very capital intensive operation with large start up costs and high political and commodity risks (but with high potential returns). Smaller investors such as myself, find the supply chain more interesting. This was equally evident to the 49?ers (1849) from the Californian gold rush and all subsequent mining booms, it is the sale of picks and shovels, the operation of saloons and brothels that were consistently considered to be the most stable and profitable businesses.

The $5bn investment amount promised by Rio Tinto and Ivanhoe Mines for the Oyu Tolgoi project will be part of this profitable Mongolian supply chain; this is only one of many large upcoming projects which are expected to contribute to it. It is easily conceivable that this service sector will become a multibillion dollar industry within the next few years.

Over the last five years, I have myself tried to take every opportunity I could and have made small strategic investments, my initial forays have been in residential property, followed by the establishment of a “subway style” restaurant called Sub’baatar and the incorporation of a small consulting firm, Mad & Dysfunctional, post-trauma consulting, dedicated to assisting foreign investors setting up in Mongolia.

All of those investments are based towards taking advantage of the developing supply chain and making the most of the growing economy, some of my investments have been hugely profitable while for others the verdict is still out. I have made many mistakes during that time but have by and large recovered, Mongolia is still a forgiving environment and as long as you are willing to work hard, it is still possible to succeed.

Working in developing countries has its own generic problems; red stamp bureaucracy, lack of basic infrastructure, poor skill sets amongst the domestic labour force, low levels of services, difficulty of enforcing regulations, unstable regulatory environment to name but a few. In Mongolia, this is balanced with a vast pool of opportunities for those willing to take the risk. The country is being revolutionized by the return of many young Mongolians to their home country with new skill sets and the increasing arrivals of young expats keen to establish themselves. The business environment is improving fast, new ventures are started daily, and improvements are visible on a daily basis, it is this fast paced change that constitutes the excitement of working in emerging markets.

For Mongolia to continue moving forward, it will be obliged to have increased interaction with the mega power that China is fast becoming, it not only represents an increasingly important trade partner for imports and exports but also a strong potential political and economical ally. As the influence of China grows, Mongolia needs to rise along with it. At the moment I have the distinct feeling that Mongolia “loves to hate” China, while an element of self preservation is understandable, greater co-operation will be essential in the future. The third neighbor policy, which is currently being pursued by Mongolia, is an innovative way to hedge the risks of being landlocked between two superpowers while taking full advantage of trade potential with its neighbours, an excellent political strategy that will pay off in the long term.

The future of Mongolia is never the less fraught with dangers; corruption might quickly become the source of its downfall, it is therefore important to effectively restrict the opportunities for temptation. This has to start with a true and real separation between public servants (at all levels) and their own business interests.

Corruption is not an emerging market particularity but a global phenomenon, not a week goes by without an international scandal hitting the world medias; but the presence of those scandals and its associated public outcry is an important indicator of a functioning democratic system. Mongolia is currently lacking in large scale corruption scandals.

The foundation of creating a strong and powerful Mongolia will be established through reforms towards a more powerful independent judicial system and the greater enforcement of its law. It is my impression that while the judicial system has a good legal grounding (despite its often contradictory and confusing laws) the enforcement of those regulations are haphazard at best.

The future of Mongolia is bright, a new chapter in its history has just started, we can only hope that its ruling class will make the right reforms to make sure this process continues while making the most of current opportunities for growth.

More articles by this author available here.

Why October 6 - Mongolian Mythology - Oyu Tolgoi Agreement

tomongolia@gmail.com (tomongolia) — Wed, 07 Oct 2009 12:56:49 +0000

By Dan

On October 6, 2009 Ivanhoe Mines signed a long-term Investment Agreement with the Government of Mongolia that establishes a comprehensive framework for the construction and operation of the Oyu Tolgoi copper-gold mining complex in Mongolia’s South Gobi Region. Was this date chosen deliberately? Is it related to Mongolian Buddhist mythology?

Why on October 6 2009 ?

Robert Friedland, Ivanhoe chairman, said "It is appropriate that the Mongolian Government carefully considered the symbolic significance of staging the signing on October 6, traditionally an auspicious day for new beginnings"

The signing of the agreement was postponed several times, as there were some last minute issues to resolve. The final date incidentally and maybe luckily coincided with a lucky date according to the Mongolian Buddhist calendar. According to tradition on this date Mongolians will occupy a new house, get married or start a fresh business venture.

Mongolian Buddhist mythology and rituals have been influenced mainly by the Tibetan lineages of Buddhism (Yellow hat) but Mongolian Buddhism also developed some of its own mythology influenced by Mongolian Shamanism.

The legend
In Mongolian Buddhism several deities are worshipped and regarded as divine beings. Each one is in charge of specific issues relevant to human beings. According to the Mongolian Buddhist mythology, two of these deities, the god of "wealth and prosperity" (Baljinnyam), and his partner the god of "cheerfulness and energy" (Dashnyam), meet twelve times a year on specific dates. Each meeting has its agenda of subjects which they will discuss.

Their discussion topics are wide-ranging, related to all aspects of life. Some of these issues are good for mankind and some are bad. The agendas are usually a mixture of good and bad issues. This means that the days when Baljinnaym and Dashnyam meet together are not necessarily good days.

Only one specific meeting date once a year, has an agenda which is completely favorable to humanity. The subjects they will discuss on this date are happiness, prosperity, good health and the wealth of humanity. This year the lucky date is the 17th day of the middle month of Autumn according to the Mongolian Buddhist calendar (October 6, 2009) and it is therefore a very special day for Mongolian Buddhism and for the Mongolian people. (Thanks Luke, for your enlightenment).

On that same day of the ceremony a group of old Shamans climbed the Bogd Khan mountain south of Ulaanbaatar, to the Tsetsee Gun Peak performing a routine Shaman ritual, held every auspicious day. Lets hope there blessings will add to the many blessings expressed at the signing ceremony. (Thanks Ganbat for the information).

Some foreign companies doing business in Mongolia do wisely by seeking advice from Mongolian Lama's regarding Mongolian Buddhist traditions and rituals. Let's all hope that in this case this legend will fulfill itself to the benefit both the Mongolian people and also foreign investors.

This article is the second in a series discussing the Oyu Tolgoi agreement implications.

Related articles

Signing the Oyu Tolgoi (OT) Agreement

OT - photos maps videos (ToMongolia)

Mongolia Takes Greater Control Of Uranium Sector

inmongolia@gmail.com (Mongolia Web News) — Sun, 04 Oct 2009 14:47:52 +0000

For about a decade since the mid-1990s uranium exploration in Mongolia by international companies was not subject to any clear national policy or close regulation. In the last few years, however, the Government has sought to exercise more control over the whole mining sector and earlier this year it set up MonAtom to undertake uranium exploration and mining on behalf of the state, as well as to pursue nuclear energy proposals. It will hold the state's equity in uranium and nuclear ventures, under the Mongolian Nuclear Energy Agency.
In mid-July, after consultation with the International Atomic Energy Agency, Parliament passed a Nuclear Energy Law to regulate the exploration and mining of uranium and give the state a greater degree of ownership and control of those resources. Along with this the Government set up Dornod Uran, a joint venture company between MonAtom and Russia's ARMZ to develop two uranium mines in Mongolia -- Dornod and nearby Mardai. A Japanese partner, evidently Marubeni, is also expected to be later involved in the work of this joint venture.
The development is of particular interest to Russia due to its proximity to the Priargunsky operations, allowing possible creation of a ‘single infrastructure’.
At least until mid-August, Canada-based Khan Resources owned a 69% share in the Dornod project, mostly through its 58% subsidiary Central Asian Uranium (CAUC). The balance of CAUC, which holds Mongolia’s only uranium mining license, was owned by MonAtom and ARMZ, each with 21%.

A definitive feasibility study released in March 2009 showed that the USD333 million project was sound, on the basis of 24,780 tons of indicated resources, including 20,340 tons of probable reserves. Annual production of 1,150 tons over 15 years from 2012 was envisaged.

However, the Nuclear Energy Agency has announced that the joint venture of MonAtom with ARMZ will develop the project to annually produce about 2000 tons. Khan is uncertain where it stands, having apparently been dispossessed as it sought to negotiate an investment agreement with the Government.

Gurvanbulag is another deposit, about 30 km away, which has been held by the Canadian Western Prospector Group. In March the company agreed to a USD25 million takeover by China's CNNC International, a 74% subsidiary of CNNC Overseas Uranium Holding and through it, of SinoU. MonAtom appears to be positive about this development.

Source: World Nuclear News

The Business Council of Mongolia aims to advocate increased trade and investment in Mongolia and serve as a forum for dialogue on the important business climate issues. Join us at the Business Council Mongolia Official Website

TDB Pays Back Usd31.5 Million To Investors In Corporate Bonds

inmongolia@gmail.com (Mongolia Web News) — Sun, 04 Oct 2009 14:45:51 +0000

Trade and Development Bank has repaid 42% of its corporate bonds worth USD31.5 million, including coupons, to 96 investors in 13 countries, before maturity. The bank believes this will reassure international investors on Mongolian financial institutions’ sense of responsibility.
Three-year bonds carrying an annual interest of 8.625% were offered in January 2007 in international financial markets. The sale amounted to USD75 million. The repayment indicates that TDB is recovering well from the recession and financial crisis.

Source: Mongolia-business.com

Central Bank Lowers Rates To “Help Sustain Growth”

inmongolia@gmail.com (Mongolia Web News) — Sun, 04 Oct 2009 10:43:48 +0000

The Central Bank has lowered its policy rate to 10 percent effective September 30. This 1.5 percent cut, the Bank’s first since June 12, has been taken as the inflation rate has been steadily declining, and is expected to help sustain the revival of growth in some economic sectors. Along with this, the repo rate has been cut by 3.5 percent, the interest rate of non-standing facilities by 2.5 percent, and the overnight interest rate by 2.5 percent. The Bank hopes all this will help lower the cost of short-term funding.
The Bank has said in a statement announcing the changes that certain positive conditions have marked the state of the economy in the third quarter of 2009. The inflation rate has been steadily declining and was 3.9 percent in Ulaanbaatar in September. Gross international reserves have exceeded USD1 billion, and the exchange rate has been stabilized.

Source: www.mongolbank.mn

Mongolia and Ivanhoe to sign Tuesday Oct. 6 the $3.6 Billion Oyu Tolgoi Copper-Gold mine agreement

tomongolia@gmail.com (tomongolia) — Sat, 03 Oct 2009 20:02:28 +0000

By Dan (ToMongolia)

Ivanhoe and the Mongolian government are finally expected to sign the long awaited Oyu Tolgoi landmark deal. Preparations are underway for the agreement signing ceremony on Tuesday October 6, at 3:00PM at the government house.

The Oyu Tolgoi copper-gold mine in the Gobi desert will be one of the largest copper-gold mine developments in the world. The Investment will be the largest foreign investment ever in Mongolia. The project will have a tremendous impact on Mongolia's economy, it will employ thousands of Mongolians and have major positive economic effects on the supply chain nationwide.

Ivanhoe executive team led by Ivanhoe Mines’ President and CEO John Macken and Mongolian officials led by Finance Minister S.Bayartsogt, the head of Governmental "Working group" on Oyu Tolgoi Investment Pacts, spent sleepless nights during the last few days to brush up and synchronise the English and Mongolian versions of the agreement.

The last few hurdles negotiated up to the last minute, included a 5 point secrete section added to the agreement by the National Security Council, headed by the President Elbegdorj Tsakhia, the terms of an upfront payment of $225 million by Ivanhoe to the Mongolian government, and tax issues. Elements of the agreement are anchored in the Mongolian law. Recent changes in the law relevant to the agreement had to go through a period of optional disapproval by the president, though he is not expected to disapprove, the proper period of time had to be respected until this week.

The final terms of the agreement are favorable to the Mongolian people after decades of mining agreements with foreign parties that exploited the rich land of Mongolia and returned very little to the Mongolian people.

Oyu Tolgoi marks a change in the way the mines of Mongolia are exploited. It took years of negotiations which eventually redefined the country's mining and investment laws. The deal will set a precedent for future foreign mining investments in Mongolia. The Oyu Tolgoi agreement provided the Government of Mongolia with a 34% equity interest in Ivanhoe Mines Mongolia Inc.

According to parliamentary economic committee Chairman T. Bayarsaikhan Mongolia’s government may approach international financial Institutions, including the World Bank, to help it raise the $820 million needed to maintain a 34 percent equity stake in the project.

Signing the agreements on behalf of the investor's side will be; Peter Meredith, Deputy Chairman of Ivanhoe Mines, Keith Marshall, Managing Director of Ivanhoe Mines Mongolia, John Foniani, Executive Vice President of Ivanhoe Oyu Tolgoi, and Bret Clayton, Chief Executive Copper of Rio Tinto - Ivanhoe's venture partner.

On behalf of the Mongolian side the agreements will be signed by Bayartsogt Sangajav Finance Minister, Gansukh Luumed Environmental and tourism Minister, Zorigt Dashdorj Minister of Mineral Resources and Energy and B.Enebish, CEO of Erdenes Mongolia.

The main agreement document is the investment agreement, supplement to it is the shareholders agreement and a pre-payment agreement.

Hosting the ceremony will be Mongolia's President Ts.Elbegdorj, Speaker D.Demberel, and Prime Minister S.Bayar.

Robert Friedland, (in the photo above) Executive Chairman and largest shareholder of Ivanhoe Mines arrived in Ulaanbaatar with several institutional investors on his private jet to honor the event.

Mongolia is rich in a range of resources, including coal, gold, iron ore, zinc and uranium. According to a study, the Oyu Tolgoi mine could produce 440,000 metric tons of copper annually, and 330,000 oz of gold a year for at least 45 years. production at the mine is expected to begin as early as 2013 with an approximate five-year ramp-up to full production.

Partnering with Ivanhoe is Anglo-Australian Rio Tinto currently holding a 9.9% stake in Canada-based Ivanhoe, after making an initial $US303 million investment in 2006, with an option to raise that to 43.1% totaling the phased investment in Ivanhoe inclusive of equipment purchased to approximately US$2.4 billion. Other investors are looking into buying a stake in this promising venture. Provisions have been made recently to allow that, by amending the original agreement between Ivanhoe it it's major partner Rio Tinto.

Oyu Tolgoi, in Mongolian means Turquoise Hill, hinting to the Turquoise green rocks found in the region. These rocks drew the attention of the geologists to the possibility that this area is rich with copper.

An exploration shaft was drilled and in January 2008 it reached the depth of 1385 meters. Analysis of the rocks drilled out clearly show the rich gold deposits.

South west of Oyu Tolgoi a new copper-gold field was discovered recently by Ivanhoe named Heruga, which is a 13 million-ounce gold deposit, with about 16 billion pounds of copper equivalent. New copper-gold deposits have been located in the last few months by Ivanhoe using new exploration technology named "Zeus" (in the photo) developed by GoviEx and tested for the first time in real exploration. Large copper wires are stretched along the Gobi with electrodes on each end up to a distance of 20-km, enormous electrical current is passed through those wires and the Zeus measures the earth's electrical conductivity to locate metalic mineral deposits. This method is named Induced Polarization (IP). Zeus enables geologists to "see" copper and gold using a non invasive method similar to a CAT scan of the human body or MRI, avoiding the hit-and-miss method of traditional exploration by drilling.

See ToMongolia for additional video, maps and photos of the Oyu Tolgoi project.

Dan: ToMongolia@Gmail.com

Ivanhoe, Rio agree to change provisions of their agreement

inmongolia@gmail.com (Mongolia Web News) — Fri, 25 Sep 2009 12:28:27 +0000

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Ivanhoe Mines Ltd., seeking to build the Oyu Tolgoi copper and gold project in Mongolia with Rio Tinto Group, may consider selling up to a 9.9 percent stake in the company after being approached by sovereign wealth funds. Ivanhoe and Rio agreed to change provisions of Rio’s agreement to invest USD2.4 billion in Ivanhoe to allow a sale, the Toronto-based company said on Wednesday in a statement. Any sale will not affect Rio’s accord to buy a 43.1 percent stake in Ivanhoe, the statement said.
“Several sovereign-wealth funds are among potential investors who have expressed unsolicited interest in participating in Ivanhoe’s growth opportunities,” Ivanhoe President John Macken said in the statement without specifying them. “Ivanhoe Mines and Rio Tinto also have agreed to cooperate in considering potential investments in Ivanhoe by one or more strategic shareholders,” the statement said.
Rio, based in London, has also agreed with Ivanhoe to change their accord to allow it to delay the October 27 deadline for the second stage of its planned investment in Ivanhoe. The deadline will be delayed in 30-day increments until “either until the completion of an approved, unconditional investment agreement for Oyu Tolgoi, or until April 27, 2010,” the statement said.
“Rio Tinto is committed to its partnership with Ivanhoe in developing Oyu Tolgoi,” Mr. Bret Clayton, Rio’s chief executive of copper and diamonds, said in the statement. “We have made good progress with the Government of Mongolia and expect to sign the investment agreement shortly.”

Source: Bloomberg.com
An Ivanhoe Mines news release dated September 22, reaffirming its long-term commitment to the three-year-old strategic partnership with Rio Tinto and detailing their present agreement to fine-tune two provisions in the 2006 private-placement agreement, can be seen at BCM Website, Articles/Reports on Mongolia

The Mongolian Property Boom v.2.0?

chris@degruben.com (Christopher de Gruben) — Thu, 24 Sep 2009 15:01:37 +0000

As the recent crisis has shown, real estate, the world over, is not only an important indicator of the financial health of a country but also one of its main instruments. For the past couple of weeks I have had ample time to reflect on the state of the property market in Mongolia and more specifically Ulaanbaatar. What impact will it have on the economy at large and how will the market move in the next few years? This reflection is of course fueled by a consideration of what actions I should take for my own property portfolio, is it better to cash out and seek new investments or remain in the market and wait for the longer term benefits?

This week will probably turn out be one of the most eventful and important weeks for the Ulaanbaatar Real Estate market, in exactly seven days, the deadline set by the government for the signature of the Oyu Tolgoi project runs out. The long awaited signature of this agreement is expected to have a wide ranging impact on all the various industries of Mongolia. Due to its small size (not geographic but in terms of economy as well as population), this project alone could give an enormous boost to what has now become a mostly lethargic economy.

As Peter Morrow, CEO of Khan Bank declared at the recent Euromoney Conference, Mongolia has remained largely unscathed by the world financial crisis but was hit hard by the subsequent commodity crisis. Due to its lack of exposure to the global financial markets, it had little to lose, the real hit came when the price of copper (Mongolia’s single largest export) collapsed from 9,000USD a ton to 3,000USD a ton in little over 5 months. This greatly impacted the unprepared Mongolian economy: foreign investments dried up, GDP growth collapsed; the national currency became unstable, national reserves dwindled, large companies went into administration, construction projects screeched to a halt, banks stopped lending and most property prices fell between 20 to 50% of what they use to be.

Not all property prices fell. Some sectors not only remained stable but appreciated in value, for example the high end prices have remained generally stable while properties that benefit from an excellent location and middle to high end pricing have gained in value as they are considered a safer investment. The demand for quality properties has not dropped (if at all) as fast as the supply has. Not everyone in the Mongolian economy was hit equally hard, indeed some benefited handsomely from the crisis.

Since the last winter, cautious optimism in the economy has grown; property prices have slowly risen again even if they are still a far cry from their pre-crisis levels. Will the imminent signature of the Oyu Tolgoi Investment Agreement signal the start of the Mongolian Property Boom (Version 2.0 Beta)?

The signature of the agreement will not only bring in the associated investments by Rio Tinto and Ivanhoe Mines, which is considerable at 5$bn (equivalent to current GDP levels), but also create a strong supply chain with its own capital investments. This means more expats on the ground, more money circulating in the economy and a subsequent boom in all mining related businesses. As the economy explodes, it is likely that the property market will follow. A large number of expat families are expected to relocate to Mongolia within 6 months of the signature, foreign companies currently waiting on the sidelines, will finally make their long awaited investments in Mongolia. The combined effect of those investments will undoubtedly affect the demand of real estate; more office space will be required by companies, new comfortable apartments will be needed for expat families not to mention the increasing need for hotels, restaurants and shops.

Demand will of course not only be driven by the expat market along with its foreign direct investments, the bulk of the new demand will come from the increasingly wealthy Mongolian middle class, they are the end user and the main players in this market, it is their new found wealth that will dictate the property prices of the majority of the market. As Mongolian commercial banks recover and mortgages are once again available, the market will gradually move from cash only purchases to mortgage driven acquisitions, thereby making house ownership affordable to a larger segment of the domestic market.

While the levels of demand are expected to increase exponentially, there will be an equally distinct lack of new supply, the vast majority of construction projects that began pre-crisis have been abandoned due to a lack of financing from the banks coupled with falling demand, it will take at least two to three years before we experience again a consistent supply of new properties on the market. This supply is not only limited by financial constraints, by the harsh weather conditions (which limits the available construction time) but also by the lack of available buildable land.

When the Soviets built Ulaanbaatar in the early 1950’s, it was designed to accommodate a relatively small population, since then the population of the city has greatly expanded but investments made in the infrastructure of the city has been lagging behind, this means that land which has access to the city infrastructure is strictly limited to the city center and a few outlying suburbs. With no serious Government commitment to infrastructure development predicted in the near future, buildable land will command an even greater premium and property prices will rise accordingly.

All of this is pointing towards a new explosion of property prices within Ulaanbaatar, but surely in such a buoyant market as Ulaanbaatar, there are other investment opportunities that can prove to be more exciting and indeed rewarding?

Over the past 5 years, I have been fortunate enough to work in a wide spectrum of industries; cashmere, restaurants, tourism, fire safety and of course property to name but a few. While every investment in Mongolia can be made profitable, it is my strong opinion that there is no better business in Mongolia than Real Estate.

Every business should try to minimize its exposure to external risks such as government intervention, reliance on licensing, “favours” from officials (a.k.a. corruption), the need to enter into partnerships with Mongolian entities and its vulnerability to changes in unstable taxes and laws aimed at discriminating against foreign investors. Mining is clearly a business that has a high level of exposure to all of the above, property, on the other hand, has none of those external risks. Foreign investors in Mongolia can own their property 100% as freehold properties, do not need to go into a partnership with any Mongolian entity, have no restrictions on the movement of capital and benefit from very low tax levels. More importantly, Mongolian and foreign investors are treated as equals under Mongolian law.

Despite its recent drop in value, property remains a strong and stable asset in times of crisis, an asset that will (nearly) always appreciate in the longer term while providing recurring rental income for minimal involvement in terms of management. In short, it presents low risks with medium to high levels of returns. The currently undervalued prices present an unparalleled opportunity for cash rich investors to get into the game before it’s too late. There is a limited window of opportunity for the next two years when the demand for quality property will in by far outstrip the supply and the returns on investments are likely to become phenomenal.

How far can prices go? Well, it is as always a case of demand versus supply, a glass of fresh water in the Gobi desert is worth infinitely more than it is in Paris. In the short term, prices will rise, the longer term outlook will depend on supply but a double digit GDP growth a year, a nascent mortgage market along with a growing urban population can only push prices one way, up.

While I do need to sell some property over the next few months to fund some upcoming expenses (MBA School) it is clear that it is in my interest to retain as much real estate in Ulaanbaatar as I can. I have never seen another country with such potential for growth and above average returns as Mongolia.

Visit the author's website for more information at: www.degruben.com

Cafe Amsterdam: Glenn Mullin on the new Nicholas Roerich Museum in Mongolia

inmongolia@gmail.com (Mongolia Web News) — Tue, 22 Sep 2009 08:09:36 +0000

This Wednesday's Cultural evening at 8 PM in Cafe Amsterdam we have a lecture by Glenn H. Mullin titled "Roerich and the Mongolian Contribution".

Canadian Glenn H. Mullin is one of the world's foremost Tibetologists and has published approximately twenty books on Tibet and Tibetan Buddhism. He is an internationally renowned Buddhist scholar, an acclaimed translator of Tibetan classics and a well-known speaker on the international lecture circuit.

The lecture will be about the Russian born New York artist Nicholas Roerich, the first Buddhist nominated for the Nobel Peace Prize. He was a student of the Mongolian lama Agwan Dorjeff in the early 1900s and his travels through Mongolia in the 1920s and 30s inspired many of his greatest paintings. His dozens of essays and books on Mongolian-related subjects, and his hundreds of Mongolian paintings, where a major factor introducing Mongolia to the international community.

The house in Ulaanbaatar in which Roerich lived and worked during 1926 an 1927 was saved from demolition several years ago by the distinguished Mongolian academic professor Bira, the last living student of Nicolas Roerich's son George Roerich.
Glenn H. Dunn has been assisting professor Bira in the work of restoring the house and transforming it into a museum, which opened recently in July.

Wednesday night we will also have the opening of a new exhibition "Limitless Word" by Mongolian artist J. Gursenge, who was awarded "Best Young Artist 2009" by the Nicholas Roerich Museum in a competition for Mongolian artists to make art inspired on Nicholas Roerich.

So come for an interesting evening this Wednesday evening to Cafe Amsterdam.

DONORS URGE CEILING ON STATE INTERVENTION IN ECONOMY

inmongolia@gmail.com (Mongolia Web News) — Mon, 21 Sep 2009 10:03:44 +0000

Mr. B.Batjargal, Head of the Budget Policy Section at the Ministry of Finance, has said that foreign financial institutions have recommended a review of the share of State expenses in Mongolia’s small economy and have suggested something like a legal ceiling on this. They find it unwise that in 2009 as much as 39% of the total social resources are allocated through the state budget. This high degree of state intervention in the economy exacerbates the negative impacts of dependence on mining resources.
The main challenge is to amend the present economic and budgetary structures and halt the inefficient expenditure of social resources. The Ministry of Finance is clear that, once the present crisis passes, there should be no further loans and aid from outside to manage the budget deficit. The emphasis now should be on formulating a medium- and long-term sustainable and consistent macro-economic policy.
In March, 2009 Mongolia went back to taking an IMF loan and adopting a new “IMF program”. The wheel, in a way, had come full circle. It is not that the IMF program is the only or a mandatory route to economic development. What is, however, imperative for the sustainable development of Mongolia is that there should be a comprehensive policy document, formulated by professional institutions and to be implemented consistently at every level by the Government and Parliament.
Read more…

Source: The Mongolian Mining Journal

Mongolia Faces Delicate Balancing Act to Avoid “Oil Curse”

inmongolia@gmail.com (Mongolia Web News) — Mon, 21 Sep 2009 10:03:02 +0000

Economists say riches sure to be unleashed by Mongolia’s first major mining project will make it the world’s fastest-growing economy. Yet things may get worse before they get better. Bankers, miners and government officials are bullish, and for good reason. The country is sitting on quite the lottery ticket if the Government can use the nation’s underground riches productively. That’s a very big “if,” though, and for two reasons.
One, much of the capital available to be deployed in risky, frontier markets just a year ago has dried up. Two, Mongolia still must avoid the so-called “oil curse” that almost always plagues impoverished nations that suddenly begin exporting vast resources.
The global slump dented prices of everything from wool to agricultural goods to copper and other metals. Government revenue shrank, while the central bank has drawn down its currency reserves to support the MNT. Now everybody is hoping that once major mining projects come online, it will quickly begin reaping big economic gains.
Mongolia is at a crossroads and faces a delicate balancing act. It must avoid scaring off investors convinced of its economic potential, while also maximizing its take of the resources. It must then make sure the benefits are distributed wisely and widely among its people.
Read more…

Source: Bloomberg.com

Ot Agreement Will Be Signed This Month

inmongolia@gmail.com (Mongolia Web News) — Mon, 21 Sep 2009 09:56:54 +0000

Finance Minister S.Bayartsogt has said preparations for signing the Oyu Tolgoi investment are going on according to schedule. He would not specify a date beyond saying that the signing would be this month.
Certain laws have been amended and the President is allowed a certain period of time to refuse to ratify the changes. He is not expected to do so, but that period has to be over before the changes legally become effective. The agreement is likely to be signed only after the end of that period.

Source: www.news.mn

Relief, Cautious Optimism At Mongolia Euromoney Conference

inmongolia@gmail.com (Mongolia Web News) — Fri, 11 Sep 2009 12:06:38 +0000

A sense of relief and cautious optimism marked the 4th Annual Mongolia Investment Forum organized by Euromoney at Government House on September 8, the first occasion to bring together investors since the Mongolian Parliament removed all obstacles to the signing of the Oyu Toloi agreement.

Delivering his opening keynote address, Deputy Prime Minister M.Enkhbold said foreign direct investment would “open new doors to the wider world” for Mongolia and asked investors to help the country “realize its economic potential to the full”. Earlier FIFTA Chairman B.Ganzorig had listed some of the measures the Government was taking to make Mongolia “more competitive and more business-friendly”, expressing the hope that more investment would accelerate such changes. Minerals and Energy Minister D.Zorigt said such conferences should be used to make “a realistic assessment of where the global recession has placed Mongolia” as well as of “the steps being taken to get out of it”.

The first of the five panel discussions was on the state of the Mongolian economy. Mr. Alisher Ali Djumanov, CEO of Eurasia Capital, said the global crisis and the delay in deciding on the Oyu Tolgoi agreement had together made the situation “desperate” but recent developments were heartening. However, the real test for Mongolia would be in choosing the right way to manage the liquidity that the expected flurry of investments would bring.

Mr. J.Peter Morrow, CEO of Khan Bank, said the Mongolian financial system had generally escaped being hit by the international downturn; it was the failure of the domestic fiscal and monetary policies that had led to runaway inflation and a sluggish economy. Calling the Oyu Tolgoi agreement “Mongolia’s stimulus package”, he said it is coming late, but it is a package that will cost the state no money while reviving the whole economy.

Mr. S.Demberel, Chairman of the Mongolian National Chamber and Industry, said “figures are poor tools” to understand the economy and he did not share the general enthusiasm that the economy was poised for a upswing. “We are merely surviving instinctively”, he said, urging the Government to give more freedom to the private sector and to adopt “more decisive” macroeconomic policies.

Source: BCM NewsWire