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http://zgm.mn/post/391/

Aduunchuluun’s license conflict to be resolved

Area coincided with MAK LLC has a coal reserve of 40-50 million tons

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http://zgm.mn/post/391/



During his official trip in local areas in Dornod and Sukhbaatar aimags, Minister of Mining and Heavy Industry Sumiyabazar Dolgorsuren visited the Aduunchuluun JSC’s coal mine, which has beencontinuously supplying the Eastern Region Energy Systems JSC (ERES) with thermal coal for 63 years. Since establishment, Aduunchuluun has run open-pit and underground mining operations, removing 28.4 million cubic meters of topsoil and produced 14.9 million tons of coal. In addition to ERES, it also provides its products to companies, organizations and households in Dornod aimag. As of 2017, the company allocated MNT 1.16 billion to the state budget. According to the Mining Minister, Aduunchuluun, which was privatized in 1999, is facing a serious issue of concurrent licenses in its mining areas. Specifically, 134 hectares of area was concurrent with MAK LLC’s mining license granted in 2009.


Currently, MAK LLC possesses two licenses on 5104.3 hectares and is conducting topsoil removal on the area. Accordingly, Aduunchuluun was unable to run any operation on its area due to the license dispute. If the issue is settled, the company will have an opportunity to run operation for the next 30-40 years. The coincided area has a resource of 40-50 million tons of coal. The CEO of Aduunchuluun JSC told the minister that the company is has no area left to mine. The ERES in Dornod has no coal reserves and is in a difficult situation of energy shortage. He was grateful that the delegation had an in-situ visit during the company’s time of difficulty. The company’s management requested the Mineral Resources and Petroleum Authority of Mongolia to urgently issue its relevant decision based on the Clauses 62.4, 62.5 and 62.6 of the Minerals Law of Mongolia. Mr. Sumiyabazar told the management to submit its request and documents related to the license, and highlighted that there will be no risk of energy irregularity in the area.

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NBFIs see steady growth in 2018

​Half-annual report of NBFIs, SACCOs and Insurance firms releasesd​

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Financial Regulatory Commission (FRC) presented half-year statistics of non banking-financial institutes (NBFI), Savings and Credit Cooperatives (SACCO) and insurance sector. The indicators had positive results in the first half as securities market capitalization grew by 65.9 percent, to MNT 2.5 trillion, which equals 9.1 percent of the 2017 year-end GDP. Insurance sector surged 13.1 percent, to MNT 282.2 billion. Insurance firms spent a total of MNT 29.2 billion on reimbursement expenses, which equals around 34.7 percent of revenue. Total capital of NBFIs expanded by 33.6 percent, reaching MNT 1.14 trillion. About 74.1 percent of the amount accounted for loan growth. NBFIs assets rose by over 30 percent, to MNT 888.5 billion, reported the FRC. The amount of the capital contribution totalled MNT 707.8 billion, 28.8 percent higher than the same period of last year. Furthermore, SACCOs also showed positive performance. The net revenue of SACCOs reached a 10-year high with 37.4 percent growth year-over-year, totalling MNT 19.3 billion. FRC highlighted that the restoring economic activity and results of some policies were the key drivers in the growth. For examples, FRC conducted a study and decided to increase the amount of the capital contribution in January 2017, allowing citizens to attain accessible financial services and reduce interest rates. An official noted that the commission is now studying opportunities to ratify a policy to introduce more fintechs and increase accessibility.

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Baabar: I am ready to take responsibility for my articles

​State has so much money but lacks the wisdom to spend it​

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-You published 10 articles under the Adventures of Foreign Investment. Is the series finished now, or will you continue it further?

-Although there are many things I want to say, I will not write such articles again. I am not a decision maker. I am just an independent person. I am just telling you my opinion. I just want to say how this nouveau riche disease is causing a harm to the future development of this country. Let the ones, who can understand this, understand this. Poor countries are developed by foreign investment. It is because they do not have start-up capital. Today’s developed countries such as Japan, Korea and Taiwan are all developed because of the U.S investment. Japanese Prime Minister Yoshida was a pro-American and made political compromise through 1952 agreement and in return, attracted investment. Korea was one of the poorest countries of the world in 1962 when Park Chung Hee took power. He sent Korean troops to Vietnam and gained the Americans’ trust and attracted investment. Taiwanese also attracted investment when they used Mao as a threat and stood by the U.S side. War ravaged in Europe developed quickly because of the U.S investment known as the “Marshall Plan”. When asked the soviets if they wanted to be involved in the Marshall plan, they refused and did not allow Eastern Europe to join this plan. Everybody knows what happened. 1978’s open door policy of Deng was a struggle to attract investment. After 20 years, Taiwanese invested about USD 150 billion in China only. America became the global superpower because of investment. Its liberal market, freedom, equal opportunity and democratic system attracted global investment and brain. Now, the US still leads the world in terms of foreign investment for over a 100 years. Recently, China began to be ranked after the U.S. Each country is competing with each other for foreign investment.

-Can countries be able to develop using foreign investment?

-Everybody can live happy if they earn enough money. What is harder than earning money is how to spend it. Norway is a country with enormous wealth of natural resources. They set up a fund using revenue surplus and expanded it further and created much capital. This country with 4 million population can withstand a crisis of 40 years without any problem. It has the lowest corruption index. Nigeria has more than 10 times the wealth than This country. Any party that takes power through election or state coup attempt to rob and plunder as much as possible from the wealth generated by the natural resources and then run away. Here is one example: during the 1973 crisis, oil price suddenly skyrocketed. When military took power, they immediately decided to build a new capital and placed a massive cement order all over Europe and Soviet Union for construction and infrastructure development of a dream town, which is 600 km away from Lagos. Cement demand per capita was estimated to be several times larger than the U.S. Until today, there has been no new capital and no construction and no road. It was just another way of the authorities to plunder and rob newly found wealth.

-Is Mongolia now on the same path as the Dark Continent?

-From those people who spoke about that, how many of them actually went to Africa and/or saw their statistics? I believe those are the people who cannot even tell where Africa is on the map. Almost all countries of Africa are new; therefore, lacks experience. On the other hand, these countries are made up of many tribes and ethnic groups; thus, they have too much internal conflicts. They do earn huge sum of money; however, they spend it on war, conflicts, corruption and bribery. However, not all African countries are like that. Botswana is one of the fine examples of a developing country. Rwanda lost almost 1 million people during the 1990 civil war. This became an important lesson for them and now, they have become the leading example of development. In 1979, 25 out of the 50 countries of Africa had state coups and today, there are no such phenomena and majority of these countries have democratically elected governments. Compared to this, we have 2222 years of statehood and ancient culture and left our legacy in the world history.There are three countries that are homogenous. These are Japan, Poland and Mongolia. Although there are such advantages, the others are developing and we are deteriorating.

If Rio leaves Mongolia, it would mean the entire world will leave us

-They say a global economic crisis has begun. What is your take on this?

-We all know what crisis and poverty are. When political system that relied on debt for existence has collapsed, we ended up with nothing but salt in shops. State leaders begged over 200 times for investment; however, nobody noticed and we were starving. There were many media talks about leasing South Gobi to Japan for 99 years. Inflation reached 360 percent and the currency notes became empty papers. Politicians competed with each other on how many US Dollars they brought in by organizing consultation meeting with the donors. We begged around the world talking about Dzud (heavy wintering) disasters. One of the example was during 2008 global crisis, where all economic activities were halted and merchants in the market were complaining “there is no one to buy our products even when we offer discounts far below the prices we purchased”. It was not that long ago.

-People are saying foreign investments have stopped in our country. Is that true?

-Within the last decade, Mongolia became rich for the first time in its history. From the poorest country of the world, we instantly reached the “average” level and led the economic development indicators during the last few years. Did we suddenly became a hard-working people? No. This is the benefit of the rapid development of China, and foreign investment. Copper price surged and coal also became expensive. Thanks to this, the coal revenue far exceeded the Erdenet Mining Corporation. Within one decade, the GDP increased by almost 10 times. Oyu Tolgoi, which is not yet fully commissioned, makes up around one third of the entire revenue of this country. With this money, they really had a good time organizing parties. Just imagine! The budget of Ulaanbaatar increased by 15 times during the last decade. Many dog statues have been erected in the city. Vodka money distributed to the public already exceeded the GDP. “National corruption sector” grew astronomically high. it is probably inevitable because the state has so much money and lacks the wisdom to spend it. We lost a historic opportunity. Individuals and countries does not always have such opportunities. The parliament has blocked foreign investment. It covered all sectors ranging from minerals to communication to construction and regulated the corrupt officials to give permits. Corrupt officials that chase away investors and demand bribery are being elected and becoming key decision-makers. Investors anywhere are very sensitive. They are taking a risk with their huge capital. Those who were about to invest escaped and those who invested abandoned their investment. and those who already made significant investment stayed behind as a collateral. We ended up with several holes that have dug manually and geologists became unemployed. An acquaintance of mine has a drilling company and employs about 70 people and paid about MNT 2 billion taxes to the state. Now, he is working with his employees, cleaning up the streets of Ulaanbaatar and plucking out weeds in order to not dismiss his employees. They should be drilling in field by now and paying taxes to the state. We have a good examples of Kazakhstan and Kyrgyzstan. Although Kazakhstan is not a democratic country, they are quite open in terms of foreign investment. This agricultural land of frontier area of Soviet Union has become one of the potential development zones of Asia today. The Kyrgyz people fought in small gold mine of Kumtor for almost 20 years and staged an overthrow of several governments that claimed lives of many people. Each time a new government is formed, they put new strange demand to the investors. Those who invested in such place, suffers so much and those who observe this, try to stay away from this place. Specialists say, much bigger deposits can be found; however, who will invest here in this scary place?

-Then, what do we do now?

-We have a parliamentary governance. However, foreigners does not always understand this. They think the president decides everything. They are now waiting for the next election. They know very well who pledged and promised to chase out, demolish, destruct, review, cancel and change. We talk about Rio Tinto; however, 50 large shareholders of this giant company are largest global companies and banks. If they go away from Mongolia, it would mean the whole world will leave us. It was said once that we are going to be one of the richest countries of the world; however, it changed to we may end up becoming a beggar soon. I am not trying to scare anyone. This is the reality. We are fighting with each other over a huge wealth, which more than enough enough for all of us. Shale was ignored until today. But now, there is a new technology that uses shale for energy production. High quality shale has been found in Mongolia. This is another source for new war in our country. There are already articles appeared in newspapers that say shale is dangerous, toxic and may lead to corruption and bribery. Now, the whole country will talk about shale. This is the next target for those patriots who do not even know what shale is. The environment is destroyed by us, rather than foreigners. Who is polluting the Orkhon river? Who is polluting Yuruu and Kharaa rivers? Who dug throughout the country looking for gold and made it polluted and fragile in the first place?

-You touched many uncovered issues and opened up many cases with criminal nature in your series. However, you did not name anyone. Why?

-The majority of our authorities are corrupt and thus, they cannot talk about these fearing their corruption will be discovered by other corrupt officials. I am not a maniac of eating or getting a bribery. I did not do anything illegal. I am able to take care of myself without having to steal. Therefore, I am not afraid of anyone. Those who do not like me, may stab me in the back. Now, if I say “for the sake of motherland and public”, I may look like those so-called patriots. However, I truly love this country without having to announce it superficially. Also, I am not a backstabber. I will not lodge complaint to court and police. In this series of articles, I mentioned about 10 large cases with a criminal nature. I am ready to take any responsibility if these are proven false. However, there are many organizations responsible for inspecting crimes or at the very least, compensate for the public.

Interviewed by Orkhon.J 2013.6.9

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Experts eye robust growth for coal as price surges

​Tavantolgoi-Gashuunsukhait route auto road opens​

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Mongolia’s main export border checkpoint Tavantolgoi-Gashuunsukhait route auto road opened yesterday. Although transportation delay caused by road closure affected coal export volume; revenue resulted higher than the previous year’s mean time according to statistics. The Gashuunsukhait route auto road was in high risk of flood, creating crocodile cracking on the road due to heavy rain in July. Thus, coal transport was halted on August 2. Authorities informed that immediate actions have been taken to repair the road, successfully preventing further delays to coal transports. Regardless of delay created by the road fix, coal exporters minimized loss by transporting coal reserved at Tsagaan khad port. As of the first seven months of this year, Mongolia exported 20.5 million tons of raw coal worth USD 1.6 billion, which is USD 206.6 million higher than the same period of last year; however, the volume fell by 304,700 tons. In addition, commodity market is showing a sign of weakening.

Mongolia’s main export items, namely coal and iron ore, have maintained their growth, but copper and gold have plummeted due to the trade war between the U.S and People’s Republic of China. For instance, copper price sank USD 1000-1500 per metric ton and Gold fell by USD 100-150 per ounce since June. On the other hand, coal price grew by around 10 percent yearover-year (yoy), to USD 78.4 per ton and iron ore by nine percent. Several Chinese provinces have prepared a plan to reduce the capacity of steel and coal production, boosting the prices of iron ore and coal according to experts. In the first seven months of 2018, Mongolia exported 3.9 tons of iron ore, 20 percent growth yoy, worth USD 181 million. The fates of Mongolia’s coking coal and iron ore depend on Chinese steel market, which is directly connected to its construction and infrastructure. Chinese construction demand is visible from its new housing prices. According to Chinese statistics, housing price surged in 70 cities across the country, showing an average growth of five percent yoy.

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Government loses arbitration against Standard Bank again

​MP Sanjymatav conifrms Mongolia lost twice at the arbitration​

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Earlier in July, Member of the Parliament Baasankhuu Oktyabri announced that the Government of Mongolia lost arbitration battle against Standard Bank of South Africa, which is now owned by China. Sanjmyatav Yadamsuren, Head of the Parliamentary working group responsible for inspecting the 51 percent ownership issues of Erdenet Mining Corporation (EMC), confirmed yesterday that the Mongolian Government has lost twice at the London Court of International Arbitration. EMC, the biggest contributor to budget revenue, was sanctioned in the international market in February 2018 in connection to a dispute over Mongolian Government’s 51 percent ownership of EMC. A decade ago, Batkhuu Sharavlamdan, CEO of Just LLC, loaned USD 140 million from Standard Bank of South Africa, which now belongs to China, collateralizing Mongolian Government’s 51 percent ownership of EMC.

Mongolia now has to cover the plaintiff's expenses of the last litigation

MP Sanjmyatav informed, “The working group concluded that it is unnecessary to send a Parliamentary delegation to the arbitration court. As a state monitoring, a representative of the Independent Authority Against Corruption was sent. The arbitration ruled against Mongolia.” The arbitration previously obliged the EMC to pay USD 51 million, lowering Standard Bank’s USD 109 million invoice. However, the interest and costs incurred by the plaintiff added up to USD 172 million as of March 1, 2018. Since then, the interest piled up by around USD 900 per day. Also, Mongolia now has to cover the plaintiff's expenses of the last litigation.