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http://zgm.mn/post/220/

Telecom Mongolia JSC to be nationalized

GoM to purchase 40 percent stake of Telecom Mongolia at USD 2.55 million

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http://zgm.mn/post/220/


Mongolian Stock Exchange has announced that the 40 percent stake of Telecom Mongolia JSC, MSE Tier II listed firm, will be transferred to the Government of Mongolia in a package deal. KT Corporation, formerly known as Korea Telecom, previously publicized to sell its stake in Telecom Mongolia JSC to the GoM. The company has reached a deal with the GoM to sell its 40 percent stake at USD 2.55 million. Established in 1921, Telecom Mongolia JSC is one of the pioneer companies in Mongolia and provides telecommunications, internet, cable television and directory services nationwide. Presently, 5.33 percent stake of the company is owned by the public, while the Government holds 54.67 percent of the company and South Korean KT corporation owns 40 percent. Altan-Ochir Munkhuu, CEO of Telecom Mongolia JSC, has previously told the media that the company will be fully nationalized this year. After the sale, the Government will own 94.67 percent, while the remaining is publicly owned. The sales revenue of Telecom Mongolia JSC reached MNT 20.7 billion with net profit of MNT 6 million in 2017. Market cap of Telecom Mongolia JSC stands at MNT 12.9 billion. In addition, the stakeholders’ meeting of Telecom Mongolia will be held on April 30 at the Information and Communication Networking Company’s conference hall at 11AM. The meeting is expected to discuss the following:

• 2017 operational report and its board review.

• 2017 financial statement with an independent audit review.

• The selection of ordinary and independent members of the Board.

• Approval of 2018 board budget.

• The Board of Directors' decree on not distributing dividends.

• Write out of an immovable object from asset account.

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Governor of BoM comments on FX intervention of this year

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Governor of the Bank of Mongolia (BoM) Bayartsaikhan Nadmid has released a statement to explain the current economic situations and measures, in which he highlighted that the bank supplied USD 1.2 billion for foreign exchange (FX) market intervention this year.

According to Mr. Bayartsaikhan, the FX reserves of Mongolia currently stands at a record-high of USD 3.4 billion. “Although the reserves hit USD 4.1 billion in 2012, USD 2.1 billion were raised from Chinggis and Development Bank bonds that year. The current amount may seem high; however, it is still insufficient for the current economic situation. Mongolia needs to settle its foreign debts, which reached USD 27.9 billion. There is a high risk of collapse in global economy. Major bond repayments will mature starting from the second half of 2020. Thus, it is ill-advised to utilize the FX reserves instead of saving it.”

He then explained the depreciation of MNT, saying “Amid high economic growth, FX reserves and stability in the financial market, the MNT rate fell by around 200 points in the last two months. This is due to the vulnerability of the economy that is highly dependent on mining sector. For instance, China started limiting its coal import in November. Compared to October, FX purchase of private entities grew by over USD 240 million in November and the first month of December.”

Mr.Bayartsaikhan also informed that the BoM, in order to stabilize the situation, injected over USD 400 million into the FX market as an intervention; however, the currency rate further sank, which was the indication of a speculative demand for money. This year in total, the bank administered USD 1.2 billion into the market. Last week alone, the bank supplied USD 130 million, said the Governor of BoM. He further suggested the Government to focus on political stability and avoid uncertainty to boost investors’ confidence and support export. “This is critical at the moment as Erdenes Tavan Tolgoi JSC is seeking to issue an IPO at international stock markets.”

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SME demand for green credit totals USD 1.5 billion

MNT 1.3 billion allocated to environmentally-friendly projects

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On the occasion of the five-year anniversary of the National Roadmap for Sustainable Finance, the Sustainable Finance Forum took place this week under the theme “Diversifying from Sustainable Finance”. According to officials, a total of MNT 1.3 billion was allocated to environmentally-friendly projects since the program inauguration.

In 2012, the Trade and Development Bank of Mongolia, in cooperation with Netherlands Development Finance Company, introduced the first Sustainable Finance program “Environmental and Social Management Systems” (ESMS) in Mongolia. As a result, the national roadmap was approved in the following year. The forum was initiated following an imminent need for private and public cooperation to develop and effectively implement policies, actions, and initiatives in line with the commitment of the Government of Mongolia to the global sustainable development agenda and the Paris Agreement, and the unanimous commitment of the banking sector to advance sustainable finance in the country. 

According to the Mongolian Sustainable Finance Association (MSFA), a total of MNT 1.3 billion was granted to environmentally-friendly projects in the last five years. Furthermore, the banking sector financed another MNT 16 billion on environmental projects within this period.

• A total of MNT 1.3 billion allocated to environmentally-friendly projects since the program inauguration.

• Banks financed MNT 16 billion on environmental projects in the last five years. 

• SME demand for green loans stands at USD 1.5 billion.

A market study conducted by the Mongolian Bankers Association (MBA) and MSFA shows that the small and medium-sized enterprise (SME) demand for green loans stands at USD 1.5 billion. Specifying by sectors, construction and processing plants require significant amount of loan. Thus, commercial banks informed that a low-interest credit source will allow them to distribute discounted  loan for environmentally-friendly projects for SMEs.

Traditionally, the MBA annually selects a flagship bank to steer the business organizations towards environmentally and socially-friendly. In this year’s forum, the association picked Khan Bank to be in charge of green development activities in 2019. Thus, the bank will be responsible for protecting cultural heritage, supporting green economic growth and developing transparency.

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Let us drive out Rio Tinto from Mongolia Part-2

Although OT investment gives us wealth, it splits us as a nation

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First part of the article, which was published yesterday, touched upon the current situation of Oyu Tolgoi and historic events that led to increased investment in Mongolia, which raised the concern of both Russia and China as the two countries saw this as a dire geopolitical mistake.

BEHAVIOR OF NEIGHBORS


When Putin visited Mongolia, he found out that western investors decided to inject billions of US dollars into an affluently rich deposit Oyu Tolgoi, and they already had commenced their operation. Russian Ambassador in Mongolia was completely unaware of this, so Putin immediately got rid of him. Canadian Khan Resources not only started uranium exploration, but also injected investment in mining. Former Russian Prime Minister Sergey Kirienko showed up at the site. Right on the spot, they proposed to kick Canadians out and offered collaboration with Russia. Not just that offer, he also promised to pay the penalties of arbitration tribunal that would later impose on Mongolian Government. When Mongolian Prime Minister visited Kremlin, Putin reminded him to oust Canadians and promised to provide a good lawyer for the arbitration dispute. Whatever the deal was, Mongolian Government pushed out Canadians. Obviously, the counterpart addressed to arbitration and claimed USD 400 million. After a prolonged process, the court ruled Mongolia to pay USD 100 million. During this time, Khan Resources CEO passed away in Ulaanbaatar due to a heart attack. But the Russians became silent. The promised penalty payments, professional lawyer and even the proposal on joint extraction of uranium deposit were long forgotten. Russians are not short on uranium. Plus, they buy from Kazakhstan, a country that is considered to have the richest reserves of uranium. Whilst, Mongolia’s uranium reserves account for only 1- 2 percent of total global uranium resources. 

Other companies that were interested in Mongolian uranium were Toshiba of Japan and Areva, a French state-owned company. Areva has been conducting uranium exploration for 25 years in Mongolia. Cabinets of each generation obstructed the company from acquiring the mining license. Unreasonable libels such as nuclear threat were widely disseminated and the racketeers who called themselves the media and NGOs threatened the company. The people who publicized the fake nuclear threats and potential burial of nuclear waste and organized public demonstrations and protests were all either Korean nationals or Japanese citizens. They are not rich at all, but they finance these activities. It was confirmed that the financial sources of these racketeers came from Germany, however officials of both Japan and Germany say they have nothing to do with these. There was even a case when a Mongolian high-profile official claimed money when the French Foreign Minister visited Mongolia and raised the issues of Areva, saying the issue can be solved if they pay USD 7 million in cash for  developing biotechnology sector. 

Tavan Tolgoi residual deposit is one of the largest coking coal deposits in the world. Mongolian Government made a resolution to commence coal mining at the Tavan Tolgoi back in 1968. Mongolia was not able to finance the huge amount of investments that required, so numerous cooperation offers were sent to Romania, Japan, North Korea, China and South Korea. Every offer was denied due to difficult conditions in coal transportation. After all, both Chinese Xinhua and US Peabody expressed their interest in Tavan Tolgoi. Korea and Japan, countries that are fully dependent on Australian coal supply, tried to get some quota from Mongolia as their coal supply became unstable due to disaster in Australia. Exactly at this time, Russians suddenly expressed their interest and agreed to establish an international consortium to bid for the right. US Peabody tried to invest for 9 years, and established their Permanent Representative Office in Mongolia. However, the meeting for establishing a consortium, led by Mongolian Government, was organized 13 times. It ended up unsuccessful each and every time as Russian representatives Vitaly Morozov kept insisting on impossible conditions and requirements. Bored and exhausted, Peabody finally left Mongolia soon after. Japan and Korea found a new coking coal supplier in Mozambique and halted their interest in Tavan Tolgoi.

Our neighbors will never allow anyone to come to their buffer zone and establish relations

The US Government decided to give USD 280 million in aid as a part of Millennium Challenge Fund. When Mongolian Government decided to channel the financing for modernization of its outdated railway with Russian standard gauge and internal combustion locomotives, Vladimir Yakunin, CEO of Russian Railway, which owns 50 percent of stake in Mongolian Railway, immediately arrived in Mongolia and made a decision to reject the aid from the US. He made a deal to modernize the railway, for which Mongolia has to pay its share of total costs from Tavan Tolgoi coal, if Mongolia kept the Russian-standard railway gauge. Yakunin explained his decision as “the only free cheese is in the mousetrap”, and sides took a photo after the agreement, in which Yakunin was showing a fig sign. Later on, he wrote a letter to Chinese Railway officers saying he already made the agreement to renew the Mongolian railway and asked for credit from China. A decade passed since then, but the modernization of Mongolian railway has been long forgotten. 

As opposed to Russians, Chinese have relatively milder aggressiveness and rudeness. They apply soft tricks, step by step acts, pay bribes and block Mongolia in various ways with different explanation. Their investment on Mongolian mining sector does not fuel extensive protests and does not make any sensations. The secret is that they pay bribes to all levels of government officials and racketeers to keep them silent. Conversely, in Western countries, paying bribe is strictly prohibited in both their countries and other jurisdictions, so they are disliked by Mongolians and become target for different intimidation and racketeering. Bribes and corruption paid by Chinese people are having a really bad influence on Mongolians. Majority of Chinese investment made into Mongolian mining sector are registered on the names of Mongolian nationals.

CONCEDING TO DESTINY


On one side, Rio’s investment on Oyu Tolgoi gives us large amount of wealth and could potentially make this country rich in the future. On the other side, this investment splits Mongolia into two opposing parties and drives wealth-driven political splits. It has become a normal routine to blame, curse and shout at everyone, who supports Oyu Tolgoi or gives positive credits to Oyu Tolgoi, and frame them as “foreign spy”, “betrayer” and “recipient of bribe”. Even the MPs, the members of Mongolia’s legislature, often criticize each other saying “You have never said anything against Oyu Tolgoi. You are an enemy of the state.” That is why the investment of Oyu Tolgoi (actually an investment from non-neighboring country) will likely have more serious and detrimental consequences than its importance. Regardless of what happens, Mongolia is destined to follow the words of its two neighbors. These neighbors would not allow such enormous investment from a faraway country. 

An open-pit gold mining site in Pamir Mountains of Kyrgyzstan, which is located at a high altitude with extremely difficult conditions, is called Kumtor. Canadian Centerra Gold is currently working on this gold deposit that has 350 tons of gold reserves. It is likely the only resource  that have been discovered so far in this poor, low-income country. Due to this single deposit, Kyrgyzstan experienced several coup d'etat and faced a verge of civil war that resulted in many deaths. No matter how poor and weak, Kyrgyz people will not starve without Kumtor. The investment added no fortune, but misfortune to its people. Mongolians, who ran nomadic pastoralism for centuries, have never suffered from extensive famine and natural disasters. Nowadays, the number of livestock in Mongolia hit a record high of 80 million. Only for 3 million people. 

Discrimination, intimidation, pressure and threat against third-neighbor investors, are all just a geopolitical game designated to ward them off for good and make them to not come again. Centerra Gold, which worked on a gold deposit in Kyrgyzstan, worked in Mongolia, namely on a gold deposit with 40 tons of reserves, for over a decade and paid almost USD 1 billion in taxes. They agreed with Mongolian Government to work on the next deposit, which had 70 tons of reserves, and injected considerable amount of investment. But, several MPs organized protest campaigns and racketeers oppressed and obstructed them for several years. Two sides kept raising lawsuits in turns, but Mongolian court bored out the investors without making any concrete rulings after almost 20 trials. According to 2009 data, Centerra Gold topped the list of taxpayers to feeble national budget of Mongolia, but Mongolian President explicitly libeled that Centerra Gold paid only USD 15,000 in taxes throughout the period of its operations in Mongolia. In the spring of 2018, Mongolian court made a decision and terminated the license on mining a 70 ton-deposit that were given to Canadians. In the summer after this ruling, Mongolians negotiated with Centerra Gold and agreed to buy Centerra’s assets in Mongolia for USD 35 million. In the autumn, court restituted the license holder’s right. It is still questionable whether if Mongolians really acquired the deposit. The same process keeps occuring. 

As for Oyu Tolgoi, China previously offered to purchase the deposit. At the mine, the underground development is currently underway with high-end technology. It is said that only two companies, namely Rio Tinto and Anglo-American, possess this technology. China was more interested in the technology, but did not reach a deal with Rio. According to Rio, two Mongolian Government officials proposed an acquisition of OT several years ago. When Rio was astonished with the offer as Mongolia had no financial capacity to take over this asset that is worth several billion US dollars, those two said, “Russians will give money”. It may not be true but it was obviously one of them. 

Today, Mongolia’s independence and sovereignty are fully secure. No one is trying to overrun Mongolia, at least until the next world war. None of our two neighboring superpowers are interested in annexing or occupying Mongolia, because they need a reliable sovereign buffer state. However, they will never allow anyone to come to this special buffer zone and establish a deep relationship with them. Mongolians will only suffer if they try to accomplish something that is definitely impossible in terms of solidarity, morality, personality and as a nation. First of all, we must remain friendly with the two superpowers naturally existing around Mongolia, find the correct way to interact with them and respect their geopolitical interests. These behaviors of Russia and China toward Mongolia are unavoidable and understandable. Therefore, the best way would be to talk to Rio Tinto and reach a mutual understanding on the fact that the powerful neighbors will never agree with the investment and divorce us from Rio in a friendly and amicable way. The past two decades have clearly demonstrated that a giant corporation like Rio Tinto would not be able to acclimatize in the land of Mongolia. If the current process continues, Rio Tinto will suffer more from libels and defamation, which also pose a risk of impacting their other businesses that account for majority of Rio’s assets. As for Mongolia, if the situation gets worse, this could further split and rupture the people and deteriorate the morality of people day to day and could soon turn into a country controlled by robbers like Congo, Venezuela, Zimbabwe, Nigeria and Haiti. No sane person would want to turn a country into a hell just for mining wealth.

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Let us drive Rio Tinto out of Mongolia Part-1

Regardless of Rio's contribution, people have a firm belief that Rio is robbing Mongolia

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CURRENT STATE OF OYU TOLGOI

Oyu Tolgoi is considered one of the largest copper deposits under a single a mine. Total cost of development, including open pit and underground, is estimated to be USD 13 billion, which is the largest ever investment in the history of Mongolia. Government of Mongolia owns 34 percent of the stake and Turquoise Hill Resources own the remaining 66 percent. Ivanhoe Mines, the company that discovered the deposit, founded a joint venture with Rio Tinto and named the new company Turquoise Hill Resources, which was soon taken over by Rio after they acquired Ivanhoe shares and became majority shareholder. The remaining 15 percent stake belongs to small shareholders consisting of 6-7 companies. The shares of Mongolian side were acquired in a carryforward deal borrowed from Turquoise Hill to be paid from future revenues. 

According to official sources, investors suspended the underground development after its shares declined by 20 percent after a dispute with Turquoise Hill on chasing out the company was emerged by Sedvaanchig Tserenbat, an Executive of OT from the Mongolian side of shares. Two years later, investors re-negotiated with the new Cabinet in Dubai and agreed to resume underground development and complete both underground and open pit mines by 2021, injecting additional investment for this purpose. However, the next Cabinet that was formed in the following year started various large-scale inspections on Oyu Tolgoi, issuing hundreds of complaints; and detained the former Prime Minister Bayar Sanj, who signed the initial investment agreement, and Saikhanbileg Chimed, who signed the revised agreement on restoring the underground development. Although it is not confirmed yet, they are accused of receiving billions of USD-denominated bribe for signing those agreements. 

Regardless of the fact that OT has already injected USD 6 billion into Mongolia since its inception, monthly contributing about USD 100 million to Mongolia’s tiny fx reserves, accounts for one third of the State Budget revenue, became the largest employer with 18,000 Mongolian workers and engineers, Mongolians have installed a firm belief that Rio Tinto is a bloodsucker that is robbing Mongolia’s underground wealth without any returns, all due to propagandas and gossips fueled by the short-living Cabinets and Parliament. In reality, the Government of Mongolia did not inject a single cent into the OT mine, and the credit is expected to be paid afterwards when the mine is fully operational and recoup its costs. However, the Government already received about USD 2 billion in taxes from open pit production, royalties and water usage fees. Aside from this, OT has been working with over 800 suppliers and contractors, of which 80 percent are Mongolian national companies that have earned over USD 3 billion for their goods and services. 

OT mine accounts for only 5 percent of total turnover of the global giant Rio Tinto. Rio’s Board consists of 13 directors, of which six are independent directors that are not investors. It has been over a year since the Rio Tinto directors wrangled over on  what to do with OT in the future because of the continuous provocation, libeling and burdens caused by the State, Cabinets, Parliament, Government agencies, non-government organizations and citizens. They view that numerous actions, including the tax act in millions of USD on TRQ from an inspector of the lowest unit of taxation and customs administration and detainment of high-profile representatives who made the deal with Rio for corruption probe, are a signal and intimidation to kick investors out of the deposit. Therefore, the independent directors of Rio have reportedly insisted on making decision to cease all operations in Mongolia. In their opinion, libeling Rio over a bribery to poor countries would be detrimental to the company’s reputation and will potentially damage the overall business more than the profits from OT.

Board of Rio is waiting to reach a deal on three issues with the Government

The directors decided to wait until the company reaches an agreement with the Mongolian Government on three issues. First, energy supply. Oyu Tolgoi purchases electricity from China, but the Mongolian Government reached a decision to terminate electricity import that will be effective from 2019. Rio was planning on building a power plant, but the Government rejected it saying that they will build an integrated energy source in the Gobi region. Then, the Government suddenly withdrew its intention to build integrated electricity source. Oyu Tolgoi has become impossible to operate in the future without electricity. Rio requested a permission to construct a power plant, asking for a reply due November 1, 2018, but there has been no response yet. 

Second, the customs and border situation become dire. Numerous requests were sent to the Government on resolving the issue, but the company keeps encountering various demands and insistence every time the Cabinet or even a customs officer changes. Investors keep proposing to proceed with final decision and resolutions; in reality, it is beyond the company’s control as the issue fall onto the matters between Mongolian and Chinese Governments. Therefore, Oyu Tolgoi cannot solve it unilaterally. The Government of Mongolia must intervene. Thirdly, the instability of Mongolian Government. New demands and tax requirements lead to volatility of the company’s shares in international stock markets. Therefore, the company asked to pre-negotiate decisions that are associated with stock prices. Otherwise, they will leave Mongolia for good.

BUFFER STATE BETWEEN TWO JURISDICTIONS

Despite the proclamation of its independence in 1911, Mongolia was not recognized by any country until finally, China recognized Mongolia on January 6, 1946 and USSR on February 28, 1946. Formerly  called Outer Mongolia, the country was sandwiched between Imperial Russia in the north and Qing Dynasty in the south, became a vassal of the Qing Dynasty at the end of XVII century and the two countries become mutually obligated to each other. Manchurians, the rulers of Qing Dynasty, are not Han Chinese, instead they were nomads that overrun and ruled the entire China. With the vassal agreement, the Qing Dynasty received a duty to protect Mongolia from any oppression or influence from Russians and Chinese nationals. As such, Outer Mongolia was protected and became a prohibited land with special attention from the Qing Dynasty. Following the collapse of Qing Dynasty after the Xinhai Revolution, the deal became invalid and the Outer Mongolia declared its independence. However, the new Chinese Government reckoned China as the direct successor of Qing Dynasty and thus, refused to recognize independence of Outer Mongolia. For over 30 years, superpowers, including Soviet Union, China and Japan, kept arguing on sovereignty of Outer Mongolia, which was finally settled after the end of World War II. With the negotiation between Russia and China on not overtaking Mongolia and maintaining the country as a buffer zone; Mongolia’s independence was recognized by its neighbors and other jurisdictions. 

Historically, Russians expanded its territory and occupied the entire Siberia. As a result, Russian clashed with China over the northern part of Manchuria, which led to the border treaty of Nerchinsk in 1689. Afterwards, the two countries established a new border by Kyakhta Treaty after Mongolia merged with Qing Dynasty in 1727. After Russia was forced to withdraw in the Second Crimean war in 1856, they understood that Russian expansion to the west was limited, so the Alexander II started the struggle for territory. Russia-China treaties were made several times, including Kuljа agreement in 1851, Aigun in 1857, Beijing in 1860, Saint Petersburg in 1881, Qiqihar in 1902, Beijing in 1913, Kyakhta in 1915, Beijing in 1924, Moscow in 1945, Moscow in 1949, Beijing in 1989, and Moscow in 2001, and all of them were on border issues and in majority of these cases, Russians were on the offense. 

Throughout this period, Russia occupied a large territory of then Manchuria, Mongolian and Eastern Turkestan, but the issue of Outer Mongolia, which was divided into three parts, had a different fate. Chinese revolution in 1912 overthrew the Qing Dynasty and established the Chinese Republic. Japan, a new opponent for the oriental territory, was emerged and won a battle against Russia in 1905. Great nations recognized the territory of China by the Washington Conference in 1920. These events made Russia unable to directly occupy Outer Mongolia. Due to this historic circumstances, Japan and Russia made a secret agreement, setting Manchuria, Barga and Inner Mongolia as an influence zone of Japan and Outer Mongolia as an influence zone of Russia. More detailed subsequent agreements were made between the two countries in 1912 and 1916 respectively, further confirming the deal. Therefore, the USSR was firm on its principle of keeping Mongolia as its influence territory to keep Russia separate from Japan as a buffer state. After Japan got defeated in the World War and left the game, Outer Mongolia still remained as a buffer zone, but this time, between Russia and China. Despite the fact that China was not pleasant with this principle,  they recognized Mongolia’s status quo with the involvement of the United States in the Yalta Agreement. Finally, the two sides decided to recognize the sovereignty of Mongolia with a bilateral agreement between Russia and China in Moscow. Mao’s China also approved the deal in 1950. 

Modern Mongolia is a sovereign state recognized by an agreement between its two neighbors as a buffer zone. Who will have more influence over Mongolia depends on the current circumstances. However, none of them will approve of any interests of a third country in Mongolia. When Mongolia established a diplomatic relation with Japan in 1972, the two neighbors expressed their dissatisfaction. Mongolia tried to establish diplomatic relations with the US for many years, but the USSR blocked this attempt for over 40 years. But none of the neighbors are willing to annex Mongolia, which is also impossible. After the World War II, Mongolian leaders made several requests to become a part of Soviet Union. This was an idiotic attempt in reality, because the global map was already drawn after the world war, so it was impossible and none of the neighbors were obviously willing to accept such requests.

WHIRL IN MINING SECTOR


Mongolia, which was recognized as a result of the Russia-China agreement and gained its independence, slipped out of sight during the period of turmoil after the end of Cold War. It shifted to democratic system, open society and market driven economy, plus announced a “Third neighbor” policy. With the assistance from the International Monetary Fund, Japan and Western donor states, Mongolia successfully overcame its transitional period. The country, which had a potential to have mineral wealth, excessively tried to attract foreign investors. the records indicate that the President and Prime Minister alone made over 200 statements and speeches, inviting foreign investors between 1990 and 2000. However, no investor came to Mongolia until the outset of the new century. Instead, we extracted small amount of gold through artisanal mining until foreign investors came in. The first decade of the 21st century elapsed calm as all strategic facilities were dependent on Russia and foreign trade was controlled by China. Neighbors were calm too. With the outset of the new century, the entire process changed drastically. The interests of Western companies to invest in Mongolia’s mineral sector and geological exploration suddenly ascended. Large and smallscale deposits were discovered, and a huge amount of investment flew into Mongolia. Within just a decade, Mongolia’s economy rose from USD 1 billion to USD 12 billion. The GDP growth rate reached a record high of 17 percent. Globally-renowned economists and media started naming Mongolia as the next Asian Tiger. As it suddenly became lucrative, Putin visited Mongolia three times within a fairly short period. Soviet leaders, including Stalin and Khrushchev, never visited Mongolia while Brezhnev arrived with a single purpose to deploy Soviet troops in Mongolia. Since 1990, all leaders of China paid visits to Mongolia. Of course, Den and Mao did not. For the leaders of both countries, the biggest concern was Mongolia’s rejection to join Shanghai Cooperation Organization even after numerous demands, beseech and persuasion. Even more concerning issue was that “the third countries” made huge investments in Mongolia that has never seen before. Through the lenses of both Moscow and Beijing, it was a dire geopolitical mistake. The “buffer zone”, established by a mutual negotiation, was becoming different from the initial plan. It was as if the tail disregarded the dog.

Revealing the behavior of our two neighbors, the second part of the article will be published tomorrow to explain why Rio Tinto is better off leaving Mongolia. Because at this rate, the company will suffer more from libels and defamation, while Mongolians will further split as a nation.