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I write about emerging and frontier markets in Asia. I now primarily contribute work to Forbes Asia. My most recent work and my complete bio can be found on Forbes Asia's site: http://www.forbes.com/sites/jonspringer/ If it is easier, you can find my recent work sorted by country on this... More
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  • Mongolia Weekly Update Archives 06: June 29 To August 26, 2012 3 comments
    Sep 2, 2012 9:48 AM | about stocks: ASPXF, EGI, ERDCF, GMGLF, TRQ, KHRIF, BZDLF, LKYSF, MNAP, MERMF, MOAEF, MOAEY, MNGGF, MOGLF, PRTDF, PRPCF, SLMZF, SGQRF, VOYRF

    Archives have name of poster & date at the top of each, and the date & time stamp at the bottom of each post. These are prior posts from the dates indicated. To search the posts for particular data or companies use control-F on PCs and command-F on Macs.

    For current news posts, links to other Mongolia-related pages, and current author disclosures, please go to Mongolia Weekly Update.

    • Guest InvestorComments (83)

      Preliminary results from the General Election Commission.
      Out of 48 seats under a majoritarian system, DP won 21 seats, MPP 20 seats, MPRP 4 seats, independent candidates 3 seats.
      Preliminary party list vote (28 seats total)
      DP-32.24%, MPP-28.38%, MPRP-20.51%, Civil Will-Greens- 5,9%, the rest did not pass the 5% barrier.

      Roughly then, it looks like DP will receive 10 seats on party list, MPP 9 seats, MPRP 6 or 7 seats, Civil Will-Greens- 2 or 3 seats.

      In total, DP will get 31 seats, MPP 29 seats, MPRP 10 or 11 seats, Civil Will-Greens- 2 or 3 seats and there will be 3 independents (two of them, Ts.Davaasuren and Kh.Bolorchuluun were members of MPPs before and presumably will ally with them)

      http://bit.ly/N1m7hq
      http://bit.ly/L7f0Id

      29 Jun, 05:51 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      If that is the case there are only three ways to form a gov't (with 76 parliament members requiring 39 seats for a majority):
      DP-MPRP
      MPP-MPRP
      MPP-DP

      All of of CWGP and Independents combined will not be enough to get either of the big two parties to a majority.

      MPRP can play kingmaker and has a strong position to negotiate for ministerial seats... or does the grand coalition return for another 3 1/2 years?

      29 Jun, 07:43 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      DP-MPRP coalition is looking unlikely given previous demonisation of Mr. Enkhbayar by Democratic press ("Godfather of corruption" and all that nonsense)

      Now, MPP is in excellent position to negotiate. Essentially it can force DP into an equal, full parity coalition like in 2004-2006 (perhaps even keeping Batbold as a Prime Minister). If DP refuses, MPP can certainly gain a coalition with MPRP, but as a senior partner (and again, with Batbold as Prime Minister once more)

      The only problem I can foresee is a possible power struggle within MPP leadership. MPP/MPRP has a rather good tradition of changing leadership after every election.

      So, fractions within MPP might attempt to unseat Batbold and Khurelsukh, citing poor electoral performance or perhaps even blaming them for split with MPRP and Enkhbayar.

      29 Jun, 08:20 AMReplyDelete CommentLike4

    • doublegunsComments (5706)

      So what is it that the MPRP really want. Seems now is the time to negotiate.

      29 Jun, 07:49 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Someone on Twitter speculated that there might be a MPP-MPRP coalition and asked the same question - what posts the MPRP will ask for?

      The joking (or perhaps, not so joking) answer was - Ministry of Justice and Internal Affairs

      29 Jun, 11:58 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Another observation. This result, 32% is really one of the worst in the history of Democratic Party.

      It certainly should be regarded as a defeat. DP managed to gain so many seats only because of the MPP/MPRP split.

      In fact, if not for this split and if the old election law were still in force, DP with such a performance would have ended up with only 2-3 seats in the parliament, like in 1992 or 2000.

      Now, a question which Democratic Party leaders should ask themselves is why the voters are dissatisfied with Democrats so much and who and what is to blame for this?

      For readers of this blog, the answer I think is clear enough.

      Mongolian voters expressed their disapproval of President Elbegdorj's attempts to start political persecution of his opponents under pretext of fighting corruption.

      29 Jun, 08:28 AMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      A joint press-conference of all political parties with exception of Democratic Party took place an hour ago. They signed a petition to the General Electoral Commission demanding a manual control recount of votes throughout the country citing gross irregularities and suspicious results of automatic vote counting.

      Speakers who signed the petition included Prime Minister and head of MPP Mr. S.Batbold, deputy head of MPRP MP Ch.Ulaan and leaders of all the remaining parties except DP.

      This is an extremely important development and very dangerous for DP.

      It well may end up to be a birth of "Everybody against Democratic Party" coalition....

      http://bit.ly/MEoW9i

      29 Jun, 08:40 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Jon Springer writes an open challenge to the ACA in the UB Posthttp://bit.ly/MFSTaa

      29 Jun, 10:23 AMReplyDelete CommentLike6

    • H. T. LoveComments (10322)

      Outstanding Jon!

      I guess you won't be visiting again *too* soon!

      Let's hope the challenge gets wide coverage and instills a desire to take appropriate action.

      MHO,
      HardToLove

      29 Jun, 11:06 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Well, one friend over there already replied that my work was good and I'm probably banned from the country... LOL. We shall see...

      29 Jun, 01:27 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      I am getting a bit optimistic now, after the election results.

      Mongolia will not turn into a dictatorship just yet, but there will be more of the same business as usual.

      Which is bad, sure, but at least it's not getting much worse.

      29 Jun, 11:54 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      By the way, the Sant Maral Foundation poll I referenced above proved to be remarkably accurate (and in fact, managed to get exact MPP vote)

      http://bit.ly/MFWaGD

      The remarkable man who runs Sant Maral Foundation once again proved that he is a political genius. There is an excellent, though quite dated article in New Yorker magazine with lots of insight about people who do Mongolian politics

      http://nyr.kr/KHNx9Y

      29 Jun, 10:47 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Live press conference of General Election Commission in progress. All data from all districts collected, the final results look like this:

      DP - 21 seats, MPP - 19 seats, MPRP - 4 seats, independents - 2 seats (Mr.Ts.Davaasuren appears to have lost to MPP candidate)

      Two seats in the city will be subject to re-vote, because the winning candidates failed to reach 28% of vote barrier (1 is from MPP, with 24% of vote, 1 is from DP with 26% of vote)

      Party list vote according to final results are as follows DP- 35%, MPP-31%, MPRP - 22%, Civil Will-Greens -5% (sorry, didn't catch all the decimals)

      Which translates roughly into 11 seats for DP, 9 seats for MPP, 7 seats for MPRP and 1 seat for Civil Will-Green Party.

      Overall result - DP- 32 seats (probably 33 after re-vote), MPP- 28 seats (29 after re-vote), MPRP coalition - 11 seats, Civil Will-Greens - 1 seat, independents - 2 seats.

      Chairman of General Electoral Commission Mr. Luvsanjav rejected proposal by 11 parties to conduct control manual recount in all districts saying that this demand contradicted the law and had no legal basis. He confirmed earlier statements that there were no significant irregularities and errors in automatic vote counting.

      30 Jun, 01:31 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Correction. Several sites continue to give different data, but apparently Ts.Davaasuren did win after all.

      So then, it's DP - 31 seats (probably 32 after re-vote), MPP - 27 seats (probably 28 after re-vote), MPRP-11, Civil Will-Greens - 2, independents 3.

      Final and official looking table in Mongolian
      http://bit.ly/MZNDgL

      30 Jun, 08:25 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Update. Party list vote with decimals (someone has better memory than me!)

      Democratic Party: 399,194 /35,32%/ MPParty: 353.830/31.31%/ MPRP: 252,077/22.31%/ Civil Will Green Party: 62,310/5.51%/

      Seat calculation now gives DP -10, MPP-9, MPRP-7, Civil Will-Green - 2 seats.

      Overall results then - DP - 31 seats (32 after re-vote), MPP - 28 (29 after re-vote), MPRP - 11, Civil Will-Greens - 2, independents 2.

      30 Jun, 02:05 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Comparison with presidential elections of 2009 is instructive.

      Democratic Party candidate Ts.Elbegdorj won with 562,718 votes (51.21%), and incumbent N.Enkhbayar from MPRP lost with 520,948 votes or 47.41%.

      We can clearly see that Democrats lost over 163 thousand votes from three years ago, while combined MPP-MPRP vote appears to have gained some 185 thousand votes.

      30 Jun, 02:10 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Reuters article on election results

      "ULAN BATOR (Reuters) - A left-wing alliance hostile to foreign mining has won more than a fifth of the votes in Mongolia's parliamentary elections, according to a preliminary tally on Saturday, making it a potential coalition partner in the next government.

      Led by the Mongolian People's Revolutionary Party, or MPRP, the alliance could hold the balance of power in a new parliament after gaining more than 22 percent of votes cast on Thursday, the country's elections commission said.

      Neither of the two front runners - the Mongolian Democratic Party (MDP) and the Mongolian People's Party (MPP) - had won enough seats to form an outright majority of 39 seats, the preliminary results showed....

      The MDP won 35.32 percent of the total vote, while the MPP gained 31.31 percent. Both parties ran the country in a "grand coalition" that broke down in January.

      Under Mongolia's new electoral system, 48 parliamentary seats are contested at constituency level on a "first past the post" basis, while the remaining 28 seats are allocated to each party proportionately, depending on their total share of the vote.

      Although the elections commission did not provide aggregate figures for the number of seats won by each party, Reuters calculations suggest the MDP will be the largest party with 31 seats, eight short of an overall majority. The MPP will control 29 seats while the MPRP-led alliance will gain 11."

      http://bit.ly/LXc39C

      30 Jun, 07:16 AMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      A brief list of newly elected MPRP members of parliament:

      1. Current MP Ch.Ulaan, former deputy prime minister, former finance minister, permanent member of parliament since 1996, was one of the key leaders of MPRP/MPP until he split from MPP after Enkhbayar's arrest and joined MPRP. His political influence over the MPP is huge, he is reported to have said that MPP and MPRP are one blood and one flesh and shall one day reunite again.

      2. N.Batsereg, secretary-general of Mongolian National Democratic Party, a junior partner in coalition with MPRP

      3. M.Sonompil, another member of MNDP, former defense minister.

      4. Z.Bayanselenge, MPRP activist. Was arrested briefly for demonstration against arrest of another MPRP activist B.Tulga, former assistant to Enkhbayar.

      5. O.Baasankhuu, Enkhbayar's lawyer.

      6. Ts.Tsolmon, MNDP member, former foreign minister.

      7. Ts.Oyunbaatar, MPRP member, former MP in 2004-2008, former head of General Department of National Taxation

      8. G.Uyanga, journalist and civil movement activist. She used to be one of the strongest critics of Enkhbayar when he was in power.

      9. MP D.Terbishdagva, one of the MPRP leaders. Member of parliament since 2004, former minister of agriculture, former ambassador to Germany.

      10. L.Tsog, secretary of MPRP

      11. D.Battsogt, civil movement activist.

      30 Jun, 07:51 AMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      On re-vote, the new election law (article 48.6) apparently stipulates that only two remaining candidates with largest votes can participate in the re-vote.

      This means that in Bayanzurkh district re-vote, voters will choose between B.Batzorig and D.Arvin (both MPP), so this seat is guaranteed to MPP.

      In Songinokhairkhan district, voters will choose between DP candidate L.Erkhembayar (30657 votes or 26,09%) and MPP candidate D.Sumyabazar (28517 votes or 25,02%)

      So, MPP has now 27 seats, is guaranteed to have 28 seats after Bayanzurkh re-vote and has a good chance of getting 29 after Songinokhairkhan re-vote.

      DP has 31 seats at present, will gain no seats from Bayanzurkh re-vote and has a chance of getting 32 after Songinokhairkhan re-vote.

      http://bit.ly/LXkyBv

      Note: In Songinokhairkhan district, 37,19% voted for D.Terbishdagva from MPRP. Presumably, being forced to choose between MPP candidate (who happens to be a popular wrestling champion) and DP candidate, these voters will rather choose MPP. So chances are that this re-vote will result in 29th seat for MPP.

      30 Jun, 09:12 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      On June 28th, a municipal election was held in Ulaanbaatar city along with national election.

      According to MP E.Bat-Uul, out of 45 seats in the city council, the Democratic Party has won 26 seats, MPP 15 seats, MPRP - 3 seats, Civil Will-Green party 1 seat.

      It appears likely then that Mr. Bat-Uul will become the next mayor of Ulaanbaatar city.

      http://bit.ly/KSWlyu

      30 Jun, 09:50 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Thank you Guest Investor. We all must thank you for the data and information - much obliged.

      How many current members of parliament have lost their seats? and how soon does the ACA pursue cases against them? (the way the ACA is currently, to lose your seat is to lose your immunity)

      I assume the two CWGP seats are Mr. Davaasuren and Mrs. Oyun. With the current election results it looks like they are left without any leverage to be part of the government and gain a single ministerial seat (unless the MPP loses the still to be contested seat you believe they will win). I know they generally eschew being part of a coalition, but Mrs. Oyun as the Minister of Justice would be intriguing.

      My guess is we will see an MPP-MPRP coalition, but there's still time for something else to happen.

      30 Jun, 12:15 PMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      No, number two on the CWGP list is Mr.S.Demberel, Chairman of the Mongolian National Chamber of Commerce and Industry.

      There are plenty of people who lost seats.

      Notable ones - MP Ts.Batbayar, former mayor of Ulaanbaatar (investigated by ACA for that mini-hotel privatisation), MP Kh.Narankhuu (former CEO of Erdenet Mining Corporation) , MP D.Zorigt, minister of mineral resources and energy (now that will be tough, every important recent mining deal went through him personally, his arrest could be a disaster for foreign mining companies)

      Also, ACA might investigate MP O.Chuluunbat (MPRP), former president of Mongolbank and finance minister Ch.Ganhuyag

      On DP side, there are lots of losers, notably MP L.Gundalai (former minister of health) and several Mongolian "oligarchs" like G.Batkhuu and D.Zorigt (from DP, namesake of minister D.Zorigt of MPP)

      30 Jun, 09:41 PMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Regarding coal.

      Many thanks to an alert reader who noted:

      - Coal inventory at China's Qinhuangdao Port hits record http://bit.ly/KKrRtP

      - & pictures of it http://bit.ly/MylvmK

      P.S. if you see messages disappearing in the next few days, it means I am finally creating a new archives so this web page loads faster. All messages will be archived.

      30 Jun, 02:17 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Official results for Ulaanbaatar municipal elections are in.

      Out of 30 majoritarian seats, DP won 20, MPP 10.

      15 seats are rewarded according to party list vote. DP got 35.53% (6 seats) MPP - 26.15 %(4 seats), MPRP - 22.77 %(4 seats), Civil Will Green Party -8.02% (1 seat).

      Overall result - DP - 26 seats, MPP - 14 seats, MPRP - 4 seats, CWGP - 1 seat.
      http://bit.ly/OQ6Y6x

      Note how well the new election law serves DP. They got 58% of all seats in city council, but got only 35% of vote.

      Similar, though slightly weaker dynamic can be seen in national elections. DP got 42% of seats in parliament, but only 35% of vote.

      Compare with the MPRP, the party which suffered most from new law. They got 22% of vote, but ended up with only 14% of seats in parliament.

      1 Jul, 06:52 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Several articles and opinion pieces in pro-DP press arguing in favor of coalition with MPRP rather than MPP.

      They say that MPRP support can be won at the cheap - just promise to drop the case against Enkhbayar and a couple of ministerial posts...

      Another suggestion is to try to engineer a collapse of MPRP-led coalition. There are three or four newly elected MPs from MPRP who used to members of Democratic party/coalition in the past, so presumably this would be possible to arrange.

      Both seem to me a rather wishful thinking, but this indicates how much DP dislikes prospect of an equal, full parity coalition with MPP

      2 Jul, 01:23 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Besides, no coalition (be it with MPP or with MPRP) can possibly survive the 2013 presidential election campaign.

      2 Jul, 01:25 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Riots reported in the Khan-Uul district of Ulaanbaatar. Squatters from adjacent ger area started to appropriate land from foreign and domestic companies in Yarmag and Airport areas and began to erect illegal fences.

      As a justification for their actions, they cite campaign promises of DP candidates who apparently pledged to take illegally obtained land from current holders and to redistribute it among ger area residents.

      Khan-Uul district governor rejected their demands and threatened to use force to disperse squatters.
      http://bit.ly/M0AwuH
      http://bit.ly/LRlCL7

      2 Jul, 06:02 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Report in Mongolian (but with pictures) on squatters.

      The land in question belongs to the Bogd Uul Mountain protected area. The squatters say that the rich people already have their houses in protected areas such as Zaisan or Nuht, so they ask, why shouldn't we have the same right to settle there?

      http://bit.ly/MNo2Zl

      2 Jul, 07:34 AMReplyDelete CommentLike4

    • EBennettComments (4)

      I would say that that is a very good question.

      2 Jul, 09:33 PMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Prominent DP leaders Bat-Uul and Baabar said in an interview that they were ready to enter into a coalition with MPRP. Mr. Baabar even said that MPRP-MNDP coalition consists of people with democratic leanings so the alliance would be natural...

      http://bit.ly/NVt7eQ

      In other interview, MPRP secretary-general MP Ch.Ulaan answering a journalist's question said that if DP offers a coalition, MPRP is ready to accept...

      http://bit.ly/N6oTUB

      2 Jul, 07:09 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Oliver Belfitt-Nash of Monet Capital's summary view at the moment:

      "Election results pose bad news for investors as resource nationalism expected to increase. A higher-than-expected portion of MPRP members in parliament and a possible coalition between DP and MPRP could put more pressure on Oyu Tolgoi operations, as anti-OT sentiment prevalent in Enkhbayar's party."

      2 Jul, 07:53 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Baabar is a leading government critic and journalist, FYI

      2 Jul, 07:53 AMReplyDelete CommentLike1

    • Jon SpringerComments (2456)

      Dale Choi of Frontier Securities with an extensive detail of every seat won in the election. Dale expects another MPP-DP grand coalition.

      Date: Mon, 2 Jul 2012 18:43:37 +0800

      According to major Mongolian news portal news.mn, (http://bit.ly/KVVe1f), "General Elections Committee of Mongolia has not introduced elections final results. In any case the committee is obliged by law to inform election results to President of Mongolia within 15 days of the elections or within June 13,2012. Re-vote is to proceed in the two election districts but district electoral committees are to decide regarding re-voting."

      "Results by party lists are not finalized but preliminary Parliament seating is to be

      DP 31/there will be re-vote in one district/
      MPP 27/also there will be re-vote in one district/
      MPRP-MNDP Justice Coalition-11
      CWGP - 2
      Independents-3"

      Regarding 48 nominees from 26 election districts( majoritarian vote), 46 are clear.

      DP has got 21 seats( within these 21 seats one nominee , L.Erkhembayar in populous Songino Khairkhan district has got less than legally instructed 28% threshold, - 26,09% therefore the electoral district committee will decide whether there will be a revote).

      DP's successful nominees( personal comments by Dale Choi within parenthesis)
      1. N.Batbayar( author of ill-fated WPT, well known for his anti-OT IA stance, populism and resource nationalism)
      2. B.Bolor
      3. A.Bakei
      4. Kh.Battulga( former Minister of Roads, Transportation, Construction and Urban Development, known for support for Russian gage railroad and priority for eastern railroad)
      5. D.Ganbat
      6. B.Narankhuu( Chairman of Mon-Uran group)
      7. Ya.Sanjmyatav
      8. D. Bat-Erdene (Chairman of MSE-listed Tavan Tolgoi joint stock company, known for resource nationalism)
      9. M.Zorigt
      10. S.Bayartsogt( former Finance Minister, one of the signatories to OT IA)
      11. B.Garamgaibaatar
      12. Ts.Oyungerel ( Chairperson of DP Women Association, former advisor to the President, Stanford-educated)
      13. L.Bold(former Defense Minister)
      14. J.Batzandan( former radical, independent board director of Erdenes Tavan Tolgoi JSC)
      15. D.Gankhuyag(well known for his anti-OT IA stance and resource nationalism)
      16. L.Gantumur
      17. R.Amarjargal
      18. G.Bayarsaikhan(well known for his anti-OT IA and general anti-mining stance)
      19. S.Erdene(well known for his anti-OT IA stance, populism and resource nationalism)
      20. S.Odontuya
      21. L.Erdenechimeg
      L.Erkhembayar (in populous Songino Khairkhan district has got less legally instructed 28% threshold, - 26,09% therefore the electoral district committee will decide whether there will be a revote)

      MPP has got 19 seats (within these 19 seats one nominee , B.Batzorig in populous Songino Khairkhan district has got less than legally instructed 28% threshold, - 24,66% therefore the electoral district committee will decide whether there will be a revote).

      MPP's successful nominees.
      1. A.Tleikhan
      2. Yo.Otgonbayar(former Minister of Education, Science and Culture)
      3. Ts.Dashdorj
      4. J.Batsuuri
      5. N.Nomtoibayar( son of Chairman of MAK Group Nyamtaishir)
      6. D.Oyunkhorol
      7. S.Chinzorig
      8. N.Tumurkhuu
      9. J.Erdenebat
      10. M.Enkhbold( former Deputy Premier)
      11. Su.Batbold
      12. Ch.Khurelbaatar
      13. B.Choijilsuren
      14. S.Byambatsogt(known for his anti-OT IA stance and resource nationalism)
      15. L.Enkh-Amgalan(Non-Exe... Director of Mongolian Mining Corporation)
      16. B.Bat-Erdene(known for his anti-OT IA stance and resource nationalism)
      17. D.Khayankhyarvaa
      18. O.Sodbileg( son of late Chairman of Erdenet Mining Corporation Otgonbileg)
      19. B.Batzorigt(in populous Bayanzukh district has got less legally instructed 28% threshold, - 24,66% therefore the electoral district committee will decide whether there will be a revote)

      MPRP-MNDP Justice Coalition got 4 seats.

      MPRP-MNDP Justice Coalition successful nominees ( all characterized by populism and resource nationalism - Dale Choi)
      1. D.Battsogt
      2. L.Tsog
      3. G.Uyanga( radical)
      4. D.Terbishdagva(also well known for his anti-OT IA stance)

      Independents got 3 seats.
      1. Kh.Bolorchuluun (Dornod province)
      2. Ts.Davaasuren(ex-MPP, known for resource nationalism stance)
      3. S.Ganbaatar( President of Mongolian Trade Unions Association, known for populism and resource nationalism)

      Further according to news.mn, revotes are to proceed in Bayanzurkh and Songino Khairkhan district where nominees B.Batzorig(MPP) and L.Erkhembayar(DP) have got less than 28% of votes. The respective preceding two candidates who got more than 28% will not be voted on, only candidates below 28% will be voted on.

      According to latest GEC prelimary results on proportional party votes

      DP got 35,32 %
      MPP got 31,31%
      MPRP-MNDP Justice Coalition got 22,31%
      Civil Will Green Party got 5,51%
      Rest of parties got below 5% threshold

      By proportional vote system, in preliminary results, DP will get 10 seats, MPP 9 seats, MPRP-MNDP Justice Coalition 7 seats, CWGP 2 seats.

      Successful DP candidates by party list
      1. N.Altankhuyag(Chairman of DP)
      2. Z.Enkhbold(known for his anti-OT IA stance and resource nationalism)
      3. Kh.Temuujin
      4. Ch.Saikhanbileg
      5. D.Erdenebat
      6. Sh.Tuvdendorj
      7. R.Burmaa
      8. Ts.Bayarsaikhan
      9. R.Gonchigdorj
      10. M.Batchimeg

      Successful MPP candidates by party list
      1. S.Batbold(Chairman of MPP)
      2. U.Khurelsukh
      3. D.Demberel
      4. U.Enkhtuvshin
      5. L.Lundeejantsan
      6. Ts.Nyamdorj
      7. N.Enkhbold
      8. Ya.Sodbaatar
      9. J.Enkhbayar

      Successful MPRP-MNDP Justice Coalition candidates by party list
      1. Ch.Ulaan
      2. N.Battsereg
      3. M.Sonompil
      4. Z.Bayanselenge
      5. O.Baasankhuu
      6. Ts.Tsolmon
      7. Ts.Oyunbaatar

      Successful CWGP candidates by party list
      1. S.Oyun
      2. S.Demberel

      However, GEC will introduce and finalize which party will get how many seats.

      Further according to news.mn, MPP and over 10 parties and coalition have demanded from GEC manual recount of votes. The portal also reported GEC stated that "there is no legal foundation for manual recount. Nationwide manual recount would breach the law. GEC is working according to law and requesting from parties no outside influence on activities of GEC."

      Frontier Securities conclusion:

      · Our interpretation of latest poll results by Sant Maral Foundation in our research report" ELECTION OUTLOOK: ODDS ARE IN DP'S FAVOR YET RESOURCE NATIONALISM IS TO RISE WHICHEVER PARTY WINS" of June 21,2012 has proven to be correct. Election is indeed resulting in "slight DP plurality (30-35 seats), but not enough to form government with CWGP"(as formulated by Julian Dierkes, an associate professor at the University of British Columbia's Institute of Asian Research)
      · Further in line with our forecast, resource nationalism is to rise strongly. The successful nominees already include at least 9 candidates from both DP and MPP known for their various degree of populism and resource nationalism, on top of this 11 nominee MPRP-MNDP Justice Coalition faction which includes for example radical G.Uyanga will be "loud voice for populism and resource nationalism". Two of the independents are also known for populism and resource nationalism
      · Influential writer Baabar has stated today (http://bit.ly/KVVg9c), "two of three independents have already said that they will join MPRP"
      · Only two scenarios left for DP is to make coalition either with MPRP or with MPP.
      · We still believe that most likely outcome would be DP Coalition with MPP.

      2 Jul, 07:54 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Now that elections are over, can we expect return to sanity?

      Alas, in fall (possibly in October) there will be municipal elections in the rest of the country.

      In May next year (less than 10 months away!), crucial presidential elections.

      More populism and resource nationalism should be expected from all parties

      2 Jul, 08:26 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      In an amazing decision proving beyond any doubt all allegations of voting fraud, the election committee in Songinokhairkhan district has decided that no revote there is necessary, because additional votes were found for L.Erkhembayar who got 26% (less than legally required 28%).

      The election committee officials explained that the additional votes were found after recount in votes previously discarded as invalid.

      http://bit.ly/LKMKtg

      2 Jul, 08:59 AMReplyDelete CommentLike5

    • Jon SpringerComments (2456)

      Notice comments disappearing? They're not gone, but searchable in archives 5: http://bit.ly/KObkoP

      Connecting dots:

      - I posted some images of coal piled up in China the other day in a bit too much of hurry. Thanks to those who have pointed out to me that the coal in the picture is thermal coal, not coking coal. For those companies from Mongolia selling coking coal, this is not an issue. And honestly, thermal coal has yet to show itself as a decent business in Mongolia.

      - Julian Dierkes who has a twitter feed as an election observer is from the University of British Columbia which has some excellent programs on Mongolian studies

      2 Jul, 08:15 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Meanwhile, more follow up on the coal links I posted the other day from Mark Anthony, my favorite resident China/coal expert on Seeking Alpha:

      Jon:

      1. The headline phrase "record breaking" could mean something for things that have not changed much for a long time. But for things at the QinHuangDao port, record breaking is the norm. This port was originally designed for a fraction of its current capacity. They were forced to squeeze the capacity again and again as China's coal production and demand grew rapidly over the last 12 years. So they were breaking records on all the numbers all the time to begin with.

      2. The reported 9.4M coal stockpile at QinHuangDao port is a drop in the bucket, compared with the 250M tons throughput of the port in 2011, another record breaking number. The stockpile is a drop in the bucket compared with nearly 4 billion tons of annual coal consumption in China. The 9.4M tons is a lot of coal, but not a lot when you put it into the proper context.

      3. That port landles domestic coal to be tranported from northern China to southern China. Currently domestic coal is too expensive than imported coal. So China is importing a lot of coal and there was a slight glut of domestic coal as a result. China's coal imports reached 112.73M tons in the first five months of 2012, up 67.8% over the same period a year ago. This has got to impact domestic coal some what.

      I am not worried about stockpile at China's QnHuangDao port.

      link to his comment: http://bit.ly/Lf1Lp7

      2 Jul, 08:47 AMReplyDelete CommentLike4

    • IsaiahUComment (1)

      DP claims they have won 36 seats (apparently the source is a post on their website)? This article is from businessweek but I saw this earlier as well...

      http://buswk.co/LJVT5d

      This doesn't add up with the math that I've seen from Mongolian sources? What's the story here? Obviously this would allow DP to form a coalition with CWGP + just 1 independent--any credibility to this claim?

      3 Jul, 03:32 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      They claimed 36 to 39 seats next morning after the election. Just wishful thinking on their part

      3 Jul, 06:00 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Rumours about conflict between President Elbegdorj and DP leader Altankhuyag. The latter is said to favor coalition with MPRP (and even began talks with Enkhbayar), but Elbegdorj strongly objects.

      President wants coalition with MPP instead.

      It is reported that he had very strong words to say to Altankhuyag.
      "Will the Democratic Party support Enkhbayar in the presidential elections of 2013 or me? "

      http://bit.ly/LugI1Z

      3 Jul, 06:06 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      DP leader Altankhuyag will be next Prime Minister. No info on possible coalition yet

      http://bit.ly/MvdQpZ

      4 Jul, 01:05 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      MPP is losing allies in a struggle for manual recount. MPRP said yesterday that elections were irregular and unfair, but it's time to look forward and move on.

      CWGP said today that they have complaints about elections, but it's time now to swear in new parliament and establish new government

      4 Jul, 01:12 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Official election results will be presented to President tomorrow.

      Revote in Songinokhairkhan and Bayanzurkh districts scheduled for Sunday, July 8th. (Previous report of additional votes found for L.Erkhembayar was false apparently. Or maybe they just changed their mind again...)

      4 Jul, 08:31 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      The campaign of politically motivated arrests has apparently resumed. Two assistants to the newly reelected MPs Ch.Khurelbaatar and B.Choijilsuren (both MPP) from Uvs province were arrested and charged with "Conspiracy to illegally capture state power by tampering with election process" (they apparently made payments to voters, which are illegal under new election law).

      This could well lead to recall of both MPs and new election in this electoral district.

      While the actions of which they are accused are clearly illegal, selective prosecution makes this case political. There were several reports (quite well documented at that) of DP candidates also making payments to voters, but none of these cases led to any arrests.

      4 Jul, 08:52 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Article 31.1.2 of the Constitution of Mongolia states that the President shall propose to the Parliament the person to be nominated as a Prime Minister
      *in consultation with the majority party or
      **if there is no majority party, then in consultation with the party which won plurality of seats
      ***or if the party which won plurality of seats failed to gather parliamentary majority for nomination of Prime Minister then with any party in the parliament which managed to gather a parliamentary majority

      As far as I am aware there are no time limits on this process (in 1998 and in 2004, it took several months to appoint a new government)

      However, if the Parliament fails to approve Prime Minister within 45 days of nomination, then it shall be disolved by Presidential decree (Article 12.3 of the Law on President of Mongolia).

      4 Jul, 09:54 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      This essentially means that the DP, being a party with plurality of seats, shall make a first attempt to gather a parliamentary majority.

      If they fail to do so (but time period for this failure is not specified), then any party in the parliament can attempt to gather a parliamentary majority and nominate a Prime Minister.

      4 Jul, 10:00 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Excellent summary. Thank you GI for keeping us up to date.

      4 Jul, 08:05 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Political crisis deepens. General Election Committee presented to the president final election results for 72 members.

      Two newly elected MPs from Ovorhangai province (both from MPP) were temporarily suspended, because they are accused of making payments to voters (bundles of Khar Chingis Vodka and Choco Pie chocolate, I hear...)

      Another two newly elected MPs from Uvs province (again, both from MPP) who as I reported above were also accused of the same crime, were not suspended, but the case will probably go to the court and they will be recalled by the court, not by GEC.

      There were reports of a criminal case and suspension of another newly elected MP from MPP (O.Sodbileg, son of a former director of Erdenet Mining Corp) , but apparently he managed to avoid suspension this time.

      All this has caused MPP to boycott the closing session of parliament today.

      If the boycott persists there will be no legitimate parliament and no legitimate government in Mongolia for indefinite period...

      A nightmare scenario for investors and the country

      5 Jul, 01:48 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      or a fantastic investing opportunity IF the government pulls its act together (which looks more doubtful by the day)

      5 Jul, 12:10 PMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      I came to conclusion that the next four years will be a period of political instability and frequent changes of government as in 1996-2000 (which saw 4 cabinets fall in 4 years).

      We will probably see coalitions in every possible combination - DP-MPP, DP-MPRP, MPP-MPRP and maybe even something else.

      6 Jul, 02:04 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      I will be selling my Ivanhoe shares tomorrow (July 6) for tax purposes. I can do better with something else. The government is determined to boondoggle this company and Rio Tinto is determined to boondoggle investors. In the end, no one cares.

      5 Jul, 12:46 PMReplyDelete CommentLike2

    • Valley BoyComments (1483)

      I sometimes read articles on the global geopolitical scenes; it's sort of watching someone play a game of chess.
      Here's one that mentions how Mongolia fits into to the Shanghai Cooperation Organization's strategic thinking. I have to wonder by what degree the SCO influenced the Mongolian elections.
      http://bit.ly/M2MYhd

      5 Jul, 06:18 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      At the last minute, MPP changed their mind again, stopped boycotting and attended opening session of new parliament and swearing in of new MPs.

      The reason for this is unclear, since none of their demands were met. There are speculations though that the MPP leadership received assurances from DP that there will be a grand coalition with MPP.

      Let's see what will happen next.

      Meanwhile as I predicted, MPRP refused to swear in last three members of their 7 party list winners and reiterated that they regard the General Election Committee decision to remove Enkhbayar, his son Batshugar and a law professor Narangerel from MPRP party list as unconstitutional and illegal and said that they await a ruling from Constitutional Court on this issue.

      So in the end, Mongolia does after all have a new parliament now, but with only 69 members instead of 76.

      6 Jul, 01:58 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      D.Battulga, known in Mongolia under nickname "Casino" Battulga has just been elected Head of the Citizens Representative Council of Ulaanbatar (dominated by Democrats).

      "Casino" Battulga, a prominent Democratic activist and former MP was convicted by court in 1999 for taking a bribe from Macao-based company to lobby Casino law, served time in prison (3 years) and after release was appointed a head of Presidential Secretariat by President Elbegdorj.

      Appointing a convicted corrupt official to such elevated (lucrative) post seems a rather strange way of fighting corruption....

      9 Jul, 01:14 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      any relation to Kh. Battulga?

      9 Jul, 02:40 PMReplyDelete CommentLike1

    • Guest InvestorComments (83)

      No, just a namesake

      9 Jul, 08:03 PMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Of course, former criminals are nothing new in Mongolian political scene.

      One of the newly elected Democratic MPs, J.Batzandan was imprisoned in 2008 on charges of terrorism and incitement of public disturbance (he personally led the crowd and was first to storm the MPRP building on July 1st, 2008). The terrorism charge was later dropped and he was amnestied under president Elbegdorj's Amnesty law for incitement of public disturbance.

      One of the Democratic Party bosses in Khentii province is Ch.Enkhtaivan, a convicted gangster who served time in prison on charges of murder, kidnapping and racketeering (spent some 15 years in prison in total). He also was investigated as a suspect in Zorig's assassination case (in fact, according to some sources, he was a friend of Damiran Enkhbat, a Mongolian gangster kidnapped from France by Bat Khurtz on suspicion of being Zorig's assassin)

      He several times attempted to run for Parliament from Democratic party, but even Democrats balked at the prospect...

      9 Jul, 01:26 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Breaking news.

      Democratic Party leader N.Altankhuyag and DP Secretary-General D.Erdenebat have just told journalists that DP will establish a coalition government with MPRP.

      http://bit.ly/PyaBP7

      9 Jul, 01:43 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      thanks...

      9 Jul, 02:40 PMReplyDelete CommentLike1

    • Guest InvestorComments (83)

      The Constitutional Court discussed today Enkhbayar's suspension from party list, could find no legitimate reason why he should be suspended and therefore postponed ruling until more information on reasons for GEC decision is supplied.

      Most of Constitutional Court members were appointed under MPRP/MPP rule, but its Chairman and two other members (including former president Ochirbat) are prominent former Democrats.

      I assume that if MPRP demands reinstatement of Enkhbayar as MP as a price of coalition, Altankhuyag and DP leadership could influence the ruling.

      9 Jul, 11:21 AMReplyDelete CommentLike3

    • Valley BoyComments (1483)

      Secretary Clinton visits Mongolia touting political liberalization where it may be encouraged.
      http://bit.ly/MgZgyU

      9 Jul, 04:22 PMReplyDelete CommentLike5

    • Jon SpringerComments (2456)

      John McEnroe

      9 Jul, 09:19 PMReplyDelete CommentLike1

    • Jon SpringerComments (2456)

      McEnroe reference explanation/translation:http://bit.ly/yPPLhP

      9 Jul, 09:30 PMReplyDelete CommentLike3

    • Valley BoyComments (1483)

      Well, Jon, lol, it boils down to how a player can play it and phrase it.

      9 Jul, 11:00 PMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      To be fair to Hillary, it is alleged that

      "Clinton did not mention Enkhbayar's prosecution in public, though an aide said she was likely to discuss it in her private talks, which included sitting down in a ger, or traditional circular tent, with President Tsakhiagiin Elbegdorj.

      "The secretary is going to be very clear that we celebrate a succession of successful elections in Mongolia and that in the aftermath of this recent election that the international community is watching ... how the rule of law is applied," a senior U.S. official told reporters on condition of anonymity."

      http://reut.rs/NZy05Y

      10 Jul, 09:45 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      According to the rumor currently circulating around the Government House, S.Bayar will be returning tomorrow from the US where he was undergoing treatment (presumably from injuries inflicted by mysterious foreigners).

      It is expected that he will take charge of the defeated and demoralized Mongolian People's Party.

      http://bit.ly/NZxjtj

      Leadership changes are imminent - Secretary-General Khurelsukh has already resigned, party leader S.Batbold will be next.

      10 Jul, 09:42 AMReplyDelete CommentLike4

    • Valley BoyComments (1483)

      The Bay Area in the United States has a number of citizens and immigrants of Mongolian ancestry. They might have some opinions on the election by now.
      http://bamons.com

      10 Jul, 10:30 AMReplyDelete CommentLike2

    • faizulramliComments (27)

      Hi Jon

      Just wanted to post this link:
      http://on.wsj.com/NsU2zn

      It says that Wolf Petroleum is going to be 'acquired' by Strzelecki Metals which is listed on ASX. The article says that the stocks will start trading again from November onwards. If Wolf is the real deal then save the date for November!

      16 Jul, 09:23 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Here is the full release from the ASX http://bit.ly/Nwzpnu

      Its a reverse takeover with Strzelecki being renamed Wolf Petroleum. Probably much easier than an IPO in the current market conditions

      George Tumur is on the board and involved with many of the Matthew Wood/Garrison Capital/CPS prospects in Mongolia. Before joining this group, George was CEO of Mongolian Mining Corporation.

      16 Jul, 10:46 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Coalition talks between DP and MPRP reached an agreement.

      Three parties will form a coalition, 75% of ministerial seats will go to the DP and CWGP, 25% to MPRP. It's not quite clear how many ministries will be there, the DP apparently wants to increase number of ministries (up to 20, according to some reports)

      http://bit.ly/NzHFVf

      Urgent session of the MPP Managing Council. There will be a party conference on July 24th. Managing Council has nominated MP U.Enkhtuvshin to the post of MPP Chairman instead of current PM S.Batbold.
      http://bit.ly/NAScOx

      Trial of Mr.Enkhbayar got postponed again. According to the rumors, his fate is the main subject of coalition talks between DP and MPRP. The latter apparently are ready to concede more seats to the DP in exchange for ending prosecution of Mr.Enkhbayar.

      19 Jul, 06:59 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Interesting point here. CWGP is not necessary to forming a coalition here (they have 4 seats in the gov't IIRC). However, CWGP's membership in coalition will give it more credibility.

      CWGP = Civil Will Green Party

      Mrs. S. Oyun of the Civil Will party (which merged with the Green Party this year) is the most interviewed member of parliament by western journalists (she is Cambridge educated and well-spoken; her brother was assassinated when he was on the brink of becoming prime minister 14 years ago).

      CWGP's presence indicates perhaps government is serious about reform because CWGP generally stands aside when controversial issues arise (such as Mr. Enkhbayar's arrest) - I've always taken the prior CWGP stance as a fashion of pointing their finger at everyone as corrupt.

      19 Jul, 09:32 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      CWGP have only two seats. And I forgot to mention, but there is an investigation by ACA of second MP from CWGP, Mr. Demberel, Chairman of the Mongolian National Chamber of Commerce and Industry. He appears to have had some corrupt dealings.

      So, I suppose, there is no reason for DP to invite Ms. Oyun's party at all. But maybe it makes them easier to sell coalition with MPRP to their electorate - we are not allying with Enkhbayar, we are allying with every party in the parliament except bad, bad MPP!

      19 Jul, 11:00 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Thanks for correcting me GI. Wife is in labor so my mind is skipping a bit.

      It would be interesting if they give Ms. Oyun a ministerial seat. If they give her the Ministry of Justice, the ACA would get legitimatized overnight.

      19 Jul, 11:30 AMReplyDelete CommentLike2

    • Jason RyanComments (5)

      Jon, did you end up closing out your IVN position?

      19 Jul, 10:48 PMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Hi Jason,

      I said I was closing out the position on July 5 (above) ... and said I would do so on July 6. I did just that. I became too tired of the games. I held the stock through a lot of downturns to write about what was going on and ensure that I did not play any games with my readers.

      Ivanhoe's Oyu Tolgoi is a huge part of why Mongolia's economy will do well, but that doesn't mean investing in Oyu Tolgoi is the best way to benefit from that economic boost.

      24 Jul, 06:25 PMReplyDelete CommentLike2

    • faizulramliComments (27)

      Thanks Jon for the ASX document...and congratulations are in order? (safe to pass out the cigars?)

      I also saw the update on the result of the Mongolian elections. Hopefully media reports of the DP being in favour of foreign ownership (and having 75% of the new government) will prove to be true.

      Not sure if anyone has read the latest newsletter from MNGGF? Anyway, my questions arising from their latest newsletter are:
      - When MNGGF says that their land is still valued at agreeable prices, what does that mean?
      - I wonder what sort of occupany rates are there in their properties as they seem to be optimistic?
      - Mandal continues to look like it will build market share. I note that there is now mandatory insurance for cars (effective Oct 2012?). At the moment Mandal has 1% of market share so definitely a lot of scope for growth here if they play their cards right. Who are Mandal's main competitors anyway and how confident are we that Mandal will be able to capture and maintain market share?
      - If what management says is correct, that once the mandatory car insurance is in place and this will have a positive effect on their top line, probably a good time to get into MNGGF is before 1 September. My target price is still $4 with a max limit of $4.40. However, in saying that, not comfortable over the amount of cash they seem to have on their balance sheet (only 7.8m in unrestricted cash?). What are company obligations falling due by end of 2012?

      22 Jul, 10:36 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Hi Faizulramli,

      - Yes, cigars can be passed out as of July 20 (we had a son). At some point I'm hoping the sleep deprivation stops and I start writing this update normally again (looking forward to it, but enjoying hanging out with the new member of the family).

      - Regarding the foreign investment law, the DP helped push the darned law through. When we find out who the Minister of Mining is, we'll beging to find out how the stupid law will be enforced. The fact remains that as long as they keep this stupid law, the government can make a grab for foreign owned mines at any time.

      - Will answer the MNGGF questions a little later - have a doctor appointment at home right now.

      24 Jul, 06:28 PMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Here's the response on MNGGF.

      Keep in mind I've been to Mongolia twice, I went to Mongolia Growth Group's annual meeting in Toronto, and my largest position (by far) invested in Mongolia is MNGGF.

      - Regarding the Mandal Insurance unit. I urge investors to ignore this unit when valuing the company. It is less than 10% of the company's valuation, and that number will decline further. The insurance unit is important for other nuanced reasons (the staff of the insurance unit is a sharp group and well connected). However, the insurance unit is YEARS away from being a driver of MNGGF's growth. If the insurance business pans out down the road, that's gravy, but it is simply not worth hemming and hawing over when considering the company's growth outlook or considering investing in the company.

      - Regarding property valuations. Property in the center of Mongolia (where most of MNGGF's property is) typically goes up 3% to 5% PER MONTH on average (sometimes it flattens, sometimes it goes up 10% in a month; but 3% to 5% per month is the consensus average increase in value in the center of UB monthly).

      - The dynamics of property in the center of Ulaanbaatar are very particular. It is coming from a low base and there is a lot of price pressure on a verys small swathe of land.

      - As of the annual shareholder meeting, their occupancy was well in excess of 90%.

      - They have cash flow from their rental properties and don't need that much more cash to operate.

      - MNGGF may need some cash influx to make some other larger purchases, but they were already close to assembling several large properties when I was in Mongolia in February... and there was progress on those as of the annual meeting in April.

      - As previous investor letters from MNGGF have stated, they are looking into property development which would involve partnering with other companies. In this partnering, Mongolia Growth Group would seek a lower risk arrangement whereby they might sacrifice some profit on the development for limiting both risk and the funds they need to put up to help develop the property they own. Thus, they don't need much cash on hand for these projects either.

      - $7.8 million is still a big chunk of change in Mongolia, especially on its real estate market.

      - I am confident they will raise more capital when/if they feel it is needed and that conditions are favorable. I believe the dynamics changed such that raising further capital was neither necessary nor prudent at this juncture.

      - At prices below $3.75, I would certainly advise consider buying MNGGF.

      P.S. I am beginning to believe that one gives cigars to newborn's fathers to give them something to lean on...

      26 Jul, 09:39 PMReplyDelete CommentLike4

    • StilldazedComments (1089)

      Nah, the cigars give you an excuse to puke and not blame it on the nervous stomach from realizing the great responsibility you have now. :-)

      26 Jul, 10:25 PMReplyDelete CommentLike4

    • sharfichComments (7)

      Jon, did you also get this week an "Important notice from MSCHCD" where you are asked to inform your broker with notarised letter to inform him to return your money in the MSCHCD account back abroad or put it into a to-be-opened account with a clearing bank? Did you open already a new non-MSCHCD clearing account? I am afraid that a personal presence in Mongolia might be required to do so. Notarized letter is also not done easily. Any comments?

      27 Jul, 12:44 PMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Yes I did. I need to sort it out next week. Newborn has kept me busy this week.

      It should not require a presence in Mongolia, but may involve a few hoops (my guess).

      Will get some clarifications next week and let you know.

      27 Jul, 09:15 PMReplyDelete CommentLike3

    • Jason RyanComments (5)

      Jon,

      Congrats on the baby! I hope you're able to get some sleep soon!

      28 Jul, 02:56 PMReplyDelete CommentLike5

    • faizulramliComments (27)

      Jon

      Again congratulations on the newborn boy! I'm sure you'll have loads of fun raising him up! Sleepless nights, however, depends on how active they are! My little one did not have a full night's sleep until she was 4 (not to discourage anyone else from having children that is!)! so "don't worry", just go with the flow as they say (and open up a brokerage account and start investing for them on their behalf...20 years of small contributions will definitely add up!)

      Back to Mongolia now. Thank you so much for your analysis. I've added to my position now at 3.70. However, I am quite nervous about the whole situation with China experiencing a hard landing. It will definitely affect stocks such as MNGGF. By the same token, I keep telling myself that I am a long-term investor (40-year outlook now as bear markets can last for 2 decades!) so these short-term swings should not affect me!

      Let's hope the authorities don't get too excited about resource nationalism. Indonesia recently passed a new mining law which really restricts new foreign players. Will definitely be a challenge for the mining industry there (especially coal IMO) in the next few years.

      I read that Sharyn Gol just got its licence to ahead with mining. Do you think this is a good company to buy? So far the local brokers are still saying APU and Remicon (RMC) are good buys.

      29 Jul, 07:51 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Thank you all for the congrats. And yes, I'm still having trouble managing sleep and time. Going to get around the curve though :-), and the little guy is quite an enjoyable experience.

      Regarding China. If China had zero growth for the next 20 years, Mongolia would be fine. Mongolia has a tremendous amount of natural resources *per capita* but Mongolia's natural resources are *nothing* to China. Worrying about China consuming all of Mongolia's natural resource output is like worrying about if a single piece of cake will get consumed at a feast http://bit.ly/NEKrKv

      Regarding any thermal coal producers in Mongolia...

      - If Jerry Springer were hosting a show in Mongolia, he'd invite the thermal coal producers... all of them have something bad to say about the other ones and why the other thermal coal producers has "low quality coal." After hearing this enough times from enough different thermal coal producers I have come to the conclusion that thermal coal in Mongolia is plentiful (farmers will sometimes pay companies to remove the thermal coal from their land) and as a rule of poor quality (although there is always an exception to such rules, from what I have gathered the best quality thermal coal is privately held or owned by the government and not investable).

      - That said, at times, the thermal coal producers have had spectacular runs on the Mongolian Stock Exchange and international exchanges. If one has learned anything about investing from the global situation of the last 20 years, it should be that just because an investment doesn't make sense doesn't mean it can't provide phenomenal returns.

      Regarding MSE investments:

      - The best investment is knowing what B-listed company is going to get irrationally pumped up next. As one floor trader told me on my last visit, "sometimes we traders just get together and decided to push a stock up" (true story)

      - APU and Remicon are the solid blue chips, and of the two, I'd weight in favor of RMC. Review these 2 articles on Vietnam ETFs to understand the dynamics that will occur as more investment funds enter the market to "get" why you should invest in the bigger names now (1) http://bit.ly/IiLawf (2)http://bit.ly/Pfn98G

      - the second article makes well the case that you should watch for local banks in Mongolia having IPOs and get invested in them... I have heard from folks in Mongolia that banks will need to raised capital to have more money to lend so going public will ultimately make sense... Trade and Development Bank, Golomt Bank, Khan Bank, and Xac Bank should all go public in the next three years and I'd want in on those IPOs

      30 Jul, 07:05 PMReplyDelete CommentLike4

    • Joseph HarnedComments (38)

      Jon: First let me add my congratulaltions to your wife, and all good wishes to the three of you.
      Returned from CAPEX UB Meet-Up yesterday. As Michelin says in its highest accolade, well worth the trip. Chris and Mark surpassed all expectations. Kuppy's tour de force on MNGGF inspired confidence in the future of that company, especially. John Finigan of Golomt Bank left everyone looking forward to the day they can add Golomt to their portfolios. It is clearly in a different class than every other bank in Mongolia, morally and managerially. For my money, I'll be using CPS and ResCap to play Wolf Petroleum in due course for the long game. Your absence was noticed and you were missed; but you could not have had a better reason!

      31 Jul, 05:26 PMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Excellent to hear Joseph. Look forward to hearing more about the journey as you have time.

      31 Jul, 06:45 PMReplyDelete CommentLike2

    • faizulramliComments (27)

      LOL...great analogies with the slowdown in China and thermal coal...makes sense though. I have not looked at RMC since last month so not sure if the price has increased since then (it was trading at below 200MNT with a price target of 250MNT).
      Bizarrely, have not received my account details from Money despite providing a reminder to them. Must remember to follow up at some point.

      Great article on the effect of ETFs on local country stocks...definitely a good reminder to get into the good quality companies before the herds come in...

      The list of IPOs look really impressive, though at the moment i cannot get a feel of how well capitalised the local banks are...hopefully we'll be able to obtain some information well before they IPO

      Best of luck with the little one. Its great to see them grow up as they change on a daily basis.

      1 Aug, 01:59 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Jon, congratulations!

      Some political news out of Mongolia.

      While MPs from MPP were busy at a party conference and electing new leadership (MP Enkhtuvshin as predicted), DP, MPRP, CWGP and independents went through and elected a Speaker of Parliament, MP Z.Enkhbold.

      Predictably, MPP refused to recognize the legitimacy of this parliament session and continues to call Z.Enkhbold as "a nominee for Speaker of Parliament".

      And the boycott continues.

      Without MPP participation, it is unclear how it could be legally possible to elect Deputy Speakers of Parliament and most importantly, a Prime Minister and Cabinet.

      Constitutional Court once again refused to take up the case of Enkhbayar's exclusion from election. Undeterred, he is going to appeal again. Two other MPs from MPRP have taken an oath today, bringing total number of current MPs to 71 (31 DP, 25 MPP, 10 MPRP, 2 CWGP, 3 independents). This makes it at least arithmetically possible to create a coalition government with MPP, MPRP and 2 independents - but this is just a speculation. So far, DP-MPRP coalition appears to be on track.

      But this brings to most important political event this week. Trial of Enkhbayar began yesterday and continues today, broadcast live on TV.

      Mongolian public had a chance to see and hear what charges against Enkhbayar are all about.

      And it turns out they don't amount to much.

      Charge of transporting books for free on MIAT plane was shown to be spectacularly wrong - the book in question was not Enkhbayar's, it was a Government publication for the 800th anniversary of the Mongol empire. The book was published in Korea on state expense and distributed free of charge in Mongolia and abroad as a part of government publicity campaign for the anniversary celebrations. It was freed from customs charges by a Government decree and MIAT, being a state-owned company, transported it for free. Enkhbayar did not receive a cent from this book.

      That prosecution did not bother to check this for five months shows quality of their investigation. Other charges appear just as groundless.

      I'll post update as soon as trial finishes

      1 Aug, 07:55 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Thanks GI for that local perspective and update. Had missed your updates. Hope you enjoyed Naddam and had a few buuz and drinks for the rest of us.

      1 Aug, 11:31 AMReplyDelete CommentLike2

    • tripleblackComments (10734)

      http://yhoo.it/QgW21B

      Jon, found this one today which talks about Nova Mining's CEO just returning from Mongolia and China after sewing up lithium mining deals in Mongolia (and looks like sales contracts in China)...

      2 Aug, 12:07 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Thanks. I'm curious where the heck he's getting lithium in Mongolia. On the one hand, I'm sure its in the ground there. On the other hand, I don't know of anyone that is meaningfully getting it out of the ground there now, or anytime soon.

      2 Aug, 12:41 AMReplyDelete CommentLike2

    • tripleblackComments (10734)

      It could be that, like many westerners, he doesn't know the difference between Chinese-controlled Inner Mongolia and Mongolia.

      2 Aug, 09:36 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      Either that, or perhaps the reporter lost that nuance in translation. Checked on the validity with a friend in Mongolia who felt lithium in Mongolia is closer to a scam than reality at this juncture.

      2 Aug, 12:02 PMReplyDelete CommentLike3

    • optionsgirlComments (4234)

      According to the Nova website, their license for one property called Bayankhongor is good through 2013! They have an official looking certificate and everything! :)
      I especially like the graphics on their website, particularly the picture of a smugly smiling Steve Jobs holding and Ipad. http://bit.ly/Ppajoj

      2 Aug, 02:15 PMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Interesting.

      They also say, "Mongolia is a major known exporter of Lithium."

      This is an odd statement. It is also not true.

      Will wait for more data, but they don't look like a viable investment to me.

      Also, keep in mind that Nova Mining (NVMN in the US) is different than Nova Resources (NOVA, or NOVA.L, in England) which has legit logistics deals.

      2 Aug, 02:58 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Enkhbayar's trial finished. Court sentenced him to four years in prison.

      MPRP is going to pull out of coalition in protest against "modern political persecution".

      2 Aug, 08:11 PMReplyDelete CommentLike5

    • Jon SpringerComments (2456)

      Wow. More interesting dust to settle... to come.

      2 Aug, 11:32 PMReplyDelete CommentLike2

    • optionsgirlComments (4234)

      Reuters news release:
      http://bit.ly/NPXn0e

      3 Aug, 08:57 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      From Reuters report
      ----
      "The most likely scenario is that the Justice Coalition will remain in the ruling coalition despite condemning the conviction," Dale Choi, an associate at Origo Partners MGL, a private equity investment company which advises investors on Mongolia, said in a note.

      "The coalition parliamentarians will fight to free Chairman Enkhbayar and there may be further concessions from the Democratic Party to the Justice Coalition."
      ---

      Another possibility is that MPRP-MNDP "Justice" coalition will collapse allowing DP, CWGP, defecting members of MPRP-MNDP and independents to form a minimal majority of 36-37 MPs (though I am not quite sure about legality of a Cabinet formed by such a majority, given constitutional requirement of 76 MPs in the Parliament of which only 71 have taken an oath).

      Judging by press-conference today, coalition members are terribly reluctant to break up with DP (which would give them ministerial posts and lots of opportunities for enrichment)

      3 Aug, 10:07 AMReplyDelete CommentLike5

    • Jon SpringerComments (2456)

      For what its worth, the Reuters article was written by Terrence Edwards who lives in Mongolia and speaks Mongolian. He also writes for the Business Council Of Mongolia and Mongolian Economy.

      I continue to target September to start gaining clarity on the political and investment landscape in Mongolia. As Guest Investor's comment points out above (in a manner), we need to know what individuals will fill the various ministries to get a clear read on the investment climate.

      3 Aug, 11:41 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      IMHO, we already getting clarity on most important issue.

      Next May, Elbegdorj will not be reelected unless he resorts to vote rigging on a very large scale (which is very risky and probably impossible given Mongolian realities)

      Since Enkhbayar most certainly will not be running in the election, an MPP candidate will win (combined MPRP/MPP vote in election of June 28th exceeded 51 per cent while DP got only 35%. Since Enkhbayar's voters will now vote against Elbegdorj, MPP win seems well assured ).

      And then a new president will appoint new General Prosecutor, new Supreme Judges, new heads of Anti-corruption Authority and General Intelligence Agency and will launch one more cycle of politically motivated purges - this time against Elbegdorj and his supporters.

      It will take some time for this to sink in, but once people in Mongolia realize that this is what will happen, we can expect lots of interesting and unexpected maneuvers....

      6 Aug, 07:25 AMReplyDelete CommentLike5

    • haiguikeComments (385)

      Wow, that is a very interesting perspective. If this is all comes to pass, Oyu Tolgoi should hire you as a "Principal Political Analyst".

      By the way, most young education Mongolians I have met seem to be supporters of Elbedorj. I haven't met a single one who supports Enkhbayar. Why is this the case? You seem to have kind words for Enkhbayar and not-so-kind words for Elbedorj.

      9 Aug, 05:16 AMReplyDelete CommentLike3

    • haiguikeComments (385)

      Guest Investor,

      Please read Mogi's take below on an excerpt of an article written by someone who has never been to Mongolia:

      ----------------------...

      Mogi: Step forward for me but what would you expect from journalists who never bother to come here and spew such BS from the comfort of his office

      A Step Back For Mongolia

      August 7 (The Diplomat) The Mongolian courts have sentenced former President Nambaryn Enkhbayar to seven years in jail - commuted to three years (Mogi: commuted to FOUR years actually) - stemming from political corruption during his tenure as leader from 2005-2009. Enkhbayar also served as Mongolia's Prime Minister from 2000-2004. The scandal has destabilized Mongolia's international reputation at a time when the Central Asian country is looking to court foreign investors to its burgeoning economy. (Mogi: I say this actually strengthens it, makes a statement about how serious we are about corruption, no one is immune, not even ex-presidents)

      ----------------------...

      What's your take?

      9 Aug, 07:10 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      I suppose this is because I am no longer that young...

      9 Aug, 09:20 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      How about arresting current President for corruption?

      That would really show how serious we are!

      9 Aug, 09:31 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      The MPRP-MNDP Justice Coalition will not collapse just yet and will not pull out from coalition with DP either.

      But they asked Democratic Party to make a statement condemning Enkhbayar's sentence (presumably as a precondition for continuing coalition government)

      This puts DP in a rather difficult position...

      6 Aug, 07:15 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      MP Erdenebat, Secretary-General of the Democratic Party gave an answer today.

      He said that DP believes that nobody should interfere with court decision. He said that DP is against political persecution. He said that there is a need for judicial reform and that DP expects to work together with MPRP on this. He added that Parliament obviously has a right to make new laws in this area.

      Reading behind the lines, he is basically proposing to the MPRP that the parliament dominated by MPRP-DP coalition could make a new law designed to give amnesty to Enkhbayar, bypassing court system and President Elbegdorj altogether.

      7 Aug, 09:39 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      There is a lot of talk about Mongolian resource nationalism, but few foreign investors understand feelings involved.

      Well, this popular opposition clip just about summarizes their view of situation in the country (lyrics in Mongolian, but you don't really need to know words - video speaks for itself. The refrain is simply "People of our nation wake up! Blue Mongolia arise! Genghis Khan's Mongolia shall flourish again!")

      http://bit.ly/MnYAGn

      6 Aug, 10:06 AMReplyDelete CommentLike3

    • Valley BoyComments (1483)

      I follow what you are saying about their historical sense of resource nationalism. They were able to expand their country at the time of Genghis Khan in large part by pooling their natural resources effectively.
      I picked up on that idea many years ago by reading Taylor Caldwell's novel about Temujin, the young Genghis Khan. The idea is hinted at in the book title, "The Earth is the Lord's."
      http://amzn.to/NXlCto

      6 Aug, 11:34 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      From the perspective of the general populace, there is no genuine relevance between laissez-faire capitalism, resource nationalism, or any other guiding economic policy of the elite.

      The question is if the political and economic elite of Mongolia will do the things necessary to improve the country for the general population.

      - Will they invest in improving education?

      - Will they improve the regional network of healthcare, education, and distribution of goods back to communist levels or (preferably better) to relieve the pressure on Ulaanbaatar and make life everywhere in the country up to global standards?

      - Will they improve roadways and rail systems?

      - Will they improve job training programs?

      - Will they report inflation honestly and make sure government and teacher salaries keep up with inflation (and rid the education system of the bribery for grades that is rumored to be rampant)?

      - or, will they be greedy and torpedo the country into a profound case of Dutch Disease, debilitate their citizens with cash handouts to placate them while they are robbed of life, and busy themselves entirely with intramural elite shenanigans over who gets what contract and trying to be richer than their fellow elite?

      *Now... I think resource nationalism will be bad for the general population. But, that is because:

      a) resource nationalism will not change government policies that are making things worse for the majority of people in the country

      b) resource nationalism will cause there to be less foreign direct investment and international aid; and unfortunately the government is reliant on these funds to the point that they have to contain reported growth to make sure they continue to receive the international aid

      6 Aug, 05:20 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      ---resource nationalism will cause there to be less foreign direct investment

      Mongolbank reports that foreign direct investment fell by 22.5% in first six months compared to same period last year.

      http://bit.ly/MhixDh

      7 Aug, 09:33 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      "Mongolbank reports that foreign direct investment fell by 22.5% in first six months compared to same period last year."

      That simply is not sustainable.

      7 Aug, 12:02 PMReplyDelete CommentLike2

    • H. T. LoveComments (10322)

      (NVMN): Saw a PR that might be of interest.

      "NVMN: Third-Party Estimate States Lithium Reserves on Mongolian Mining Properties Under Contract Could be in Excess of $12 Billion"

      http://bit.ly/QAHJFi

      HardToLove

      7 Aug, 08:42 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      An advertisement for NVMN popped up on a news website (daily caller) that a Drudge Report headline led me to this morning. The last company operating in Mongolia that I saw pop-up ads for in "mainstream" internet news sources was GTSO.

      One question is: if you have a $12 billion property, why advertise your shares on Daily Caller?

      On the bright side, their home page (http://nova-mining.com) notes at the bottom, "Nova Mining Corporation is an American publicly-traded mining company that is also listed on a US Stock Exchange and the Company's ticker symbol is NVMN. The Company reports quarterly and yearly audits AS WET AS material events to the Securities and Exchange Commission (SEC)." (all caps to "as wet as" added)

      And, the Bayankhgor property where they claim they have this mega-mine has a license that expires next year http://bit.ly/NyZi3i

      The original article Tripleblack cited above is from July 2012; which is the first reference we have of NVMN's CEO visiting Mongolia.

      No one else has even spoken about lithium in Mongolia and now they are sure they have a mega-mine?

      They're going to have to do some more drilling, reporting, and fund-raising to pay for all the drilling to pass the sniff test

      7 Aug, 11:46 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      In other news, Prime Minister S.Batbold has appointed Mr. E.Bat-Uul a new mayor of Ulaanbaatar.

      The unusual nature of his appointment (why he was appointed by outgoing Prime Minister and not by a new Democratic PM?) seems to indicate some sort of deal between DP(or some faction of DP) and MPP.

      7 Aug, 09:43 AMReplyDelete CommentLike3

    • optionsgirlComments (4234)

      Did you see this Proph Coal announcement?

      Prophecy Coal Corp.
      TSX:PCY
      OTCQX:PRPCF
      FRANKFURT:1P2
      Other Recent News | Printer Friendly Version
      August 7, 2012
      Prophecy Coal Debuts Its Power Division
      VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 7, 2012) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)... is pleased to debut Prophecy Power Corp. ("Prophecy Power"), the Company's wholly-owned Mongolian subsidiary focused on the power sector in Mongolia. Prophecy Power, formerly known as East Energy Corp, was incorporated in 2010 with the specific business objective of supplying power to Mongolia through the construction of the Chandgana Thermal Power Plant. Prophecy Coal's Chandgana LLC in parallel will develop the Chandgana coal project to ensure fuel supply to Prophecy Power.

      Location

      Prophecy Power's proposed 600 MW (150 MW x 4) mine mouth power plant complex is to be built next to Prophecy Coal's Chandgana coal deposit located in Central Mongolia, next to a paved highway, just 60 km from Undurkhann (east electricity grid connection leading to Cholbbalsan, and 120 km from Baganuur (west electricity grid connection leading to Ulaan Baatar).

      Power Plant Licenses

      Prophecy Power obtained approval of its Environmental Impact Assessment (http://bit.ly/NZSyBw) from the Ministry of Nature and Tourism in November of 2010. In November 2011, the Ministry of Natural Resources and Energy granted a construction license for the 600 MW power plant. This license was the first of its kind ever granted in Mongolian history.

      Directors and Management

      Prophecy Power's Board of Directors consists of Chris Kwan, John Lee, and Bailikhuu Dambachultem.

      Mr. Kwan is a lawyer with extensive experience with Power Purchase Agreements. Mr. Bailikhuu Dambachultem is an established Mongolian person whose previous posts included State Secretary and Advisor to numerous government agencies that manage power plants and other significant facilities in Mongolia. John Lee is the Chairman and CEO of Prophecy Coal and an entrepreneur with a home base in Ulaanbaatar. Mr. VP Sharma is appointed as Prophecy Power's advisor. Recently retired from a Director of Operations and Construction position with China Light and Power (http://bit.ly/NlF2Df), Mr. Sharma is a Chartered Engineer with over 40 years in the Energy Industry.

      Power Purchase Agreement ("PPA")

      Since Prophecy Power obtained the construction license in November 2011, the Company has been in ongoing discussions with the Mongolian government to finalize a PPA in order to secure Mongolia's long-term energy supply, and enable project financing and construction to move forward.

      The Ministry of Natural Resources and Energy appointed a working group of over a dozen experts on the legal, technical and commercial aspects of granting a PPA to Prophecy Power. In the last six months, Prophecy Power has held numerous sessions with working group members to establish Prophecy's Chandgana project status as the first independent power plant in Mongolia. Technical discussions included understanding and overcoming concerns over grid connection and plant implementation. Commercial discussions revolved around establishing tariff structure (cost plus principle, and take-or-pay) as well as the setting of prices (with proper indexation of fuel, operation & maintenance, and equity) that are both affordable and lower than current Russian power imports, yet generate a fair equity return to Prophecy Power's investors and shareholders. Equity risk assessment included Mongolian sovereign ratings and early stage development in the independent power sector. Prophecy expects to make a formal tariff submission in August and expects a reply in 2012.

      In parallel, Prophecy Power has been in discussions with several private Mongolia companies regarding bi-lateral power purchase agreements. The current proposed mining projects (copper, molybdenum, and iron ore) and industrial development complex (cement and smelter) in Mongolia will, collectively, require up to 200 MW of power by 2016. This excludes the massive Oyu Tolgoi project. The remaining power supply from Prophecy Power's Chandgana Power Plant is expected to help meet the increasing energy demand created by ongoing expansion of Eastern and Northern Mongolia, and the capital city of Ulaanbaatar, as well as to replace Russian power imports.

      Coal Supply Agreement

      A coal supply agreement is in place whereby Chandgana LLC, another Prophecy wholly-owned Mongolian subsidiary, will supply 3 million tonnes of coal per year to Prophecy Power for 25 years. The initial coal price will be set with annual price adjustment based on diesel price, Mongolia's CPI and US' CPI. Chandgana LLC controls over 1.4 billion tonnes of thermal coal in measured and indicated categories, including a starter pit with 140 million tonnes of measured resource and a strip ratio of 0.5 to 1 which is ready to be mined. Upon the acquisition of the Tethys claims (refer to press release dated June 18, 2012) with a historic (non 43-101 compliant) resource estimate(i) of 2.3 billion tonnes, Chandgana LLC will control one of largest thermal coal basins in the world, with an ample supply of coal for a power plant of 4,200 MW or bigger.

      Engineering, Procurement and Construction ("EPC") of Thermal Power Plant

      In December 2011, Prophecy Power prepared a data room and distributed a request for proposal (http://bit.ly/NlF3an) to six carefully-selected EPC contractors. Site visits and technical sessions were conducted in Mongolia between January and May 2012. Prophecy received proposals from all six EPC contractors and in July, after extensive review and face-to-face meetings, Prophecy shortlisted three EPC contractors based on construction capability, equipment quality, time to deployment and price. Prophecy Power is currently in close discussions with the remaining candidates with respect to detailed design specifications, labor and parts requirements, Mongolian customs and import, and project timeline in order to formulate final quotes. Prophecy Power expects to finalize the EPC selection by October 1, 2012.

      Project Financing and Financial Advisors

      Prophecy Power is in active Project Financing discussions with a number of interested parties.

      Financing structure is expected to be 30% equity and 70% debt. The 600 MW project will be implemented in two phases, with Phase 1 construction of 150 MW x 2 and the transmission lines planned to start in Q2, 2013 and be complete by early 2016. Phase 2 construction of 150 MW x 2 is planned to commence in 2014 and be completed in 2017.

      Debt Financing

      Prophecy Power has held preliminary discussions with China Export-Import Bank and Sinosure. There is a likelihood of Chinese financing predicated on a Chinese EPC and Chinese equity. Separately, Prophecy has approached EBRD and a number of major commercial banks active in Mongolia that have expressed interest in the Chandgana project. The risk-sharing provisions and investment returns detailed in the PPA will be an important factor in determining the financing arrangement.

      Equity and Developer JV Financing

      Prophecy has been introduced to a number of international power project developers ("Developers") since late 2011. Over ten Developers have executed Confidentiality Agreements and reviewed Prophecy Power's data room in looking to establish equity stakes in Prophecy Power and jointly construct, manage and operate the Chandgana Power Plant. Several Developers are at term sheet stage with Prophecy Power that will structure the sharing of Prophecy Power's expenses through various milestones such as PPA, financing close, and construction. The Developers have demonstrated genuine interests in partnering with Prophecy after learning more about Mongolia's acute power shortage after years of rapid growth, the Government's efforts toward liberalizing the energy sector, and the secured fuel supply from the Chandgana coal project. Prophecy's goal is to secure Developer sponsorship in 2012.

      Prophecy Power is also in discussions with EPC contractors to obtain funds through an equity stake and/or advanced credit line to ensure construction starts in 2013 as planned.

      Financial Advisors

      Prophecy has met with several first-tier investment banks with interests in mining and utilities operations. While the Chandgana project is currently considered "greenfield", it has advanced to a mature stage for financial advisory engagement in 2012.

      Prophecy's Chairman and CEO, John Lee, states: "The Company is entering into an exciting phase with several important near-term catalysts. Our international team, consisting of members of eight different nationalities, has been working tirelessly to conclude/finalize EPC selection, PPA, Developer JV, and Financing. Just last week, India suffered the most extensive power blackout in history, during which 600 million people faced rail shutdown, traffic gridlock and dangerous daytime heat without air conditioning. In Mongolia, the citizens would face a serious threat without power in -40 degree winter conditions. We have been mandated by the Mongolian Energy Authority to supply power by 2016 and we intend to fulfil this important mission."

      Prophecy Power's Chandgana power project is the most mature thermal power project in Mongolia. Ground leveling work is to start in September in preparation for the pouring of foundation to commence in the spring of 2013.

      (i) According to records reviewed by Prophecy, Tethys applied on March 15, 2011 to register a resource estimate of 2.33 billion tonnes of thermal coal for the Tugalgatai licenses with the Minerals Resource Council of Mongolia. The resources registered by Tethys are not NI 43-101 compliant.

      About Prophecy Coal

      Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. The Company's wholly-owned subsidiary Prophecy Power is developing a proposed 600 MW mine-mouth power plant, which has been permitted by the Mongolian government, adjacent to its Chandgana coal deposit. Negotiations on financing, power purchase agreement and construction management are underway.

      Mineral resources that are not mineral reserves do not have demonstrated economic viability.

      Further information on Prophecy Coal can be found at http://bit.ly/pCqn2J.

      ON BEHALF OF THE BOARD OF PROPHECY COAL CORP.

      JOHN LEE, CEO/Chairman

      Forward Looking Statements: This news release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, including, without limitation, statements regarding future plans and objectives of the companies are forward-looking statements that involve various risks and uncertainties. Although Prophecy believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include general economic, regulatory, market or business conditions, and other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Mineral exploration and development of mines is an inherently risky business and large infrastructure projects such as power plants require huge amounts of capital which may not be available to Prophecy on terms which will allow its shareholders to realize a reasonable return or on any terms at all. Accordingly the actual events may differ materially from those projected in the forward-looking statements. For more information on Prophecy and the risks and challenges of its business, investors should review filings that are available at http://www.sedar.com.
      Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

      7 Aug, 10:29 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Prophecy Coal (OTCQX:PRPCF) (PCY in Canada) has the best investor relations team of any publicly traded company in Mongolia. They are a very sharp group.

      Prophecy Coal does not have a Power Purchase Agreement done, despite ongoing negotiations.

      Prophecy Coal did buy the Tethys property (which they told me they were planning to do in February).

      Estimates of how much money Prophecy Coal needs to raise to execute this project have gone from $700 million in February to $840 million (I heard last week from a reliable source).

      If I were considering investing, I would rather invest after they have the majority of the debt they need secured. They plan to get up to 80% of their debt from China's Ex-Im bank (which is the same as they told me in February). The other portion will be dilutive unless Prophecy Coal raises the funds by selling Prophecy Platinum (PNIKF)

      Mind you, I wish every company had an investor relations department that made as good presentations while being smart and open to investors as Prophecy.

      7 Aug, 12:01 PMReplyDelete CommentLike3

    • Mathieu MalecotComments (482)

      agree. let them raise capital before risking dilution.

      14 Aug, 05:34 PMReplyDelete CommentLike2

    • optionsgirlComments (4234)

      Anytime you have frontier properties, you have pump and dump paradise.
      I got burned right down to the bone with IVAN--which appeared to be for real.
      In my mind, I now live in the "show me" state.

      7 Aug, 12:45 PMReplyDelete CommentLike4

    • Joseph L. ShaeferComments (1239)

      And some of us have felt the marrow start to sizzle with IVN, as well, OG...

      7 Aug, 02:08 PMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      We have a a new Prime Minister.

      42 MPs have voted for DP leader N.Altankhuyag.

      MPP boycott has also ended (no visible signs of any DP consessions yet)

      9 Aug, 09:34 AMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      MP D.Terbishdagva from MPRP made a speech in Parliament today accusing Justice and Interior Minister Ts.Nyamdorj (one of MPP leaders) of being a mastermind behind Enkhbayar's persecution and promised to fight against political repression together with new Prime Minister Altankhuyag.

      He is probably right about this, but this is not a whole truth, of course.

      I'd say there is a whole conspiracy against Enkhbayar which is led by a strange (and of course temporary) alliance of President Elbegdorj, his men in law enforcement (notably Chief Justice Zorigt, General Prosecutor Dorligjav and Deputy Chief of ACA Mr. Bat Khurts) and former MPP leadership (S.Bayar, Ts.Nyamdorj, Khurelsukh, S.Batbold)

      9 Aug, 09:55 AMReplyDelete CommentLike4

    • optionsgirlComments (4234)

      Prophesy Coal is moth balling their coal plant in Mongolia for at least 6 months. They say they have enough product to fulfill existing contracts.
      IVAN came out with terrible numbers. Again.

      9 Aug, 11:26 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Well... it will be longer than 6 months for Prophecy... I don't think they'll ramp up production at their northern mine (the only one in operation) during the winter. In any case, their mine in the north is small potatoes (albeit important for cash flow). The big deal that will drive Prophecy's share price is Chandgana (where they are *not* mining coal yet) and the power plant.

      I can't comment on IVAN intelligently. Their operations in Mongolia are tiny and a small part of the company.

      9 Aug, 11:37 AMReplyDelete CommentLike2

    • Joseph L. ShaeferComments (1239)

      Mothballing should improve their cash flow, OG. They were losing money on every ton produced. But making up for it in volume? :-)

      9 Aug, 01:56 PMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Breaking news. Prime Minister N.Altankhuyag has just presented his proposal for the new Cabinet to Speaker of Parliament Z.Enkhbold.

      ---
      Prime Minister N.Altankhuyag /DP/
      Deputy Prime Minister D.Terbishdagva/MPRP/
      Minister and Head of Cabinet Secretariat Ch.Saikhanbileg /DP/

      Ministers
      1. Minister of environment and green development - S.Demberel /CWGP/
      2. Foreign minister- L.Bold/ DP/
      3. Minister of finance - M.Enkhsaikhan/MPRP-MNDP "Justice" coalition/
      4. Minister of justice - Kh.Temuujin/DP/
      5. Minister of construction and urban development - A.Gansukh /DP/
      6. Minister of defense - Sh.Tuvdendorj/DP/
      7. Minister of education and science- L.Gantumur/DP/
      8. Minister of roads and transport - B.Ariunsan/DP/
      9. Minister of culture, sports and tourism - Ts.Oyundari /DP/
      10. Minister of mining - G.Batkhuu/DP/
      11. Minister of industry and agriculture - Kh.Battulga/DP/
      12. Minister of labor - Ts.Oyungerel /DP/
      13. Minister of human development and social protection - R.Amarjargal /DP/
      14. Minister of economic development - N.Batbayar /DP/
      15. Minister of energy - M.Sonompil /MPRP-MNDP "Justice" coalition/
      16. Minister of health - N.Udval /MPRP/
      ---

      Most of these ministers were in the 2008-2012 coalition government and resigned in January this year.

      "APU" G.Batkhuu, "Genco" Kh.Battulga, "Fortuna" N.Batbayar - they are all oligarchs with enormous business interests in areas which they now will be regulating as ministers.

      This "Cabinet of oligarchs" appears to be DESIGNED to become the most corrupt government ever in Mongolian history

      14 Aug, 12:50 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      I like Temujiin at Ministry of Justice. He is supposed to be an up and comer, young, and moralisitic.

      What about Ariunsan? He is road and transportation? Will he support building railways?

      14 Aug, 07:38 AMReplyDelete CommentLike2

    • faizulramliComments (27)

      saw this article on Forbes, quite damning on the current President. Is it merited though?
      http://onforb.es/OY9TqB

      15 Aug, 08:58 AMReplyDelete CommentLike1

    • Jon SpringerComments (2456)

      Nope. I'm not sure Mr. Schoen has even been to Mongolia.

      To me, the issue is:
      if you want to say Enkhbayar is corrupt, that's fine... but then you darned well better start arresting all the other people that are even more corrupt than he is, including people in the DP (and not exclusively people in parties other than the DP). If Mongolia wants to look like its cleaning up, it has to arrest higher profile people who are even wealthier than Mongolia... or, it can appear "democratic" (i.e. fair) and release Enkhbayar because they don't have the gumption to arrest some of their wealthiest citizens.

      15 Aug, 09:17 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Read comments there - very educational.

      16 Aug, 01:45 AMReplyDelete CommentLike1

    • haiguikeComments (385)

      Although the corruption case is politically motivated, all young and educated Mongolians I have met are supportive of this movement. They say that it shows even a former president is not immune and that this is only the beginning.

      There are a few Enkhbayar supporters such as Guest Investor from what I have read online. I have never met any of these people during my time in Mongolia. Sure, Elbedorj may be corrupt, but if he is moving the country in a business friendly direction while consolidating the corruption, why not?

      16 Aug, 06:01 AMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      I am quite sure that the new government will be very friendly to businesses of Mr G.Batkhuu, Kh.Battulga, N.Batbayar and A.Ganbat....

      16 Aug, 08:27 PMReplyDelete CommentLike2

    • haiguikeComments (385)

      In the U.S., we have Nancy Pelosi, Barney Frank, Barack Obama, and more. At least there are only four populist resource-nationalists.

      16 Aug, 09:09 PMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      For fun... a friendly reminder...
      ... that Mr. Batkhuu was #9 on last year's list of Mongolia's 100 richest...
      ... and Mr. Battulga was #3

      Only the top 10 were translated into English here
      http://bit.ly/LNvSjo

      I have the whole top 100 list, but its in Mongolian and I'll worry about deciphering when the appointments are final.

      In America, among the top 400... in politics we have...
      http://onforb.es/MBmItM
      Mr. Bloomberg at #12 is mayor of NYC

      and that's all.

      16 Aug, 09:28 PMReplyDelete CommentLike5

    • doublegunsComments (5706)

      In America, among the top 400... in politics we have...
      http://onforb.es/MBmItM
      Mr. Bloomberg at #12 is mayor of NYC

      Yep and he used that money to buy that office. I wonder if telling everyone what they could eat, drink, etc..... was his reason for running. He seems to be enjoying himself.

      Wonder whose tyrants are more tyranical. Ours or Mongolias.

      17 Aug, 08:33 AMReplyDelete CommentLike3

    • Mathieu MalecotComments (482)

      lol. nicely done.

      20 Aug, 10:01 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      This is getting embarassing. For some reason there was a change in plans.

      Mr. G.Batkhuu will not get a job after all, instead another Mongolian oligarch "Bridge" D.Gankhuyag will be a minister of mining.
      A.Gansukh will be a minister of roads and transport, not Mr.Ariunsan.
      Yet another oligarch, "Ajnai" D.Bat-Erdene will be a minister of defense.
      Minister for Construction and Urban Development- Ts.Bayarsaikhan.
      Ms. Ts.Oyungerel will be a Minister of culture, sports and tourism.
      Ya.Sanjmyatav, former governor of Zavkhan will be Minister of labor.
      S.Erdene will be a minister of human development and social protection.

      http://bit.ly/QIHc00

      Up the thread there are assessments by Dale Choi of our new ministers made when they were elected as MPs, so I'll just quote them:

      Minister for Economic Development N.Batbayar ( author of ill-fated WPT, well known for his anti-OT IA stance, populism and resource nationalism)

      Minister for Industry and Agriculture: Kh.Battulga (former Minister of Roads, Transportation, Construction and Urban Development, known for support for Russian gage railroad and priority for eastern railroad)

      Minister for Defense: D. Bat-Erdene (Chairman of MSE-listed Tavan Tolgoi joint stock company, known for resource nationalism)

      Minister for Mining D.Gankhuyag (well known for his anti-OT IA stance and resource nationalism)

      Minister for Human Development and Social Welfare: S.Erdene(well known for his anti-OT IA stance, populism and resource nationalism)

      "Moving the country in business-friendly direction", right....

      17 Aug, 07:35 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Yet... who would we rather have running the country than business men with a vested interest in the success of business? civil servants? teachers? nurses?

      We will find out what "resource nationalism" really means soon enough. Is "resource nationalism" something that is promenaded about once every 4 years for electoral purposes while policy remains laissez-faire... or is the nationalization of mining interests a risk? (I think these men are closer to the former than the latter)

      I want to know more about Mr. Gansukh if he is to be Minister of Transportation and Roads. I want to know if Mongolia is serious about railway infrastructure development. Without railway development, the whole country will remain bottlenecked:
      - the railway network between Mongolia and China already is transporting at its full capacity
      - the mines of Mongolia will be able to transport far more by rail than by truck which will lead to more tax revenues for the government which will give the government the funds it need to invest in the rest of the country's infrastructure (not to mention making the mines, including those state run, more profitable)

      Of course, the flip side of this is my favorite quote in my notebooks labeled (at request) anonymous: It is only the Mongolian government's inability to execute and develop infrastructure that has prevented hyperinflation in Mongolia.

      17 Aug, 08:42 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Mr. Gansukh used to be a deputy minister of roads, transportation, construction and urban development. He was close ally of his minister Kh.Battulga and they quit together in January this year.

      17 Aug, 09:04 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Well, I hope he doesn't have a trucking business, too, like Mr. Battulga - that's a whole other level of conflict of interest.

      17 Aug, 10:19 AMReplyDelete CommentLike3

    • faizulramliComments (27)

      All interesting stuff. Comments in that article were certainly not kind on the author.
      As Jon mentioned, we'll see things roll out in the next few weeks

      18 Aug, 03:11 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Mongolian news site http://newsworld.mn reports that new mining minister Gankhuyag has vowed to change Oyu Tolgoi Investment Agreement and promised to resign if he fails to do that.

      He made this statement at a party celebrating his appointment to ministerial post.

      http://bit.ly/OEu7nN

      20 Aug, 01:42 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      I've learned the hard way that one must have news from multiple sources in Mongolia to confirm its validity, so we should wait for confirmation of this information.

      However, personally, this author would take any action by the government to change the Oyu Tolgoi Investment Agreement as a signal to tell investors to sell all their Mongolian investments. If the government chooses to act dishonorably, like a man who brings a knife to a fist fight, the investment environment is no longer appropriate for foreigners (in any of the foreign-held publicly traded miners; and all other foreign-held companies would be at risk).

      That said, I would wait and watch to gauge what the government will actually do at this time.

      20 Aug, 07:22 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      Enkhbayar's health is in crisis.

      There was some brief confrontation between Enkhbayar's supporters and prison authorities this morning. They threatened to storm the prison if they don't immediately start treating Enkhbayar in hospital.

      The authorities capitulated and Enkhbayar was transferred from prison to 2nd hospital.

      In other news, ministers from MPRP and CWGP were appointed today.
      Deputy Prime Minister- D.Terbishdagva (MPRP),
      Finance Minister- Ch.Ulaan (MPRP) ,
      Minister of energy - M.Sonompil /MPRP-MNDP "Justice" coalition/,
      Minister of health - N.Udval /MPRP/
      Minister of environment and green development - S.Oyun /CWGP/

      Finally, MPP is once again boycotting the parliament angered by what they describe as a contempt for opposition and unwillingness to compromise from the DP side.

      20 Aug, 09:46 AMReplyDelete CommentLike3

    • Jon SpringerComments (2456)

      Nice to see Ms. Oyun in the government - her politics have been described to me by most people as "balanced". As possibly the most popular politician for western interviews (due to her Cambridge education + the sad yet interesting story of her brother's assassination), she lends to validity to this government in the west.

      20 Aug, 11:13 AMReplyDelete CommentLike2

    • Guest InvestorComments (83)

      Alicia Campi writes in Asia Times about coming visit to Mongolia of the top national security adviser to China's President. The Chinese are trying to pressure new Mongolian Government into allowing Chalco's takeover of SouthGobi Resources. If Mongolians continue to resist, the Chinese are likely to threaten to deny power to the Oyu Tolgoi mine which will be heavily dependent for electricty imports from China in the first few years of operation.

      http://bit.ly/O0b8pZ

      22 Aug, 01:31 AMReplyDelete CommentLike4

    • Guest InvestorComments (83)

      New Finance Minister Ch.Ulaan in an interview to "Ardyn Erh" newspaper tells about true state of Mongolia's finances.

      He says that the budget for this year was unrealistic, revenue collected amounts to only 80% of target, there are lots of loans to be paid, lots of promises of payments to the citizens which are difficult to fulfill.

      He says that this year's budget calls for 230 bln tugrugs of advance payments from Tavan Tolgoi, but only 80 bln were collected so far.

      He says that there is a new wave of world economic crisis coming, economies of both of China and Russia are in bad shape and this is going to impact Mongolia.

      http://bit.ly/SQYlGC

      22 Aug, 01:46 AMReplyDelete CommentLike6

    • StilldazedComments (1089)

      Wow,
      He needs to take lessons in double speak from Uncle Ben.

      22 Aug, 09:16 AMReplyDelete CommentLike2

    • Jon SpringerComments (2456)

      With coal prices depressed this year, it may be better that Tavan Tolgoi is behind schedule in the long run.

      The government needs to stop spending bad dollars on cash handouts when they should be spending money on building up infrastructure that will create jobs and tax revenue.

      Also, rumor has it that they might need better security at the border and around the national mines to make sure all that is mined is noted by the tax man; and both on the government and company books.

      Until the IAAC (the anti-corruption arm of the government) can arrest members of parliament and ministers (and they cannot), there is going to be ongoing questions about members of the government profiting handsomely from their positions of authority.

      22 Aug, 05:00 PMReplyDelete CommentLike3

    • Guest InvestorComments (83)

      Reuters runs a story about mining minister Gankhuyag's plans to nationalise half of Oyu Tolgoi

      --
      Mongolia should seek to raise its stake in the giant Oyu Tolgoi copper and gold project, the country's new mining minister said, adding weight to concerns among foreign investors about rising resource nationalism following a June election....

      Davajav Ganhuyag, speaking to the Odriin Sonin (Daily News) newspaper on Thursday, said he hoped his government would implement "Resolution 57" passed by parliament, which states that Mongolia should acquire 50% of Oyu Tolgoi once the principal investors -- Rio Tinto and Turquoise Hill Resources -- have recouped their start-up investment.
      --
      http://bit.ly/R9QtP0

      25 Aug, 06:34 AMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      This is the Reuters article. Its by Michael Kohn, the best and most senior international journalist in Mongolia. http://reut.rs/PIG8L1

      Until this political nonsense stops, its hard to justify writing notes about investment prospects in Mongolia... because the government's talk is tanking the prices of all public companies doing business in Mongolia, even those that ultimately are not impacted by the potential actions indicated by the political wind bags.

      25 Aug, 09:46 AMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      If the government wants to renegotiate the OT deal, at least they should wait until most of investment is finished, OT mine runs at full production, the energy problem is solved and revenue flows to the budget.

      Then I am pretty sure that Mongolian government could do whatever it wants - take 50% or 100%, whatever - Mongolia by then would be well positioned to withstand Western anger.

      This at least makes some sense.

      But now? The last thing Mongolia needs is an unfinished OT mine with no money or expertise to finish it and this is exactly what is gonna happen if they do what they say they want to do.

      25 Aug, 11:26 AMReplyDelete CommentLike5

    • optionsgirlComments (4234)

      Given the fact that this mine alone might be worth 1/3 of Mongolian GDP, no wonder the politicians want to steal (claw) back sooner. There is still another 5+ years until it is fully functioning. Lots can happen during that period.
      For the government to reneg now is theft, plain and simple.

      25 Aug, 01:50 PMReplyDelete CommentLike4

    • haiguikeComments (385)

      That is exactly what is baffling me. Why is the government and its supporters pushing for renegotiation when OT is just getting started and at a time when Mongolia depends on consistent FDI more than ever?

      OT is a catalyst. With no FDI or foreign experise, the entire Mongolian economy would crumble in a massive domino effect.

      25 Aug, 05:20 PMReplyDelete CommentLike4

    • Jon SpringerComments (2456)

      Indeed. OT is the catalyst.

      If the government honors its agreement:
      - OT goes into operation
      - tax revenues and GDP go up
      - the economy is set in motion
      - more foreign investors enter the market
      - more mining operations are ramped up as the government is seen to respect its contracts (providing investors the "stability" they need)
      - economy spirals up

      If the government renegotiates:
      - who pays for the completion of OT? why should Rio Tinto lay out more cash to pay for the government's profits?
      - foreign investors don't trust the government will honor its contracts
      - other mining assets are left to rot beneath wind and dust
      - the population remains in an ever worsening over-concentration in the capital city (a result of communism's collapse, infrastructure collapse, and a lost decade in the 1990s that has never yet been recovered from)
      - the government ceases to have revenues to support infrastructure development that would support an expansion of the population outside of Ulaanbaatar
      - foreign aid money will dry up (since, for those uninitiated, a large portion of foreign aid money is given to governments to grease the wheels for private companies from the aid agency's home countries (or continent) to get business deals done in the country)
      - the economy spirals down
      - and the "resource nationalists" leave the country vulnerable to China...

      I keep hoping all this idiotic government talk is bluster... but they keep talking this talk... so I must begin to believe they are sincere when they maintain these statements after the election is over.

      ***
      On a related note... I'm working on a piece about resource nationalism... does anyone have an example of any country that did well under a policy of resource nationalism? (I can't think of one... and thus I really can't understand why this still exists as a policy option for anyone except those suicidally greedy) *When* has resource nationalism worked for any durable amount of time?

      25 Aug, 10:32 PMReplyDelete CommentLike5

    • Guest InvestorComments (83)

      Regarding "resource nationalism" - it works when the infrastructure is already there and country can exploit its already developed resources without foreign companies.

      Nationalisation of western oil companies in Arabian monarchies probably counts as success

      25 Aug, 11:38 PMReplyDelete CommentLike5

    • haiguikeComments (385)

      Even then it's far more efficient for private companies to run it.

      Mongolia does not have the developed infrastructure, the workforce, or the expertise. To demand renegotiation in the middle of a hard commodities bust is asinine.

      26 Aug, 12:09 AMReplyDelete CommentLike5

    • Jon SpringerComments (2456)

      "resource nationalism" - it works when the infrastructure is already there and country can exploit its already developed resources without foreign companies. "

      Name 3 examples of countries where resource nationalism worked out well?

      or in 2 parts...

      - name 3 examples of countries where resource nationalism worked out well for the country's elite?

      - and separately 3 examples where resource nationalism worked out well for the country's general population?

      The sales pitch of resource nationalism is that its better for the general population. The reality of the process seems to indicate that, in the best cases, it just concentrates wealth in the hands of an elite who steal from the rest of the country while claiming to have their best interests at heart.

      26 Aug, 08:55 AMReplyDelete CommentLike4

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Comments (3)
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  • Curious Jon - if the government chooses NOT to honor its agreement with OT, what will the ramifications be for the Mongolian banking sector. Would any of them go bust? Thinking about Khan Bank in particular.
    12 Sep 2012, 03:40 AM Reply Like
  • Author’s reply » Greetings cautiousnomad,

     

    The answer is: it depends. Its not an "if... then..." scenario. There are a lot of variables.

     

    However, if there is not enough capital flowing into the country, that could be a problem for some of the banks. There was major problems in 2009 (after the global crisis of 2008) when FDI dried up and 2 banks in Mongolia went out of business (Anod and Zoos).

     

    I keep thinking that the memory of those two major banks going belly up is fresh enough in people's heads (with neither bank's post-bankruptcy legal situations settled yet) that those governing the country would not willingly create such a situation again.

     

    Time will tell.
    12 Sep 2012, 07:37 AM Reply Like
  • Hmmmmm thank you
    13 Sep 2012, 12:04 AM Reply Like
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