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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 02: October 3 to November 15, 2011 0 comments
    Nov 26, 2011 8:23 PM
    Archives have names at the top and date 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 posts, as well as a list of companies operating in Mongolia, a current list of articles by the author, and current author disclosures, please go to Mongolia Weekly Update.

    Jon Springer

    Comments (997)

    Welcome to the weekly Mongolia news round-up. If I cite an article author’s name, its because I know they write about Mongolia frequently.

    The October issues of National Geographic (Teenage Brain on the cover) has an article about Mongolia starting on page 110 – worth a read.

    Oyu Tolgoi is dominating the news this week, so there is less news. Reports below on state employee wage growth scheduled (53%!) and a quarterly report from the World Bank on Mongolia’s economy are positive, and provide data points for those analyzing whether or not to invest in the country, and how much. 

    1) General belief from sources is that the deal for Oyu Tolgoi will be upheld (despite a contingent from the government pushing to change the government’s holding in OT from 34% to 50%). Consensus is this is an election year issue. No guarantee, but this is overwhelming opinion from multiple sources. There are articles about this daily and Ivanhoe (IVN) shares are getting pummeled.
    Bloomberg: http://bit.ly/qrPKkB
    Reuters’ David Stanway: http://reut.rs/nfyG8G
    Vancouver Sun’s Jonathan Manthorpe: http://bit.ly/qeko2c 

    2) In the midst of IVN’s shares going down, Rio Tinto (RIO) maxed out to a 49% stake. As part of an arbitration pact from last December, RIO is limited to a 49% stake in IVN in exchange for operational control of the Oyu Tolgoi project.
    Vancouver Sun: http://bit.ly/mSHRuo
    WSJ: http://on.wsj.com/qgdx2B 

    3) Leslie Hook from FT, a 3 minute video about Oyu Tolgoi. Good quick overview, although she misrepresents the controversy about the government stake in the mine (saying the gov’t has requested a bigger stake in the mine, instead of saying a group of people in the gov’t are lobbying to change the gov’t stake in the mine).
    http://on.ft.com/qL3LVi 

    4) Mongolia Mining Coporation (MOGLF.PK) road to China gets the thumbs up from the Automobile Roads Inspector:
    http://bit.ly/oO06MP 

    5) Petro Matad (PRTDF.PK), more on the recent results:
    OilVoice (1 of 2): http://bit.ly/qOL9aS
    Oil Voice (2 of 2): http://bit.ly/oZWxbd
    Proactive Investors (1 of 2): http://bit.ly/q54zx1
    Proactive Investors (2 of 2): http://bit.ly/qkafog
    SmallCapNews: http://bit.ly/oWo045/ 

    6) Entrée Gold (EGI) hits a new 52-week low:
    http://bit.ly/ocsOQI 

    7) Government is planning to raise wages of state employees 53% next year (not 5.3%, fifty-three percent). State employee wages since 2008 will have doubled.
    News Mongolia: http://bit.ly/oW9dcB 

    8) Text of August 2011 World Bank report on Mongolia, “Mongolia’s medium-term prospects continue to look excellent, both from an economic growth perspective as well as from a fiscal management perspective”:
    Text: http://bit.ly/panmB9
    PDF: http://bit.ly/n40mN5

    9) Multiple sources have mentioned that Mongolia is raising tariffs on imported construction materials. News link next week.

    10) Bill Fleckenstein, a board member of Mongolia Growth Group, writes a favorable article about Mongolia after his recent trip to Mongolia: http://on-msn.com/qESqty 

    11) The Mongolia Stock Exchange is making progress. According to this FT article: “This summer, hardware for a new trading system was shipped into Ulan Bator… The system is supposed to be up and running by the end of November or early December … and when the process is complete the Mongolian Stock Exchange will be running on the same trading system as the LSE… remote trading will also be possible with the new software.” The news is that folks I spoke to two weeks ago thought this might be done by October. It seems to be taking a bit longer, but the changes are coming. Changing to an electronic trading platform is only the first step.
    Full Leslie Hook blog with link to prior articles:http://on.ft.com/nD5Ret 

    12) Senior U.S. Official Denies Talk of Foreign Nuclear Waste Site In Mongolia (a lengthy article about nuclear isssues):
    http://bit.ly/qNJrJU

    3 Oct, 10:07 AM

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    Peter Epstein

    Comments (249)

    Great update as always. In the news a few hours ago is a joint statement from Ivanhoe and Rio Tinto saying that they will NOT re-negotiate the Oyu Tolgoi deal. Presumably they would not take this stance unless they were pretty confident that it was a prudent action to take.

    3 Oct, 10:28 AM

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    Jon Springer

    Comments (997)

    I think when the election is over next summer, this issue will go away, and the agreement will remain intact. Until then, its an easy way for politicians to get media coverage on a hot button issue.

    3 Oct, 10:45 AM

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    tripleblack

    Comments (10142)

    Lurking on MOGLF trying to snag a few shares just to keep them on my screen for tracking purposes...

    3 Oct, 11:10 AM

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    Jon Springer

    Comments (997) 

    Mid-week notes. 

    1) I've heard that the IMF was asked to leave Mongolia as the government has felt their policy suggestions and analysis were counterproductive. Contrary to that, I found a short September 29th article that begins, "Satisfied that Mongolia's economy has reached a point of stability, the International Monetary Fund (IMF) will withdraw its resident representative from Ulaanbaatar." Net result is the same, but the political spin is quite different. I believe the word on the street that the IMF was asked to leave is more accurate than this news report.
    http://bit.ly/p4aPR8 

    2) Follow-up on the 53% state-employee pay hike from a union chief annoyed the government has not followed through on its promise to triple wages. (Based on inflation and the wage increases being experienced in the mining sector, tripling wages is not an inherently unreasonable demand.) 
    http://bit.ly/ntBM67

    3) Hong Kong had a holiday today, so MOGLF which trades primarily there as 0975 may have some lagging price action. This may effect some other stocks that trade significant volume in HK.

    5 Oct, 08:30 AM

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    tripleblack

    Comments (10142)

    1) Asking the IMF to hit the road is a clear sign of common sense. This alone would heighten my interest in investing in the country.

    2) Its a boom economy taking hold. I hope that they, unlike our domestic state-employee class, are worth every dime. The danger lies in creating an entitlement mindset more than over-promising, IMO.

    3) I am just beginning to fully comprehend the effects of home exchange moves on internationally traded stocks. Thanks for the headsup.

    5 Oct, 09:10 AM

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    Jon Springer

    Comments (997)

     As expected, there is no change in the agreement between IVN, RIO, and Mongolia for the Oyu Tolgoi mine. However, I would expect ongoing political noise through the June 2012 elections. Keep in mind that despite the quote below citing "aspects" "raised by the government of Mongolia" that in fact, it was 22 members of a 76 member parliament that raised the issues of changing this agreement, and they did so in an election year. 

    "Ivanhoe Mines, Rio Tinto and the government of Mongolia have concluded discussions on the two aspects of the investment agreement that were raised by the government of Mongolia, and are pleased to confirm that all parties have reaffirmed their continued support for the investment agreement and its implementation," they said in a joint statement on Thursday.
    http://reut.rs/pm8kOx

    6 Oct, 09:53 AM

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    Jon Springer

    Comments (997) 

    News of the week on Mongolia: 

    1) I’m not linking too many more articles about the Oyu Tolgoi deal sorting itself out. The government is not changing the deal it has with Ivanhoe (IVN) and Rio Tinto (RIO). They were not going to do. Moving on…
    http://f24.my/n7DcfG

    But, if you don’t want to move on, some of the 20 members of parliament that wanted to change the agreement (from the government owning 34% of Oyu Tolgoi to 50%) now suggest that the government should resign. There are elections in June 2012:http://bit.ly/nPoaEJ 

    2) Another issue still to be resolved is who will get the rights to the West Tsankhi portion of the Tavan Tolgoi deposit (what I call “Tavan Tolgoi West”; for anyone new, there are a minimum of three key parts to the Tavan Tolgoi deposit, “Tavan Tolgoi West” which is being auctioned off to a consortium to be named by the government that will also agree to help build up the rail network as part of the deal; “Tavan Tolgoi East” which is the state-owned Erdenes MGL Tavan Tolgoi that every citizen of Mongolia is receiving 538 shares of prior to 30% of the company having a Goldman Sachs Deutsche Bank led IPO planned for next year; and “Little Tavan Tolgoi”, which is listed as TTL on the Mongolian Stock Exchange, has a high yield, and recently resumed trading after several months due to a stock split, and subsequently was once again going up the maximum 15% per day allowed on the Mongolian Stock Exchange for several days). So here is an article saying they will once again start negotiating for which companies get “Tavan Tolgoi West” next month… stay tuned…
    WSJ: http://on.wsj.com/pVtDmf 

    3) Lucky Strike (LKYSF.PK) has news on its NI 43-101 compliant resources:
    ProactiveInvestors: http://bit.ly/r6nyks
    MarketWatch: http://bit.ly/q3hKiG 

    4) Banpu (BNJPF.PK) purchase of Hunnu (HUNNF.PK) approved by authorities in Thailand and Australia:
    http://bit.ly/oyPK14 

    5) Mongolian Mining Corporation (MOGLF.PK), also known as Energy Resources, has two trucks with a 50 ton capacity for the road built to China from their mine opening this month:
    http://bit.ly/pJ2IJG 

    6) Article by one of the local real estate investment firms on the capital growth in the “40K” apartments. These are apartments built between 1955 and 1965. They are highly desirable apartment for their central location. Central location is key in a town: with only one thoroughfare that traverses the whole town; with a lack of city planning meaning that all services (shopping, schools, hospitals) are predominantly in the center; and when 6 miles out from town, for example, took one hour to drive at mid-day for me last month. The capital appreciation in the apartments for the recent 6 months is estimated at 55%:
    http://bit.ly/p7OGSx/ 

    7) Article from Bloomberg that say German Chancellor Merkel’s visit to Mongolia will include a Rare Earths deal, but is limited as there are no details of what rare earth elements are being discussed.
    http://buswk.co/pvkN9y
    AFP speculates that German-Mongolia deals struck during the visit could be in the vicinity of $2 billion: http://bit.ly/o4bo72 

    8) Interview of Mongolia Prime Minister Batbold by German press corps ahead of Chancellor Merkel’s visit (there is a question and answer about rare earths herein; otherwise fairly vanilla and short interview):
    http://bit.ly/p4gtJV

    9) In Brussels, the Mongolia-EU Joint Committee meets starting Thursday: http://bit.ly/nZ0ezt 

    10) Speaker D. Demberel makes a speech. Notes: coal now 40% of exports; large record influx of new livestock; and Mongolia has enough wheat to meet 100% of domestic demand:
    http://bit.ly/nmvpYL 

    11) State Supreme Court hearing a case brought by environmental groups that the government has ignored or allowed environmental damage in river basins (from mining operations):
    http://bit.ly/rfh1EW

    12) Barron’s article noting that Van Eck is – at some point – supposed to launch a Mongolia ETF. Please note this article has inaccuracies about Mongolia. It is quite easy to invest in Mongolia. There are a lot of companies doing business in Mongolia, both local and foreign. Anyway… the link: http://on.barrons.com/...

    13) The Economist write an article about Mongolia’s geographic position between China and Russia, and the geopolitics from it. Some history in it.
    http://econ.st/qZmEwR 

    14) The Anti-Corruption Authority (ACA) is investigating some possible corruption at a factory in Erdenet:
    http://bit.ly/oON5j0 

    15) Debate is still ongoing on how the parliament seats will be decided in the future (the balance of proportional seats from parties versus seats determined by majority vote):
    http://bit.ly/nnwMZI

    10 Oct, 11:36 PM

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    tripleblack

    Comments (10142)

    Amazing data, Jon. Thanks for what you are doing!

    11 Oct, 07:10 AM

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    Jon Springer

    Comments (997)

    More news this week as the Oyu Tolgoi controversy is over. Tavan Tolgoi East is front and center on the heels of agreements from Chancellor Merkel’s visit. At the bottom, #30 (and 30a - 30f) deals with China’s demand vs. Mongolia’s future output with a cross section of data. 

    1) Chancellor Angela Merkel’s visit to Mongolia resulted in closer ties.
    Deutsche Welle: http://bit.ly/nSml1Z
    Spiegel: http://bit.ly/nmpv6D
    Michael Kohn in AFP: http://bit.ly/oHM95N
    A $500 million contract concluded: http://bit.ly/pEwjHf
    Xinhua: http://bit.ly/px0t1e

    2) The “Tavan Tolgoi East” contracts have been reported to be split between Australia’s MacMahon Holdings (MCHHF.PK) and Germany’s BBM Operta. A visit to BBM Operta’s website (http://bit.ly/nYFbCG) clarifies:

    “Coal open pit project Tavan Tolgoi, Mongolia: Operta GmbH applies as BBM German Mining Consortium for an operator contract for one of the world biggest open pit projects for coal. BBM German Mining Consortium is represented by the ‘flagships’ of the German industry such as RWE (RWEOY.PK), Thyssen Krupp (TYEKF.PK), Siemens (SI) or the KfW-Bank, which have long-term experience and excellent international references. These companies stand for the world standard of the ‘German Mining Technology.’” 

    3) “Tavan Tolgoi East” will start production December 1 of this year. The East Tsankhi is 40% of the world’s 2nd largest coal deposit. This is the portion that BBM Operta and MacMahon have been contracted for. This is the portion owned by the government in which Mongolian residents are being issued shares. It will have an IPO for 30% of the company led by DeutscheBank and Goldman Sachs presumably next year with the government retaining 50% of the company -
    Reuters: http://bit.ly/pSQ5fr 

    4) Articles about MacMahon (MCHHF.PK) getting their part of the deal to operate at “Tavan Tolgoi East.” MacMahon is a 50/50 partner with BBM Operta. Tavan Tolgoi East, according to the first article, will produce 15 million tonnes of coal annually once at full production with all necessary infrastructure realized.
    The West Australian: http://yhoo.it/oEujgy/
    PerthNow: http://bit.ly/q4tjyn
    Proactive Investors: http://bit.ly/n0vIlg 

    5) Aspire (ASPXF.PK) raised $34 million by a private placement of 80 million shares. South Gobi Resources (SGQRF.PK) purchased approximately 14.3 million shares to maintain its 19.9% stake in Aspire. South Gobi Resources is 57% owned by Ivanhoe (IVN). Ivanhoe is 49.9% owned by Rio Tinto (RIO).
    Mining Weekly: http://bit.ly/qqkR7i
    ABN Newswire: http://bit.ly/ojiSwc 

    6) Erdene Resources (ERDCF.PK) reports drilling results, “encouraging polymetallic-gold assay results are from a shallow, four-hole drill program, focused on epithermal-style gold, silver and base metal mineralization.”
    http://bit.ly/niTRun 

    7) Mongolia Growth Group (MNGGF.PK) to attend the Hong Kong investment summit October 25 – 27.
    http://bit.ly/oCRtgh 

    8) An FT columnist worries that a 20% correction is yet to come on October 14th, and thinks it will be terrible for Origo Partners (OPP.L). Details are minimal. Its just a paragraph that generously speaking, has almost no analysis.
    http://on.ft.com/nKq5ON 

    9) General Mining Corp (GMM.AX) buys interest in Khuden coal deposit in Mongolia.
    http://bit.ly/p8pBuB 

    10) Mongolia Blue Wolf Holdings (MNGLU) 10-Q. Highlights. “We are a newly organized blank check company formed on March 11, 2011… The Company’s efforts in identifying prospective target businesses will initially be focused on businesses within Mongolia that complement the management team’s background such as in the natural resources sectors and any related sectors… Through August 31, 2011, our efforts have been limited to organizational activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters… As of August 31, 2001 approximately $80,237,740 was held in the Trust Account…”
    http://bit.ly/q9wJrQ 

    11) Robe Australia (ROB.AX) is applying for a coal license on a property adjacent to a Hunnu coal property. Robe has an upcoming recapitalization plan that includes issuing shares at $.005 with an option exercisable at $.01.
    http://bit.ly/nQYhOI 

    12) Gold mining licenses in Mongolia: 1200. Gold mining licenses in use in Mongolia: 466. Gold being smuggled out of Mongolia: increasing.
    http://bit.ly/mUP56d 

    13) The Mongolian government says it will spend $1 billion on road and rail infrastructure projects in 2012, a doubling of the country’s infrastructure budget -
    Michael Kohn in AFP: http://bit.ly/pxoFqw 

    14) Rail freight transported rose 9.9% year over year.
    http://bit.ly/nOxznT 

    15) Mongolia GDP up 16.7% year to date.
    http://bit.ly/nhUh1b 

    16) Preliminary discussions are being held about a constructing a state-owned oil refinery in Darhkhan-Uul:
    http://bit.ly/oqNWLB 

    17) A currency forum at the University of Mongolia has criticized the government’s policy of giving every Mongolian citizen 21,000 Tugrik per month ($17) is making poverty worse. The forum cited poverty rising from 32% in 2006 to 39.2% in 2011. This thesis agrees with recent World Bank reports on the monthly stipend.
    http://bit.ly/qQj2j8 

    18) The government is building up programs to bring home skilled Mongolians living and working abroad. This “beehive” program recently had a conference attended by 150 Mongolians living in 17 European countries.
    http://bit.ly/pkz7YN 

    19) North Korea sells its people into cheap labor in Mongolia per this investigation by England's daily The Independent. Sources Wikileaks data, etc.
    http://ind.pn/oBiFYk

    20) This article points to troubles created by Mongolia’s economic boom. Best quote: “Critics say the country is now dominated by rampant and unbridled capitalism, with its economic growth mainly benefiting a small elite of oligarchs.” I expect more articles like this. It is a sign that Mongolia’s boom is gaining relevance.http://bit.ly/n4LeHr/ 

    21) Article on “ninja miners” (people independent of companies, and often licenses) and the effects of the mining boom. Article jumps around a bit, but paints a picture of the frontier landscape well.
    http://bit.ly/nopHAh  

    22) Energy supplies are running at a deficit. Western districts of Mongolia import energy from Russia. The people are asked to delay turning on their heat as long as possible to conserve money and energy. Note: temperatures at night were dropping below freezing in mid-September.
    http://bit.ly/nkDbql/ 

    23) Plans to build nuclear waste storage facilities in Mongolia have been scrapped by the government:
    Manichi Daily News: http://bit.ly/pY5SVa
    Nuclear Street: http://bit.ly/oRlPvr 

    24) R K Pachauri, head of the U.N.’s Intergovernmental Panel on Climate Change visited Mongolia and if offering to assist development of renewable energy, water conservation and other “green” development. President Elbegdorj was receptive.
    http://bit.ly/oEBDJ1
    MSN: http://on-msn.com/oKi1z9 

    25) Monks from Mongolia go to Montana to learn about responsible mining for the environment:
    http://bit.ly/p1hkuy 

    26) An article about trying to solve Ulan Bator’s pollution problems with different stoves to keep warm in the winter. After Ahvaz, Iran, Ulan Bator is the most polluted place to live worldwide.
    Michael Kohn in Reuters: http://reut.rs/orTdrz
    iNewp: http://inewp.com/?p=9288 

    27) The head of the U.N. Development Program, former New Zealand Prime Minister Helen Clark, is coming to visit Mongolia October 18-20.
    http://bit.ly/q6ZoSw 

    28) Bellingham, Washington (state) is now a sister city of Tsetserleg, Mongolia. The U.S. Ambassador to Mongolia gave a talk about Mongolia in Bellingham, Washington. This is just the announcement that Mr. Addleton would be speaking October 16. Looking for a report on his speech still.
    http://bit.ly/oQqNXG 

    29) Dwight Howard of the Orlando Magic chose his “representative tweet” for his Esquire profile to be: "Best place I been my whole LIFE. Mongolia. Thanks to all the people here. Love u all. Can't wait to come back here. I wanna change the world"
    http://bit.ly/pDBnLV

    30) China’s need vs. Mongolia’s output. Keep in mind: estimates are that Oyu Tolgoi’s copper-gold mine will by itself boost GDP by 25%; Tavan Tolgoi’s east and west Tsankhi coal deposits are undeveloped; these are the largest mines in Mongolia, not the only ones. 

    30a) On October 2nd Mark Anthony blogged, “China Coal Has Reached Peak Production and U.S. Coal Has Reached Bottom Price.” He has some interesting premises in this article. Mark has written other pieces on China’s energy needs I’ve cited in the past. For those interested in investing in Mongolia, the takeaway – as with Mark’s other pieces – is that China’s coal import demands will be beyond the capacity of Mongolian production; a good supply-demand relationship. In the comments, someone asked about Mongolia and Mark Anthony responded, “Latest numbers shows China produced 2.46 billion tons domestically from Jan - Aug., 2011, which brings annual production to 3.69 billion tons, another great leap (+>10%) from last year's production level. Imports from Jan. to July is only 68.55M tons, down from 2010… As for Mongolia, with luck their exports may hit 50M (0.05B) in the year 2015. It's a drop in the bucket compared with what China needs.” 
    http://seekingalpha.co... 

    30b) Related to Mark Anthony’s comment #1 - September 6, 2011, note that Dow Jones Commodities is estimating Mongolia will export 30 million metric tons of coal to China by 2015 (and that they will export 20 million this year):
    Dow Jones (September 2011): http://bit.ly/nzh0YJ 

    30c) Related to Mark Anthony’s comment #2 - June 21, 2011, Reuters article estimates total Mongolian coal exports will reach 50 million by 2015. 
    Reuters (June 2011): http://reut.rs/n1GcKg 

    30d) China used 6.8 million metric tons of copper last year:
    Bloomberg (October 2011): http://buswk.co/ptNTgC 

    30e) Oyu Tolgoi will produce an estimated .544 million metric tons per year of copper in its first 10 years.
    Ivanhoe Mines News Release (August 2011): http://bit.ly/qcEOGW 

    30f) Oyu Tolgoi is believed to contain 37 million tonnes of copper:
    Sydney Morning Herald (Dec 2010): http://bit.ly/qe7Gq5

    17 Oct, 10:27 AM

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    tripleblack

    Comments (10142)

    Amazing info-mine, Jon! Keep it comin'...

    17 Oct, 10:49 AM

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    Jon Springer

    Comments (997)

    Midweek note. Prophecy Coal (PRPCF.PK) is moving in Canada from the Venture exchange to the TSX tomorrow. Ticker in Canada is PCY.

    http://bit.ly/p9bDaI

    Thanks to OG for catching that.

    18 Oct, 02:31 PM

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    Valley Boy

    Comments (1336)

    The new trade connections between Germany and Mongolia sound very promising.

    http://bit.ly/o3Ftod

    18 Oct, 08:15 PM

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    Jon Springer

    Comments (997)

    Nine members of parliament have just submitted a letter demanding the resignation of the prime minister over, indeed, the Oyu Tolgoi agreement and the government's handling of the issue of changing the agreement (or actually, not changing the agreement). These 9 were among the 20 members of parliament who had requested that the Oyu Tolgoi agreement be changed last month which tanked IVN and RIO shares before the Mongolian government made a joint statement with IVN and RIO.

    As the other 11 that signed on for the first round of protesting the Oyu Tolgoi agreement backed out, I think its safe to say this is losing steam even with elections coming in June 2012.

    Sourced from Mongolia Daily "Udriin Sonin." Not in English language media that I can find yet. (I don't read Mongolian. This came out via Mongolian brokerage companies.)

    21 Oct, 06:31 AM

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    Jon Springer

    Comments (997)

    Weekly Mongolia news update as the global population closes in on 7 billion people. If questions come out of reading any links below, please ask them in the comments here.

    1) As noted above, during the past week: Prophecy Coal (PRPCF.PK) uplisted in Canada; and nine members of parliament continued to challenge the government policy of honoring the government’s agreement for the Oyu Tolgoi copper-gold mine with Ivanhoe (IVN) and Rio Tinto (RIO). 

    2) Kincora Copper (BZDLF.PK) has new data, and a new president and CEO. Headlines with the words “Extensive Copper Mineralization Zones.”
    Marketwatch: http://bit.ly/tnGL5u
    Proactive Investors: http://bit.ly/syP4uP
    Mineweb: http://bit.ly/tDYkEE 

    3) Speculationg that Ivanhoe (IVN) will be bought out next year from Bloomberg News analyzing IVN options activity.
    http://bloom.bg/t7h6h8 

    4) Related Ivanhoe/Rio Tinto item. The nine members of parliament demanding the prime minister’s resignation have been officially ignored. Parliament found their request in violation of the constitution and unnecessary to discuss further.
    http://bit.ly/rT8593
    Interview with the leader of this group of nine about why he was seeking the prime minister’s resignation prior to this defeat:http://bit.ly/rDNkpv 

    5) Video discussion of Prophecy (PRPCF.PK) after its uplisting (3 minutes).
    http://bit.ly/rRFFqV/ 

    6) Lucky Strike Resources (LKYSF.PK) uplisted to the OTCQX.
    http://bit.ly/vDULSw 

    7) Voyager Resources (VOYRF.PK) reports more positive results.
    http://bit.ly/vGvNnR

    8) More on General Mining Corporation (GMM.AX) from Proactive Investors: http://bit.ly/sGfV7S

    9) TVN Corporation (TVN.AX) has ramped up drilling on its coal property. http://bit.ly/w2Xi3m

    10) Following on my notes last week about China’s demand vs. Mongolia’s production, the Aluminum Corporation of China, CHINALCO (ACH), is set buy 15 million tonnes of coking coal per year from Mongolia’s Tavan Tolgoi for the next three years.

    a) http://bit.ly/tZmnOe

    b) “China is the world's largest coking coal producer with an annual capacity of over 400 million tons, but this can hardly meet robust the demand of domestic steelmakers.” http://bit.ly/tui9x4/ 

    11) The European Bank of Reconstruction and Development report on Regional Economic Prospects in EBRD Countries of Operations for October 2011 is out (the EBRD has a significant presence in Mongolia). This report is primarily discussing the first half of 2011 through June 2011. “Real private sector credit growth just below 3 per cent on average across the region through June continued to disguise large differences among countries, ranging from continued post-crisis deleveraging to potential overheating. Real credit growth was positive in only about a half of all transition countries. It was by far the highest in Mongolia at 70 per cent, driven by a rapid expansion of the commodity sector and related strong FDI inflows.” (p. 2) “Mongolia has continued to benefit from a mining boom, with GDP growth estimated at 6.4 per cent in 2010 and 14.3 per cent year-on-year in the first half of 2011. Growth is expected to reach 11 per cent in 2011 and 12 per cent in 2012, reflecting high copper prices and substantial mining-related FDI inflows, which totalled 26 per cent of GDP in 2010 and are expected to continue for a number of years. Inflation picked up again, to 9 per cent in August 2011 and is likely to stay high as fiscal policy remains highly procyclical.” (p. 14) Plenty of charts and tables for those inclined. Using control-F (or command-F on Apples) will help you search for the relevant Mongolia data.
    http://bit.ly/tUmWHA 

    12) Article by real estate outfit M.A.D. Mongolia titled “Global Crisis 2011/12 – The Potential Impact on the Mongolia Property Sector” poses some tough questions about the economy and recent government issues, then concludes real estate will be fine. For those seeking cautionary notes on investing in this economy there are plenty in this article. 
    http://bit.ly/u15C2x/ 

    13) The head of the U.N. Development Programme visited Mongolia. The first line of this article at the U.N. News Centre about her visit summarizes, “The recent economic growth in Mongolia due to a boom in its mining sector represents an opportunity to reduce poverty in the country.” She is quoted in her own words: “I am convinced that natural resources can drive human development if they are managed in transparent, inclusive, and sustainable ways.”
    http://bit.ly/rVUGzV=

    Another article about Ms. Clark’s visit with Mongolia’s prime minister stating that the natural resources boom is indeed improving conditions for all those living in Mongolia: http://bit.ly/uMOhSK

    And quoting Ms. Clark at greater length: http://bit.ly/uKz8lC

    And a speech by Mongolia’s premier at the conference with Ms. Clark this past Thursday titled “Avoiding the Resource Curse: Managing Extractive Industries for Human Development.”:
    http://bit.ly/tkpYCT 

    14) An author who believes Mongolia’s GDP growth has exponential potential, comparing the country to Panama and the Arab Emirates. (This author wrote this prior to a trip to Mongolia. He is now there.)
    http://read.bi/vzM6iC 

    15) Mongolian courts have ordered enforcement of bans on mining in river and forest areas. This is not a change, but does effect the operations (or lack of operations) of some mines. Some of Centerra (CAGDF.PK) mining operations in Mongolia are effected for example, although Centerra’s primary operations are in Kyrgyzstan.
    David Stanway for Reuters: http://bit.ly/w4NVaJ
    Related item, Mongolian recent survey of rivers and lakes (including dry ones): http://bit.ly/tQn6NJ

    16) “Tavan Tolgoi East” may have more banks in play to work on its IPO slated for next year: http://bit.ly/vsQC8p

    17) Sharyn Gol, a coal miner listed on the Mongolian Stock exchange, sets a record for funds raised through a secondary offering in the domestic market (about $14.2 million U.S. dollars). 64.5% of the capital raised came from existing shareholders.: http://bit.ly/vtXDJ9

    18) Construction on an oil refinery 85% funded by the Japanese begins: http://bit.ly/v2GU22

    19) U.S. Ambassador to Mongolia Jonathan Addleton was in Alaska to develop ties between Alaska and Mongolia (noting they are two similar places with significant resource wealth, sparse populations, and cold weather). http://bit.ly/sn1MCt

    20) An article by Resource Investing News summarizing the agreements between Germany and Mongolia stemming from Angela Merkel’s visit last week. Mostly ground previously covered in this blog. http://bit.ly/vcDPY1

    21) Mongolia also developing ties with Italy this past week:
    http://bit.ly/s3rwaT
    Signing agreements: http://bit.ly/tS8wmf
    Opening the Mongolian embassy in Rome: http://bit.ly/rAM0NO

    22) Mongolia’s Confederation of Trade Unions says it supports “Occupy Wall Street”: http://bit.ly/vdqZEE

    23) An article by someone with more questions than answers about Mongolia’s economy with many links.

    http://bit.ly/vA0iHb/

    25 Oct, 01:21 AM

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    optionsgirl

    Comments (5305)

    Jon, your updates are so comprehensive you should consider making each week's update a new article and submitting it for publication, imo.

    You have your own Mongolia Weekly Reader!

    25 Oct, 06:39 AM

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    H. T. Love

    Comments (8279)

    Plus 1 on that suggestion. And IMO there is no better concentrated source of pertinent data on this space anywhere.

    MHO,

    HardToLove

    25 Oct, 09:02 AM

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    Valley Boy

    Comments (1336)

    I imagine the Mongolian barbecue restaurants might be interested in Jon's site. Perhaps a notice could be set up by the cash registers where the customers would see it. "Interested in learning more about Mongolia? Please search for Seeking Alpha Jon Springer Mongolia" ought to cover it. If the restaurants could drum up enthusiasm about all ideas Mongolian, that should help encourage their repeat business.

    25 Oct, 09:25 AM

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    Mercy Jimenez

    Comments (305)

    Plus 2 -- on OG's and HTL's kudos. Jon the Mongolia updates you offer are not available anywhere else. Many thanks.

    25 Oct, 10:21 AM

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    AnglicoTrader

    Comments (107)

    Jon, I mirror HTL and Mercy's comments. It is refreshing to see clear analysis and good writing on this little followed corner of the world. (plus, Ulan Bator is my favorite crossworld puzzle answer that is frequently asked).

    25 Oct, 11:03 AM

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    Joseph L. Shaefer

    Comments (1164)

    Jon, as a former US geopolitical analyst, I was particularly interested in your #19 above. When a trade delegation determines to establish closer ties its one thing. When a US ambassador does so, it's quite another. As the US President's direct representative in Mongolia, he is acting on orders or with express permission from above, most likely with a view to ultimately lessening the pressures from China and Russia on Mongolia, and to continue to foster those 1-on-1 relationships built between the Alaska NG and Mongolian armed forces as well as the education and mining relationships. Squashed between two powerful neighbors, the Mongolians are sharp enough to have retained their independence. I believe they'll be sharp enough to ensure they play the "US card" to their advantage...

    25 Oct, 03:41 PM

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    Jon Springer

    Comments (997)

    Thanks for that insight Mr. Shaefer.

    Mr. Addleton's bio made him a very interesting choice for ambassador as well. After a stint at the World Bank his career was primarily with USAID including Mission Director in Pakistan (2006-2007), Cambodia (2004-2006) and Mongolia (2001-2004), as well as prior service as USAID Program Officer in Jordan, Kazakhstan, South Africa and Yemen. He grew up in Pakistan. Full bio:http://bit.ly/sh7NQJ 

    Aid agencies are playing a major role in Mongolia's development. They create interesting foundations for sovereign and corporate relations. #18 had an oil refinery 85% funded by Japanese aid. #11 spent a long time on the EBRD not just for the data, but because the EBRD has become a very big player in Mongolia in 5 years time. The EBRD was originally set up to help the post-communist countries of Central and Eastern Europe develop democracy and capitalism in the 1990s. The EBRD's mission now is to help post-communist democracies anywhere in the world, thus they justify their presence in Mongolia.

    (Urban legend has it that a former director of the EBRD took a trip to Mongolia, liked it, and had them open an office there.)

    -----

    On a separate note to all, if you find this blog useful, could you please tap the Google+1, recommend, and other assorted buttons at the top so that others may more easily find this blog when they do a search for information on Mongolia. Thank you all for the wave of compliments today.

    25 Oct, 05:29 PM

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    EBennett

    Comments (3)

    Jon - 

    Just checking, but I assume you are subscribed to the CPS, Monet, and Frontier newswires? Also, the Business Council of Mongolia newswire? Your info is great - it may save you time to look at what other people are publishing as well though.

    25 Oct, 09:51 PM

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    Jon Springer

    Comments (997) 

    I think it safe to say I look at a lot each week, and that I try to check under different rocks a little bit each week. The time spent often helps me stumble across stray pieces of information making the journey worthwhile. I do check all of those but one, and e-mailed you a query about that one. Always happy to learn more, especially from those living in Mongolia. Thanks for the note.

    26 Oct, 09:06 PM

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    Peter Epstein

    Comments (249)

    Item # 10 about CHINALCO buying 15mm tonnes of coking coal PER YEAR from Tavan Tolgoi east over the next 3 years makes absolutely no sense. There won't be 15mm tonnes coming out of TT east for at least 3 years. And, CHINALCO will get 100% of the offtake??

    I've read that story elsewhere, makes no sense.

    Keep up the good work Jon.

    27 Oct, 09:28 PM

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    Jon Springer

    Comments (997) 

    Hi Peter,

    Good to hear from you. This was reported in China Daily as well.http://bit.ly/rxA4xO

    That said, I'm checking as I know your data stream on coal is solid. It seems like the Reuters article I cited in #10 was picked up and replicated without further fact checking. Its already Friday in Mongolia and China. I left a couple of messages. If I don't hear back, I'll sort it out early next week.

    28 Oct, 12:19 AM

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    tripleblack

    Comments (10142)

    Excellent. I have been wading back through my notes on coal, and came across some similar loose data (and not just in Mongolia by a long shot). India, China, Australia, Indonesia... U.S.

    Good point, Peter, and Jon, thanks as always.

    28 Oct, 10:30 AM

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    EBennett

    Comments (3)

    I live in Mongolia, and know people working at TT. They have said pretty much the same thing. I think there must be some confusion here.

    31 Oct, 09:58 PM

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    Jon Springer

    Comments (997)

    Thanks Mr. Bennett.

    31 Oct, 11:11 PM

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    Jon Springer

    Comments (997)

    Here is the weekly Mongolia news update for the last full week in October. If you like this blog, please tap the Google+1, recommend, and other assorted buttons at the top so that others may more easily find this blog when they do a search for information on Mongolia. The more people that read this blog, the better the information will be. Thank you.

    Lots of headlines about little Australian companies this week. For those skimming past them, just consider the quantity of companies popping up that are looking for resources in Mongolia. Items 21 & 22 have 10 minutes total of good interviews.

    1) Headline of the week: Mongolia needs coal deal in 3 months to ensure IPO goes ahead. New “Tavan Tolgoi East” COO Graeme Hancock said: "Once the terms of engagement on the west block are clear, that will have an impact on the IPO valuation… I am hoping there will be resolution on this in the very near future so this can be built into our future cash flow." He is referring to resolution of the “Tavan Tolgoi West” sale (previously to China Shenhua, Peabody, and a Russian-Mongolia consortium before rejected by Mongolia’s National Security Council), and saying it will hold up the IPO of “Tavan Tolgoi East” (to be led by Goldman Sachs and Deutsche Bank next year).
    http://bit.ly/uNwOxu

    2) Ivanhoe Energy (IVAN) (note the different ticker from IVN) drill testing for oil in Mongolia: 
    http://bit.ly/rN7uVe/
    http://prn.to/vraejs

    3) Aspire Annual (ASPXF.PK) Report: http://bit.ly/vNuDlR  

    4) Voyager (VOYRF.PK) reporting more results.
    http://bit.ly/tK3b8P 

    5) Winsway Coking Coal (1733.HK) signs an agreement with Mongolyn Alt.
    http://bit.ly/tXO0Mt
    Winsway website: http://bit.ly/tT5Sad
    Mongolyn Alt webiste: http://bit.ly/tNJf3y

    6) Mongolian Resource Corporation (MUB.AX) releases “excellent high-grade gold results.” However, it should be noted that according to http://bit.ly/v683B2 

    7) General Mining (GMM.AX) will “undertake a preliminary geological reconnaissance program in November 2011.” Coal exploration program scheduled for June 2012. They also released their annual report.
    News: http://bit.ly/vMtyJo
    Report: http://bit.ly/vRdUYT 

    8) Guildford Coal (GUF.AX) annual report (another coal operation in the South Gobi):
    http://bit.ly/tBLJxv 

    9) C@ (CEO.AX) announces deals to focus on coal in Mongolia. They had a trading halt in the process, but that’s over as of Friday (the 28th).
    News release on acquisitions: http://bit.ly/uruWbX
    The West Australian: http://yhoo.it/vMIKTk/
    Proactive investors: http://bit.ly/sUeacJ

    10) Cougar Energy of Australia (CXY.AX) is planning to bring its underground coal gasification technology to Mongolia after being shut down in Australia. 
    http://bit.ly/sFgnAN
    http://bit.ly/rDE7km
    http://bit.ly/uHyVxJ 

    11) TVN (TVN.AX) quarterly activities report and quarterly cash-flow report:
    http://bit.ly/twTANi
    http://bit.ly/sIOEj1 

    12) Haranga (HAR.AX) quarterly activities report and quarterly cash-flow report:
    http://bit.ly/tJFTHz
    http://bit.ly/uwJLBp 

    13) Blina Minerals (BDI.AX) annual report (they have a copper-gold prospect in Mongolia):
    http://bit.ly/rPCjj5 

    14) Xanadu (XAM.AX) quarterly report:
    http://bit.ly/sTLriD

    15) Entrée Gold (EGI) has some non-Mongolian news on its Blue Hill property in Nevada: http://bit.ly/v1dmoA 

    16) Khan Resouruces (KHRIF.PK) wins a round of its various legal battles in Canada against Russian state-run uranium giant ARMZ.
    http://bit.ly/ux9mcY 

    17) Bullman Venture (BUL-P.V) has a letter of intent signed on some property in Mongolia, however I cannot locate a company website for them.
    http://mwne.ws/veiEZu 

    18) Citi Group cut its outlook SouthGobi Resources (SGQRF.PK) Hong Kong listing while maintaining a “buy” rating.
    http://bit.ly/taaJQC 

    19) Steel Guru cites Mr. Huang Jingan, President of the China Coking Coal Industry Association as saying in their words (not his): “China has increased efforts in the extraction of coal in Mongolia where coal reserves are abundant and cost saving in recent years. However, he also expressed his concern about Mongolia’s coal transport capacity and called for more focused attention to logistics development between the two countries which will surely boost Mongolian coal imports into China and quell the latter’s tight supply situation in some regions.” The article also notes that Mongolia coal imports were 43% of Chinese coal imports compared to 21% of Chinese coal imports coming from Australia.
    http://bit.ly/tJKE6Q 

    20) Railway development in the news –

    a) The Moscow Times reminds us that Russia still owns 50% of Mongolian Railways (a not so tiny fact other articles often omit):http://bit.ly/tp0yBZ

    b) Reuters notes the plan to list in Hong Kong to raise funds to develop the railways, floating up to 49%. The article also notes that Mongolia’s Tavan Tolgoi has begun shipping 4,000 mt of coal south to Aluminum Corp of China (ACH): http://bit.ly/sizU4s

    c) The government says railway infrastructure between Tavan Tolgoi and China will be complete by 2014:
    http://bit.ly/tlQePp

    21) Interview with Peter Morrow, Deputy Chairman of Newcom – one of Mongolia’s leading local privately held conglomerates – and former CEO of Khan Bank (the largest bank in Mongolia). He’s a local legend. 5 minutes. Watch here: http://bloom.bg/uvn81n/

    22) Interview with Randolph Koppa, President of the Trade and Development Bank (a private bank), one of the three largest banks in Mongolia (5 minutes). Talks about the quantity of resources still not discovered and developed, high rate of growth, risks, and infrastructure in brief.: http://wapo.st/sXBHBI 

    23) Print interview with N. Altankhuyag, Deputy Minister of Mongolia and leader of the Democratic Party in the UB Post. A bit on wage growth and heavy on discussing Tavan Tolgo, particularly “Tavan Tolgoi West” (the West Tsankhi part of the deposoit):
    http://bit.ly/uhkomK 

    24) UB Post article states that there are 45,000 people currently working in the mining sector which is 5% of the work force, and that another 40,000 jobs created in the sector are anticipated within the next 5 years. The rest of the article is about mining safety.
    http://bit.ly/vRhpB3

    25) The Bank of Mongolia (the central bank) raised rates .50% to 12.25%. http://bit.ly/szhL0h/

    26) Mongolia Delays Dollar Bond Sale as Economy Set for 20% Growth (Bloomberg). Cites GDP rising to $5,000 per capita by the end of the year from $3,000. Claims stock market valuation could go to $45 billion from current $2 billion. Article’s title is about delaying selling dollar denominated bonds. Article fails to mention the government just began selling sovereign bonds in local currency June 8, 2011.

    a) Bloomberg article: http://buswk.co/unx9oZ

    b) M.A.D. Mongolia note when bonds began trading:http://bit.ly/sDgTaE/

    c) Bloomberg article from March 2011 noting plans to issue bonds in Mongolia: http://bloom.bg/unNtOT

    d) FT article from May 2011 noting plans to issue first sovereign bonds in Mongolia: http://on.ft.com/twXJj1 

    27) $6.2 million in non-refundable aid delivered to Mongolia care of U.S. Ambassador Jonathan Addleton:
    http://bit.ly/vDKyDN 

    28) Mongolian Savings are 3.6%. This is good news in an environment where there is still not resolution for two banks that went belly up in 2009 on the heels of the 2008 crisis which created some understandable trust-related issues for the citizens vis-à-vis the banks. 
    http://bit.ly/uOfyGq 

    29) Mongolia has been upgraded from a country with “small revenue” to one with “average revenue” by the World Bank and Asian Development Bank:
    http://bit.ly/slVNWs 

    30) Dealing with environment concerns about oil extraction and refining.
    UB Post: http://bit.ly/ulSSJo

    31) Sovereign Man Simon Black’s note on Mongolia in Business Insider: http://read.bi/u45ofU 

    32) John Polomny has a few notes about Mongolia on Seeking Alpha in his blog recently:

    a) Analyzes Bloomberg article cited above about bonds vis-à-vis 20% growth anticipated (predictions of growth vary by agency, the lowest I’ve seen for this year is 12%). His last paragraphs has his analysis:
    http://seekingalpha.co...

    b) His note about Mongolia replacing Australia as the biggest exporter of coal to China: http://seekingalpha.co...

    33) Mongolia requests to become a participant in the OSCE (the Organization for Security and Co-operation in Europe).http://bit.ly/uJHHnR 

    34) Archaeologists believe they have discovered a ship sent by Kublai Khan to invade Japan about 700 years ago.
    http://bit.ly/vU9umU

    31 Oct, 01:45 PM

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    haiguike

    Comments (108)

    Response to #19: Jon, it seems that Mongolia currently needs more mining equipment and logistics development of coal transports between Mongolia and China. What about Uranium? The demand in China is expected to exponentially in the upcoming decades. Specialized transportation of radioactive materials with trained personnel between Mongolia and China will need to be developed. Due my background in handling radioactive materials and given the future importance of nuclear power, I am very interested in Uranium mining and logistics.

    Question on precious metals in Mongolia: Is it true that there is a lot of gold being smuggled illegally from Mongolia to China? What is the viability of starting a closed end fund of physical gold and silver in Mongolia? It would be so much cheaper than storing it in HK or Singapore. Is there any significant risk of nationalization?

    31 Oct, 03:52 PM

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    Jon Springer

    Comments (997)

    RE: Uranium Considerations:

    - #16 this week, Khan Resources (KHRIF.PK). Google them for all their many licensing issues.

    - Also in #16, ARMZ - Atomredmetzoloto JSC - the Russian history of ARMZ, their uranium company, is here http://bit.ly/vaVWUQ/

    - Why am I talking about a Russian company being relevant to uranium in Mongolia? Because Mongolia was the 2nd communist country in the world in 1921 and was a Soviet satellite for about 70 years. 

    RE: Smuggling

    - Unsubstantiated stories are just that: unsubstantiated. I would have to spend months roaming the Gobi to get a genuine answer to that question.

    - There are long borders with both China and Russia. Urban legends make good stories, but there's usually a hint of truth to them. That's all I know.

    RE: Investment counsel

    - I'm not a hedge fund manager or venture capitalist.

    - I'm a free-lance journalist and investor.

    - The best way to determine what investment ideas will work in Mongolia is to go there and see what is happening for yourself. However, I think (from a journalist's view), that there is a level of simplicity to the Mongolian economic story that makes many investment professionals think it will be an easy place to invest, but there is a level of complexity beneath that which limits the pool of people that can succeed to a select group that "get it." Others will ultimately come in and "get it", but there is a select group that is already out in front ahead of the curve.

    31 Oct, 11:29 PM

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    haiguike

    Comments (108)

    Thanks, Jon. Nothing is ever that easy. All the more reasons why one needs to spend a lot of time in Mongolia. Perhaps once I begin traveling to Mongolia, I will blog about it.

    1 Nov, 08:42 AM

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    Jon Springer

    Comments (997)

    Breaking News:

    Sources in Mongolia say Erdenes MGL Tavan Tolgoi (“Tavan Tolgoi East”) was paid $250 million up front for $70 coal by Chinalco (ACH). This works out to approximately 3.57 million tonnes of coal prior to accounting for rules in the contract governing the difference between the future value (FV) of coal and the present value (PV) of coal. The actual delivery amount is speculated to be in the vicinity of 3.3 million tonnes of coal. It is additionally speculated this amount of coal could be delivered by 1Q 2013.

    I’m working on getting more details, but as the article citing 45 million tonnes of coal is being delivered (http://bit.ly/tZmnOe) has now been picked up by Morningstar, Steel Guru, Mineweb, Hellenic Shipping News, Chinamining, and every Mongolia related blog I know, including some local Mongolian brokerages, it seems an adjustment is in order. There may be further adjustments as more facts come out. I am waiting to hear from more sources.

    Kudos to those questioning the original article and many thanks to the anonymous sources of the above data.

    For those looking to understand the time value of money and the difference between FV and PV, this article is helpful:http://bit.ly/vJHIpQ

    1 Nov, 10:20 PM

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    Peter Epstein

    Comments (249)

    great stuff as always!

    3 Nov, 01:12 PM

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    Jon Springer

    Comments (997)

    I am still not satisfied with news on “Tavan Tolgoi East” and answers to questions about the 45 million tonne deal with Chinalco. Digging around on the web while I dig for more people who will talk to me, I’ve come across:

    November 2010 Russian Federation Report on Tavan Tolgoi (note that road planned for completion in 2011 is completed):http://bit.ly/rZYnSI

    September 2010 interview with new Erdenes MGL Tavan Tolgoi (“Tavan Tolgoi East”) COO Graeme Hancock when he worked at the World Bank (skip to 2:00 mark of this 9 minute interview to avoid lengthy introduction; note that “Energy Resources” = Mongolian Mining Corporation (MOGLF); note that MOGLF’s UHG property is part of Tavan Tolgoi deposit and next to “Tavan Tolgoi East”; note that “Inner Mongolia” is in China where there is the steel works spoken about) – you should watch this as he critiques the government’s intervention in railway infrastructure development:http://bit.ly/rzPfM2

    5 part interview from October 2010 with Mr. Hancock starts here but is 50 minutes or so (skip at least the first 2 minutes of intro in part 1 (unless you can read Mongolian), look on the right side for parts 2/5, 3/5, 4/5, and 5/5): http://bit.ly/vFatjS

    Weekly update of Mongolia news later today.

    7 Nov, 06:47 AM

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    Jon Springer

    Comments (997)

    Weekly update

    1) Related to my above post today about “Tavan Tolgoi East”, this report in the Guardian is pretty thorough and has a video (4 minutes) of both Tavan Tolgoi and Oyu Tolgoi (with a Guardian slant – final quote from video “their country is on the cusp of one of the most dramatic transformations in human history, many will move out of poverty, but some are heading into a very uncertain future”):http://bit.ly/s05j3p 

    2) The Australian discusses “Tavan Tolgoi East”, and COO Graeme Hancock’s stewardship (one month into the job), after hearing Mr. Hancock speak at the Mongolia Investment Summit in Hong Kong. Most important note in the article is in the last paragraph where the article notes that rail transportation would be cheaper than by truck, but that Mr. Hancock is leaving that in the hands of the government and will not have “Tavan Tolgoi East” step up as an equity partner to develop a rail network for the mine to China: 
    http://bit.ly/txAqXd

    3) Three items for Mongolian Growth Group (MNGFF.PK) -

    a) October newsletter. Highlights are a growth chart of real estate acquisitions, pie chart of real estate usage, comment on resiliency of Mongolian economy during the global slowdown, announcement of new company building that will double as a billboard for the insurance division: http://bit.ly/s3JU03

    b) CEO Harris Kupperman blogging about the valuation of the Mongolian Togrog (local currency) and why he’s invested in Mongolia (Please note that to open a bank account you need to physically be in Mongolia – unless you find an exception that I did not – whereas you can open a brokerage account from abroad; 1 year CD rates I was quoted ranged from 10% to 18%): http://bit.ly/uRDEAh

    c) For all real estate investors in Mongolia, the government has set rules for its “100,000 apartments” program. This includes being able to get 25-year loans at 6% interest rates from commercial banks. While this will be for apartments under 50 square meters and only for qualified buyers, this is very newsworthy. Mortgages have been little used to-date and their use will changed the real estate market. Also, home insurance has been little used to-date but its use should go up as the use of mortgages goes up (as without insurance, someone will be out some money on a mortgage if a property burns down). Two businesses Mongolia Growth Group are in, real estate and insurance, both impacted. http://bit.ly/tIHgDs

    4) Two items for Origo Partners (OPP.L) -

    a) Origo and Trafigura announce a 50/50 joint venture (Trafigura-Origo MGL) to develop coal and iron ore properties in Mongolia, with possible expansion to look at investments in Russia and Kazakhstan as well: http://reut.rs/uprbGE

    b) Origo CEO Chris Rynning said the unaudited value of the company fell to $215.4 million from $225.1 million as of the June 30, 2011 quarter end: http://bit.ly/vkezGZ

    5) Areva (ARVCF.PK), the French conglomerate heavy into uranium and related industries is ramping up its Mongolia uranium mine. Also covered in the article is an explanation of how Khan Resources problems (KHRIF.PK) are also the problems delaying a Mongolian-Russian consortium from ramping up their own uranium production:
    http://bit.ly/v7QZg3 

    6) Entrée Gold (EGI) cut its 3rd quarter loss:
    http://bit.ly/uacnYH

    7) TVN (TVN.AX) shares halted pending drilling results announcement today (Monday) until November 9 at latest:
    http://bit.ly/tTHO0O 

    8) Haranga (HAR.AX) has intersected further iron mineralization:
    http://bit.ly/rthTiA

    9) Banpu (BNPJF.PK) has 90.2% of its acquisition of Hunnu (HUNNF.PK) complete: http://fxn.ws/rUTbla/

    10) Meritus Minerals (MERMF.PK) announces drilling and discusses samples: http://bit.ly/s0rp67 

    11) Back to bad drill results for Petro Matad (PRTDF.PK) -
    Stock Market Wire: http://bit.ly/tPl55x
    Positive spin from Proactive Investors: http://bit.ly/uVd6P2
    Further comment from 4-traders: http://bit.ly/vdLdrI/

    12) Note on Dennison (DNN) 3rd quarter results includes mention that the government can acquire 34% to 51% of their property in Mongolia at no cost to the government under local Nuclear Energy Law. http://bit.ly/vjb7V6

    13) Manas Petroleum (MNAP.OB) announces new senior ma1nagement: http://prn.to/uvqRjQ 

    14) Winsway Coking Coal (1733.HK) and Marubeni Corporation (MARUY.PK) are acquiring Grande Cache Coal of Western Alberta.
    http://buswk.co/s42wpC 

    15) Centerra (CAGDF.PK) plans to boost production by 50%, but this primarily at its main location in Kyrgyzstan, though some will be at its Mongolian subsidiary Boroo if they get the permitting issues sorted out (as discussed in the article).
    http://bit.ly/vp5Gaz

    And they had a 400% increase in earnings for the quarter:http://bit.ly/rGpH8W

    16) Privately held South Gobi Sands is getting a 47.5 kilometer road with an annual 40 million ton coal transportation capacity.
    http://bit.ly/uE51dR

    17) 25.6% economic growth anticipated for next year according to this article about the government passing a revised budget for 2011.http://bit.ly/vmOjF1

    18) Mongolia’s international trade volume up 92.4% year over year:
    http://bit.ly/sIsCPP 

    19) Reuters’ David Stanway with an update on Mongolia investing risk in an election year. I think he is overstating the risks as he is overstating that “the government” wanted to renegotiate the Oyu Tolgoi agreement when in fact, a small minority of the members of government wanted to renegotiate.
    http://bit.ly/snMoOl 

    20) Bloomberg Media Announces Formation of Bloomberg TV Mongolia: 
    http://bloom.bg/thKeAH
    http://bit.ly/u5OhkC

    21) According to Der Spiegel, Angela Merkel will be reporting the results of her trip to Mongolia to industrial leaders in the near future.http://bit.ly/snZV98

    22) UB post article on the Mongolian government’s desire to build up non-mining industries to diversify the economy (with Oyu Tolgoi mine by itself slated to be 1/3 of GDP by 2020): http://bit.ly/tzRA1C-

    23) Biggest budget ever has been submitted by parliament of Mongolia: http://bit.ly/u1YPMT-

    24) Anod Bank, once the 5th largest bank in the country back in 2008 before it went bankrupt is still tied up in court.
    Article from December 2008: http://bit.ly/vdkxqE
    Article from this past week: http://bit.ly/s3Lio7

    25) Mongolia faces worsening water shortages per this article from Xinhua news agency. Mining is water intensive. Just an environmental note to consider. http://bit.ly/u0VfQV

    26) Hyatt Hotels Corporation will be opening its first two hotels in Mongolia in 2014 (in Ulan Bator) and 2015 (in Terelj National Park, 40 km away from UB): http://bit.ly/v9OYZh

    27) Tip of the hat to my wife’s home country as the Prague Zoo announced its sending more Przewalski horses back to their native habitat in western Mongolia: http://wapo.st/vuxebh

    It is noted at the top, but since they’re all in this update, I will note again: I am long MNGFF.PK, OPP.L, and IVN

    7 Nov, 11:24 AM

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    Joseph L. Shaefer

    Comments (1164)

    Thank you for a great series, Jon. I was particularly interested in #23, wherein the Finance Ministry seems blithely unconcerned with the cyclical nature of commodities in justifying greater social services based upon predicted rather than actual income, and even more in #25. I know that, given its geography, roughly 2/3 of Mongolia's surface runoff from rain and snow is lost to China or Russia. While it would create "tensions" with those neighbors, especially Russia, just wondering out loud whether there isn't some way to obliquely play increased mining in the much simpler and more boring water arena.

    7 Nov, 04:58 PM

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    Jon Springer

    Comments (997)

    Hi Joseph. Thanks for the thoughtful comments.

    There is actually a Fiscal Stability Law in place. With Oyu Tolgoi set to start production in Fall 2012, the Fiscal Stability Law is set to ramp up in 2013 (if the politicians don't mess with it). There is concern about "Dutch disease" in Mongolia and politicians from both major parties bandy about the term regularly. The government has processes in place to set aside a rainy day fund, something they know all too well they may need from the events of 2008 and 2009. The August 2011 World Bank report on Mongolia touched on this briefly in the 2nd to last paragraph on page 6 here:http://bit.ly/n40mN5 Expenditures are up for a lot of reasons, not least of which are inflation above 10%, and wage growth in the private sector that has caused the government to plan to raise state employee wages by 53% next year.

    Water, on the other hand, will be a very interesting issue to navigate. The government and the economic future of the country are vested in the success of the mining industry, so I think they'll find a way, but its definitely an environmental note to watch.

    7 Nov, 06:04 PM

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    Joseph L. Shaefer

    Comments (1164)

    Thanks, Jon. I hope Mongolia follows the path of nations like Norway, where the unexpected oil wealth from the North Sea could have led them to expand social services willy-nilly, make stupid investments, and saddled them with supply-side inflation. Unlike their Middle Eastern counterparts, they wisely created the State Petroleum Fund, as it was then called (and is now the second-largest sovereign wealth fund in the world.)

    With Scandinavian rationality, they noted a generation ago that their population was aging and the future would bring higher pension expenses and more expenses for medical care, as well as then-unforeseen issues that may require money for future generations to use. They also decided that this large pool of money spend no more than 4% of its total per annum on solely Norwegian assets to deter inflation at home. (And violated it, properly in my view, to keep their currency strong and insulate them from the effects of the recent financial crisis in nations which had been more profligate.) 

    If Mongolia follows that model, I'll buy as many companies based there as I currently own in Norway!

    8 Nov, 11:06 AM

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    haiguike

    Comments (108)

    Joseph, I completely agree. Following Norway's economic model would secure political stability for Mongolia. This model only works for resource rich countries though. If Singapore tried this, they would have never came to be the Singapore of today.

    8 Nov, 11:53 AM

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    Jon Springer

    Comments (997)

    The government indeed cites Norway as a model of the results they want frequently, and are trying to emulate. Will they make it work is the question.

    8 Nov, 12:58 PM

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    Valley Boy

    Comments (1336)

    It looks like the European Bank is involved with developing Mongolia's potential for renewable energy. Mongolia could be a real powerhouse for energy one of these years.

    http://bit.ly/tJ7jG9

    8 Nov, 11:21 AM

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    Jon Springer

    Comments (997)

    For a taste of what the EBRD is doing in Mongolia, here is their March 2011 report:

    http://bit.ly/tn0F66

    Note that "Energy Resources" of the page 2 $180 million loan is Mongolia Mining Corporation (MOGLF.PK) - Energy Resources is their business subsidiary name within Mongolia.

    And here is MOGLF.PK's board of directors with Phillip ter Woort of the EBRD as a non-executive director: http://bit.ly/rvVxj2

    Here's Mr. ter Woort interviewed in July 2011 (5 fluffy minutes, does end by saying they have no plan for withdrawing from Mongolia and have "just started"; PPP = Public Private Partnership):http://bit.ly/uFiBwQ

    Please note, the EBRD is the European Bank for Reconstruction and Development. It was originally set up in 1991 to help former Soviet states. It has now been redefined as a bank that provides aid to formerly communist democratic countries anywhere in the world. They have been in Mongolia since 2006 as noted by the chart on the first page of the first link.

    8 Nov, 12:52 PM

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    Valley Boy

    Comments (1336)

    It always helps to have a friendly banker on the team.

    8 Nov, 01:04 PM

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    tripleblack

    Comments (10142)

    Long MOGLF, added more recently on the dip...

    Thanks to Jon (and my investing Gods, I may have to offer up a live goat or something soon) for this wildly informative blog.

    8 Nov, 02:58 PM

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    Valley Boy

    Comments (1336)

    Mongolia might possibly earn some revenue to help finance its development projects by selling water to China. Mongolia has ample water in its northern forests and water runoff from the Altai Mountains. I wonder if some water companies would be interested in Mongolia; another thought to add to my research list.

    http://read.bi/sxOnL8

    http://bit.ly/vnzRij

    8 Nov, 11:59 AM

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    Valley Boy

    Comments (1336)

    It would seem that water diversion from the northern forests is now being planned for Mongolia's internal development.

    http://bit.ly/sEFtPQ/

    That would leave the possibility of selling water to Inner Mongolia, China's driest region closest to Mongolia, from the northern reaches of the Altai Mountains in northwestern Mongolia.

    8 Nov, 12:48 PM

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    tripleblack

    Comments (10142)

    Good stuff, VB. Good to see you here.

    8 Nov, 02:59 PM

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    Jon Springer

    Comments (997)

    Thanks for those VB.

    In the first link, on page 3, a big swath of the dark red area suffering from significant water depletion is in the Chinese "Inner Mongolia" region which borders Mongolia, the country. Not too far on the other side of that border is where Oyu Tolgoi, Tavan Tolgoi, and quite a few other mining projects are situated.

    8 Nov, 01:06 PM

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    Jon Springer

    Comments (997)

    In the 3rd link posted by VB in this series, there is a link for an extensive 26 page government plan on developing water infrastructure. Dalandzadgad is the town closest to being in the vicinity of Oyu Tolgoi and Tavan Togloi.

    Infrastructure development in Mongolia to me is a key concern. 

    -When you turn your shower on in Ulan Bator, you find out what the water pressure is (I thought I had a faulty shower for 3 days, then suddenly there was a jet stream on day 4) , if there is hot water (rare enough that executive level guys told me of their wives/girlfriends calling them to come home to take a shower as they momentarily had hot water), and if there is cold water (the only hot water shower is an exercise in flicking water onto yourself with your hand - amusing as long as you don't feel obliged to do it yourself ever). 

    -More seriously, they have a problem in UB with power outages, but they are building a third power station for the town presently to address that issue.

    -Zoning and planning in UB is lacking. As the government's planning and development of the capital city has struggled, I have questions about their ability to do infrastructure planning and development on a national scale. That said, the counterpoint is that since communism fell, they have never really had the money on hand to develop their country's infrastructure (and the Soviets took a lot away when they pulled out). They will now have the currency to do the job. And, the government cash flow to develop more projects will depend on their effective development of infrastructure projects (energy, water, rail, etc).

    8 Nov, 01:35 PM

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    Jon Springer

    Comments (997)

    New posts.

    Mongolia: Why And How To Invest In China's Canada -http://seekingalpha.co...

    Mongolia: Why And How To Invest In Stocks -http://seekingalpha.co...

    Mongolia: Why And How To Invest In Real Estate -http://seekingalpha.co...

    Mongolia: Why And How To Invest With Brokerages In Mongolia -http://seekingalpha.co...

    Mongolia: Why And How To Invest, Further Considerations -http://seekingalpha.co...

    10 Nov, 01:13 AM

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    Mercy Jimenez

    Comments (305)

    Congratulations Jon for this fine collection of articles - very rich with practical information for anyone interested in making investments in Mongolia. The insight you provide from your on-the-ground experience is outstanding!

    Many thanks.

    Mercy

    P.S.If there is any way you can get SA to re-post your GDP graph in an expandable format for clearer viewing -- it would be welcomed.

    10 Nov, 03:36 AM

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    H. T. Love

    Comments (8279)

    Jon,

    Re Mercy's request: just make a very large picture and stick it in place of the current. Above a certain size it'll automatically respond to a click in the image and make a "blow up". Then you just add a comment saying "Click to enlarge".

    There's probably a "cutoff size" below which it doesn't have the expansion facility.

    I suspect, although I've not investigated, that the same applies to directly-entered tables.

    HardToLove

    10 Nov, 05:30 AM

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    Jon Springer

    Comments (997)

    Thank you Mercy and HTL. The image issue is now fixed. It can be made bigger in both "China's Canada" and "Real Estate" articles.

    10 Nov, 06:40 AM

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    haiguike

    Comments (108)

    These new articles are brilliant. Thank you, Jon!

    The Double Taxation excerpt is a bit discouraging, but not surprising.

    10 Nov, 08:46 AM

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    Jon Springer

    Comments (997)

    Thanks Haiguke. The double taxation is not that bad and it can be fixed with a treaty. Just let your government know its an issue of strategic importance. I think it is only a matter of time, and how much time it will be, until such a treaty is signed. (And I don't know anything more about it. It just seems like a logical thing to do.)

    10 Nov, 09:23 AM

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    Jon Springer

    Comments (997)

    For those in the greater New York City and Toronto areas, Mongolia Growth Group is presenting on November 17 in NYC and the 24th in Toronto.

    Announcement: http://bit.ly/t64V1h

    E-mail promptly if interested as space may be limited (which is why I'm posting this promptly).

    Are there any followers here in London or Hong Kong? If so I will get on top of posting other company presentations promptly. 

    Also, if I am assuming incorrectly that all investment professionals in Mongolia are aware of events there, such as APIP's presentation on November 14th at Frontier breakfast meeting, please let me know.

    10 Nov, 09:48 AM

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    Jon Springer

    Comments (997)

    Someone on another blog mentioned they were going to the Mongolia Growth Group presentation in NYC, and I realize my response including some further data points, so I'll repost here:

    ... there are some potential developments I'm waiting to hear about. Look forward to your blog/article/post about it. I'm really interested to hear about their progress particularly on the insurance side of the business even though the real estate side of the business is bigger at this juncture. If the insurance business ramps up, it will create another line of cash flow to build up the company alongside the rented properties. Insurance has interesting potential in a marketplace with nominal insurance penetration to-date. Also, the small size of Mongolia's population creates a barrier to major international insurance companies entering the market, as the market isn't big enough to move their needle (with 2.7 to 3.1 million people, McDonald's, KFC and the other fast food giants haven't bothered opening up a store there; while Louis Vuitton, Dior and Armani have opened stores there because enough wealth is being created).

    11 Nov, 01:01 PM

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    Jon Springer

    Comments (997)

    There were a few corrections to the short section on Firebird Capital Management in the brokerage article.

    There are changes to the reported returns for the year in the middle of the paragraph. There is an additional change of the investment requirement from being an accredited investor to being a qualified purchaser. These errors are mine and I apologize to readers and Firedbird for the errors. The full text now reads : 

    Experienced Investing

    While other famous investors, such as Jim Rogers and Marc Faber, may have been in Mongolia earlier, the local ex-pat investment celebrities you can invest with are Lee Cashell and James Passin. Mr. Passin is with hedge fund outfit Firebird Management LLC. He manages the Firebird Mongolia Fund and the Firebird New Mongolia Fund. He sits on the board of several Mongolian companies including BDSec and Sharyn Gol (a leading Mongolian coal company). According to an October 20, 2011, report on Bloomberg television, Firebird Mongolia Fund is the second best performing hedge fund year-to-date. Class A shares of Firebird Mongolia Fund after fees and expenses were up 46% year-to-date at the end of August, and up 34% year-to-date at the end of September. Mr. Passin started investing in the Mongolian Stock Market in 2005, and Firebird has significant investments in the Mongolian market. The Firebird New Mongolia Fund is currently open to qualified new investors (for individuals, invested assets over $5,000,000). Contact Ellen D’Aleo at 212-698-9285 for further information.

    10 Nov, 03:27 PM

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    Jon Springer

    Comments (997)

    Weekly update. A lengthy summary of the World Bank’s October quarterly report on Mongolia is in the last item on the list (#41).

    1) South Gobi Resources (SGQRF.PK) 3rd quarter results -

    RTT notes Q3 profit more than doubled in a good analysis of results:http://bit.ly/uKxubf

    Reuters note South Gobi ‘fetched higher coal prices’:http://reut.rs/vXSNnx

    Marketwatch: http://bit.ly/vF3KLh 

    2) Ivanhoe (IVN) 3rd quarter results and Reuters notes Oyu Tolgoi is “on track” and “70 percent complete by the end of 2011”–
    Reuters: http://bit.ly/w3jU4x
    Marketwatch: http://bit.ly/ruhu0a

    3) Ivanhoe (IVN) warns that if power is not secured from China by the 3rd quarter of next year, there will be delays to ramping up production and a need additional capital expenditures to build a power plant –Canada’s Globe and Mail: http://bit.ly/s6RaDK/
    Winnipeg Free Press: http://bit.ly/taax7S

    4) Lucky Strikes (LKYSF.PK) CEO Cathy Fong to be interviewed on November 15 at 3pm New York Time on Voice of America at this website http://bit.ly/thwlea per this article: http://reut.rs/saeFIF

    5) Guildford Coal (GUF.AX) “hits milestone with 63.1 Mt maiden coking coal resource in Mongolia.” They have “confirmed an initial JORC Resource of 63.1 million tonnes of coal with coking potential”:http://bit.ly/rFuQg4

    6) An article in Bloomberg on Trafigura’s expanding business in Mongolia, a follow-up piece on their joint venture with Origo (OPP.L):http://buswk.co/rXrjfR

    7) Erdene Resource Development (ERDCF.PK) drilling and issuing more shares –

    Drilling: http://bit.ly/tKTCCN

    Share being issued: http://bit.ly/sOVmLu

    8) C@ Limited (CEO.AX) prospectus for private placement. Company to be renamed Draig Resources Limited. http://bit.ly/tsz1Q4

    9) Haranga Resources (HAR.AX) “has acquired a further 20% interest in the joint venture company that holds the five exploration licenses comprising the Selenge Iron Ore Project in Mongolia”:http://bit.ly/sexJhk

    10) Meritus Minerals (MERMF.PK) announces non-brokered private placement: http://bit.ly/rU4T4Z

    11) Tembusu Investment (TIL.L) plans to change its name to Nova Resources Limited, had incorporate Nova Mongolia in Singapore, and will pursue opportunities in “the high economic growth in Mongolia” per this note time-stamped 16:17: http://bit.ly/ttfDQD

    Tembusu’s website: http://bit.ly/svREUU

    12) As mentioned during the past week, Mongolia Growth Group (MNGGF.PK) is hosting presentations in New York City November 17 and Toronto November 24: http://bit.ly/ud7fxJ

    13) The government approves that “Tavan Tolgoi East” (Erdenes MGL Tavan Tolgoi) will be listed in Hong Kong, London, and Mongolia, and they will establish Erdenes TavanTolgoi PLC in London for this purpose: http://bit.ly/utsdVf

    14) Erdenes MGL Tavan Tolgoi announce their accounting and auditing firm of choice, IARUDI, a locally based company led by two ex-pats who formerly worked for Ernst & Young: http://bit.ly/viI1AI

    15) Oyu Tolgoi and Erdenes MGL Tavan Togloi will both have their own power plants: http://bit.ly/tnjyuM-

    16) Golomt Bank, among the three biggest banks in Mongolia, has been assigned ratings for the first time by S&P and Moody’s:http://bit.ly/rU6oGb

    17) 2.4 trillion Mongolian Togrog ($1.857 billion) to be distributed to population next year. Most citizens being offered 1 million Mongolia Togrog ($773.69) in cash or in shares of 16 mining companies (including Erdenes MGL Tavan Tolgoi “Tavan Tolgoi East”). Expectations that half the population will take cash. Women over 55, men over 60, and disabled are not being given option and will be distributed cash equivalent. Also, there will be payments from the Human Development Fund to all citizens of 128,000 Mongolian Togrog ($99.03).: http://bit.ly/taGhik

    18) Disputes over how “Tavan Tolgoi East” shares will be distributed to citizens. Note in article that 10% goes to citizens (for free) and another 10% are to be sold to Mongolian organizations which “might be distributed unfairly to just a few handful of groups.”:http://bit.ly/t6rrAH 

    19) Related to the above item, the government says the budget will go down by 1.5 trillion Mongolian Togrog ($1.161 billion) in 2013 after “the end of ‘allowance’ payments to citizens”: http://bit.ly/uqvF9O

    20) Mongolian monetary supply up more than 50% year over year at 6 trillion Togrog, an increase of 2.2. trillion Togrog:http://bit.ly/uEae0C

    21) Mongolia’s Mineral Resources and Energy Minister D. Zorigt is focusing on building more regional refineries and producing fuel from coal to reduce reliance on energy imports from Russia:http://bit.ly/uyQ89V

    22) Mongolia’s Mineral Resources and Energy Minister D. Zorigt holds a one day conference on “Small Mining” and the Switzerland Development Agency is on hand: http://bit.ly/tkeCTb

    23) The Mineral Resources and Energy Ministry is going to start a petroleum reserve: http://bit.ly/vDhMDI

    24) Road, Transportation and Urban Development Minister reports to parliament. I can only concur with the World Bank’s thoughts in the link below, the budget for transportation infrastructure is too small:http://bit.ly/rM3Uq3

    25) Teachers protest for improved wages: http://bit.ly/uEBkVq

    26) Government is discussing a tax on heavy trucks in the Gobi region which would effectively be a tax on the mining companies. Its just a discussion: http://bit.ly/rA4f0M

    27) Following on last week’s discussion on water (thanks to Valley Boy and Joseph Shaefer for the discussion), “the National Development and Renovation Committee says it will thoroughly research infrastructure and water issues in the South Gobi region, where the mining and heavy industry sectors are rapidly developing.” The short article also mentions “30 underground water reserves have been discovered”: http://bit.ly/tgb86w

    28) The Atlantic Monthly asks if Mongolia could be the next Dubai:http://bit.ly/seTr8T

    29) Mongolia is changing from using Russian tracks for its railways to more durable Japanese tracks (a good sign for infrastructure and maintenance; however with Russia owning 50% of Mongolian railways, the progress of this plan is (no pun intended) worth tracking): http://bit.ly/rXclcB

    30) The government is experiment on putting an adhesive on soil around mining areas to reduce dust: http://bit.ly/uzcwJQ

    31) Government spending money to repair environmental damage to gold mining areas where mining has been banned under the rivers and forests law: http://bit.ly/vtTEeL

    32) “China’s exports rose at the slowest pace in almost two years...”

    Bloomberg: http://bloom.bg/ur6iZe

    33) Barclay’s predicts Chinese home prices to fall by up 30% next year: http://bloom.bg/sUPjEA

    34) China protest Dalai Lama’s visit to Mongolia.

    Washington Post: http://wapo.st/u5dSOs

    Reuters notes Mongolia cut the visit short due to Chinese protest:http://bit.ly/rGBVS8

    Voice of America: http://bit.ly/tgpgGv/

    40 million euros loaned by Austria to Mongolia at 0.4% interest for healthcare and infrastructure: http://bit.ly/vgKvY1

    35) Article discussing Mongolia’s mineral wealth with Rio Tinto (RIO) CEO Andrew Harding complimenting the government and Firebird’s Jame Passin saying the mining development of Mongolia currently is only the “scratched the surface”: http://bit.ly/tBhGkK 

    36) Oxford Business Group of Dubai will be publishing a country report on Mongolia soon –

    Article: http://bit.ly/tnBonN/

    Company site: http://bit.ly/tZitmK/

    37) Australian legal outfit Allens, who counts Rio Tinto (RIO) among its clients, is planning to open an office in Mongolia:http://bit.ly/tGQ93n

    http://bit.ly/uw06iX

    http://bit.ly/t5VXZx

    38) Accident data for the first 10 months of 2011 in Mongolia for the insurance minded: http://bit.ly/rYUtH8

    39) An April 2011 interview I came across with APIP CEO Lee Cashell about the Mongolian economy and its future (9 minutes):http://bit.ly/rLkoMb

    40) A local news agency’s take on the recent World Bank quarterly report (in the next item): http://bit.ly/rJ9AEd

    41) World Bank’s October quarterly update on Mongolia. Highlights:

    - Year over year GDP growth for the quarter was 20.8%. Expect 2011 GDP growth of 15% or above.

    - Concerned about a construction bubble. In Q3 it has grown 67% year over year (38% in Q2). But, construction was 1.4% of GDP in 2010, so the affect of this sector on the country’s GDP is nominal.

    - Cement demand in Mongolia is outpacing local production. Unofficial current consumption is 1.5 million tonnes with expectations it grow to 2 million tonnes soon. Prices of locally grown cement have doubled in the last three years (p.8, figure 3) which is exactly what I cited Lee Cashell as saying in my recent Why And How To Invest In Real Estate post.

    - Concerned about inflation signaling the economy is overheating.

    - “excess mineral revenues are saved in a stabilization fund as required by the Fiscal Stability Law (FSL), [but] this is not required for above-trend non mineral revenues. It is these that the government is proposing to spend under the 2011 budge amendment. This would raise expenditures by another 20 percent on top of 2011 plans, with a deficit target of 9.8 percent of GDP.” (p. 6)

    - Thus, concerns that the government is not conserving enough of it surplus for future rainy days and instead investing its surplus in agriculture (particularly sheep wool, camel wool, and cashmere), and credit lines for small and medium enterprises.

    - Official unemployment is 3.6%. Unofficial is 9%.

    - The end of the mining Windfall Profits Tax has been made up for by VAT on mining related equipment imports.

    - Government fiscal balance is in surplus. 2.5% of GDP in September (p. 14, figure 13).

    - The mining sector’s output growth is currently slow at 6% year over year.

    - Exports up 176% year over year in Q3 (compared to 38% Q2) yet the trade deficit is nearly as wide as its ever been at $1.4 billion in September for the prior 12 months (p. 23, figure 25).

    - “Commodity exports accounted for nearly 90 percent of Mongolia’s exports and 40 percent of its fiscal revenues in 2010.” Page 23, figure 30, shows Mongolia as most vulnerable to fluctuations in commodity prices.

    - Mining companies year-to-date import of fuel in September was $791 million compared to $672 million for all of 2010.

    - FDI (foreign direct investment) in 2011. Q2 $1.2 billion. Q3 $.8 billion $2 billion total for Q2 and Q3 exceed 2010 total FDI of $1.455 billion.

    - Draft 2012 budget includes changing government monthly handout currently of 21,000 Togrog ($12) per person (to every citizen) to a means test targeting to those who need it most. These distributions are 12% of the proposed budget. To understand how these distributions are sourced from mining companies and then distributed to the population, the footnote at the bottom of page 19 provides a thorough explanation. The box on page 21 explains the changes scheduled to be made in these funds (targeting the poorest instead of distributing to everyone) coming in July 2012 (note that elections come first in June 2012).

    - More on 2012 budget. 74% increase over original 2011 budget. Government anticipates a 92% increase in revenues from 2011. Deficit of 4.1% projected for 2012. 57% increase in spending on wages. 40% increase in spending on current transfers. Wages and transfers are half of budget expenditures. Government capital expenditures in 2012 are budgeted 143% higher than 2011 (p. 18, table 4). Road and rail networks improvement expenses planned are U.S. $1 billion. Budget for repairs of capital projects and infrastructure is up 146% but comes from a small base and will be 2.5% of capital expenditures (was 5.5% in 2011 budget) -> concern that infrastructure maintenance is sacrificed to build new infrastructure.

    - Concern that 2012 budget has been made with assumptions about mining boom built into calculations that may not materialize.

    Report: http://bit.ly/v3geE5

    14 Nov, 11:26 PM

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    haiguike

    Comments (108)

    Thank you, Jon. It amazes me how you're always consistent and so top on everything happening in Mongolia.

    #33. China's property bubble has been brewing for quite some time now. It has been difficult to time, but it looks like the sharp drop-off is finally coming up ahead in 2012. Contrary to popular belief, much of the properties have been purchased via loans. If the housing prices drop by up to 30%, I believe it would actually be a very healthy correction of China's economy.

    #12. I just found out that MGG will be holding a presentation in NYC this Thursday. I'm actually nearby, so most likely I will be attending!

    #39. Will you be making videos on Mongolia on a regular basis?

    Thanks again. I'll have to take some time to go over all of your updates.

    15 Nov, 09:41 AM

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    Jon Springer

    Comments (997) 

    Thanks Haiguke. I appreciate your confidence, but the nature of what information I am missing is I don't know what it is, or I would include it. While I'm here, a big thank you to OptionsGirl for below posting Ivanhoe's actual press release regarding earnings (as I only posted articles about their earnings and didn't flip the switch to post a link to their data).

    33 - China property prices having issues is relevant to neighboring Mongolia in many ways. Thus, its inclusion.

    12 - Please let us know if you attend the MGG presentation and what you learn from it. I think there may be some new developments at the company but cannot attend the presentation myself. 

    39 - I did not make the video. I was just doing some research and came across that video. I thought some folks would like to put a face with a person (in this case, Lee Cashell) and hear them talk about Mongolia.

    15 Nov, 10:29 AM

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    optionsgirl

    Comments (5305)

    More on IVN

    http://bit.ly/vthg12

    15 Nov, 09:21 AM

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    Valley Boy

    Comments (1336)

    I was reading an interesting summary of Australia's commercial interest in Mongolia.

    http://bit.ly/soiTbq

    The Australian government takes the view that Mongolia has fairly bright prospects for increased trade between the two countries, especially mining and its various aspects, even if Mongolia is landlocked.

    The Australian coal producers have a slightly different viewpoint according to this article.

    http://bit.ly/uribzz

    It will be interesting to see have this trade relationship evolves.

    15 Nov, 11:17 AM

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    Jon Springer

    Comments (997)

    Poignant data VB.

    Quoting the second article from November 2, 2009 -

    Rio Tinto chief executive Tom Albanese said he knew the leader of an energy company who likened opportunities in Mongolia to a ‘‘religious experience’’.

    ‘‘Coal from Mongolia to China is happening. It is expanding, probably doubling every two years,’’ Mr Albanese told an investors’ conference in Sydney on Monday.

    ‘‘Will that coal get to the seaborne markets? I suspect it will.

    ‘‘Will it get to the seaborne markets at a lower delivered cost than Australian coal? I suspect it will too,’’ he said.

    http://bit.ly/suAz9L

    15 Nov, 11:50 AM

     

    haiguike

    Comments (108)

    Will the coal mining companies in Mongolia need coal mining equipment and machinery? The large companies may have contracts to be well supplied, but what about the smaller or junior miners? And if they do have the demand, are they open to buying equipment and machinery from a Chinese manufacturer?

    15 Nov, 12:40 PM

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    Jon Springer

    Comments (997)

    Very honestly, there is a limit to what I can answer. Mining companies always need equipment. The rest of the details are best assessed by studying the companies supplying equipment (many discussed in this blog from Finland's Outotec to Mongolia's Monnis), determine the distribution channels of equipment makers not discussed (e.g. Caterpillar); and going to Mongolia and putting your feet on the ground in Mongolia and assessing it for yourself. There is a lot I can relay based on spending time there and investing time weekly in researching Mongolia. I am happy to help any and all individual investors. However, I cannot tailor make a business plan with my free time for free.

    15 Nov, 01:05 PM

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    optionsgirl

    Comments (5305)

    Re: Ivan's mine here is one ancillary play (FLuor's a very good company, imo):

    <Fluor Corporation is in charge of overall Oyu Tolgoi program management, as well as services related to engineering, procurement and construction management for the ore processing plant and mine- related infrastructure, such as roads, water supply, a regional airport and administration buildings.>

    This is metals mining of course.

    15 Nov, 01:09 PM

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