#mongolia mining

[miningmongolia]

The International Monetary Fund concluded its Post-Programing Monitoring, and its Executive Board has published its recommendations for Mongolia. While applauding Mongolia's vigorous economic recovery, it also warns that the economy is "overheating" and "too expansionary". 

In a public information notice released on November 28, the Executive Director's endorsed staff cited several major risks to the current economic policy. IMF fears that looming electoral policies might overshadow economic policy, growth projections are masking real inflation that is occurring, and government expenditure is dominating aggregate demand. 

The international agency has focused its forecasts on government spending and the banking system. While having nothing but praise for Mongolia's monetary policy, exchange rate policy and development banks, IMF instead points out that an increased 2012 budget and bank lending makes the country vulnerable to external shocks.  

In regards to mining, IMF raised some concerns about global mineral prices. If prices were to drop, the agency predicts that fiscal restraints would be forced and disorderly. Noting that the large mining projects are still some time away from being in full production, the agency warns that downturns in the mining industry can exact "heavy tolls on the economy, particularly on the poor."

[miningmongolia]

           Set to operate as early as 2012, the new General Electric supplied Salkhit wind farm project looks to power 5% of Mongolia's electricity. The project is owned by Newcom LLC, an investment group with prominent ties to large Mongolian companies like Mobicom and Eznis Airways. 

The wind farm project will operate 70km from Ulaanbaatar and will initially be powered by 31 wind turbines. Each one will have a 1.6 mega watts power capacity. The technology is based on GE's 1.5 mw turbine series which is an industry standard and found all around the world. 

The wind farm project is a part of Mongolia's commitment to increase renewable resource's power output by at leaset 20% by 2020. With energy demand expected to double by 2015 and the allure of cheap coal abound, the Salkhit project aims to cut carbon dioxide emissions by 185,00 tons a year as well as preserve 1.6 millions tons of fresh water annually. 

General Electric is an American company that signed a memorandum of understanding Newcom LLC in September 2010. Additional information was supplied by UB Post. 

[miningmongolia]

East Energy Development has been granted a license to construct a 600 megawatt coal powered plant in the eastern region of Mongolian. The company is a Mongolian subsidiary of Prophecy Coal, a Canadian company traded on the Toronto Stock Exchange. 

In midst paying as much as $0.08 kilowatt-an-hour for coal from Russia, Mongolian government approved the construction of the power plant in the eastern region of the country. The coal will come from Chandgana Tal coal deposits which is close to the even larger Chandgana Khavtgai deposits and located by the southern Khentii border. The power plant will be linked to both Ondorkhan, the gateway to the eastern region's cities, and the central region's power supply which will power the capital Ulaanbaatar. 

The project is targeted for construction in early 2013. 

[miningmongolia]

                          The business ubiquitous Bloomberg Media Group announced that they will be teaming up with Trade & Development Bank to create a new television station in Mongolia.

Scheduled to launch in March 2012, Bloomberg TV Mongolia will program in both English and Mongolian languages. It will feature programs aimed at the local population and serve as a resource for Mongolian citizens who have been given Tavan Tolgoi shares by the government. The station will also feature the regular 24-hour international business news in English. 

[miningmongolia]

While the events of the article take place in Inner Mongolia, this story reflects the broader cross border nature of mining and its effects for ethnic Mongolians. 

Over the weekend, a trucker transporting natural resources hit and killed an aggressive local herder who was on his motorcycle. The American-based Southern Mongolian Human Rights Information Center circulated the story and reported that the herder was part of a group that has been resisting oil trucks that ruin their grazing land and live stock. The story has received mass media reporting. 

A similar incident happened in May when a local herder was hit trying to stop a coal truck and was killed. Demonstrations followed and sparked regional unrest regarding land rights and the government. 

The Chinese authorities report that the driver has been detained and that an investigation is underway by local authorities. 

[miningmongolia]

Mongolia is finding a new trading partner in Germany. President Angela Merkel is the first German leader to visit Mongolia since the countries have established diplomatic relations and her agenda is trade. 

Last week, a story broke that Siemens MG was in the final stages of trading with Mongolia for rare earth elements needed for turbines. Most of the rare earth elements in the world are produced in China and are used for most modern products such as smart phones and hybrid vehicles. President Merkel's visit would conclude these negotiations. 

In the build up to President Merkel's visit to Vietnam and Mongolia, the media anticipates up to $2 billion USD of trade deals to be signed with Mongolia. Germany offers the prospects of infrastructure and clean energy investments. 

As details of the trades get finalized, what is certain is that Mongolia is becoming an Asian trading destination for more counties like Germany.  

[miningmongolia]

Visit Original Link

Radio Podcast: Norway has advice for Libya

Editorial:

The past week has been big for Mongolia in the news. After a visit to the United States where President Elbegdorj continued to win over western journalists, the Mongolian government has created a stir over its contract with Ivanhoe and Rio Tinto. More than a just a handful of main stream media sources are reporting that Mongolia wants to rewrite the contract that it has already signed. There are enough reports out there so I don't feel the need to repost the stories. Instead I'll try to paint the big picture:

...

Prior to 2009,  Mongolia realized that it didn't possess the infrastructure and capability to mine its own resources to the largest of scales, the Government signed an investment agreement with Ivanhoe and Rio Tinto to show that Mongolia is an open and investor-friendly country. The agreement stipulated that Mongolia gain 33% of the stakes in the project and that they would have the opportunity to increase that amount to 50% in 2039. 

In 2010, Mongolia started realizing that they are sitting on even more resources than they initially thought. While Oyu Tolgoi was projected to fuel close to a third of the country's growth, now Mongolia realizes that there are several companies and projects that will do the same. It is clear that the infrastructure and mining know-how will be developed soon. With this is mind, should Mongolia wait till 2039 to get a better deal with its Oyu Tolgoi project? While investors press the government to honor its contract, Mongolian citizens are pressing its ministers to maximize its wealth.

With these latest developments, Mongolia is now trying to navigate its wealth and opportunities. As I follow this news, I couldn't help but remember this enlightening radio podcast about Norway and its oil wealth. This radio program is related to Mongolia because Norway is perhaps the only country in the world to get rich on resources without any domestic turmoil. Both countries have small populations and are able to get rich quick. Norway has been able to escape what is referred to as the Dutch Disease, a country's curse of resources.

Perhaps Mongolia can do the same time. 

[miningmongolia]

In a profile of the Mongolian political climate, Reuters examines the merit of Mongolian government promising the dividends from the mining sector directly to Mongolian citizens. The Mongolian People's Revolutionary Party has gone as far as offering 1.5 million turgriks (approximately $1800 USD) cash to citizens during the last election in a trade off for mines to operate. This would amount to $4 billion USD and would require more cash than Mongolia's spending budget for the year. What government policy can ensure this kind of payout? 

Respected Mongolian leader and Parliament Member Oyun suggests that the policies will continue to change as more of these promises are made. She said of the political climate:

"Ten years ago mining legislation was very liberal and the mining sector was business as usual. Please provide jobs, pay taxes, thank you very much."

Today, new taxes and policies are fluctuating with prices of commodities. The author also points out that China's recent slowdown in buying minerals puts Mongolia in a vulnerable position.

                                      The government is being put in a difficult situation between satisfying local environmental and nationalist groups, and maintaining foreign investor friendly policies. Until Mongolia starts getting the revenue from these mining projects, the question remains:

Will Mongolian government continue to tax mining companies so they can keep their promises to give citizens cash, or will they stop giving citizens cash and share directly?