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Wednesday, November 27, 2013
Mogi: Anyone seen "Invest in Mongolia" ad on Bloomberg TV yet?
TRQ closed +1.68% to US$4.23 on the news, with intra-day high of $4.55
Rio Unit to Proceed With $2.4 Billion Rights Offer
November 26 (Bloomberg) Turquoise Hill Resources Ltd. (TRQ), the Rio Tinto Group unit that operates the Oyu Tolgoi copper mine in Mongolia, will proceed with a $2.4 billion rights offer to repay credit facilities.
Investors will get one right for each Turquoise Hill share, entitling them to buy another share for either $2.40 or C$2.53, the Vancouver-based company said today in a statement. That represents a discount of 42 percent to yesterday's closing prices in New York and Toronto respectively.
Turquoise Hill expects to double the number of outstanding common shares with the offer, which will be open for 27 days through Jan. 7. London-based Rio, which has a 51 percent stake in the company, will buy stock not taken up by other investors. The proceeds will be used to repay a $1.8 billion interim credit facility, and a $600 million bridging facility with Rio.
Turquoise Hill said Nov. 14 it was readying a rights offer after failing to obtain long-term project financing for Oyu Tolgoi because of disagreements with the Mongolian government. In July, Rio delayed work on a planned underground expansion of the mine, which is expected to cost about $5.1 billion, while it talked with the government to resolve disagreements on funding and other issues.
Rio, the world's second-biggest mining company by market value, and Mongolia have yet to resolve "broad" issues related to cost overruns and the mine's long-term financing, Davaadorj Ganbold, a director of Erdenes Oyu Tolgoi LLC, said in an interview on Oct. 26.
Erdenes Oyu Tolgoi is the state-owned company that holds 34 percent of the mine, while Turquoise Hill owns the rest. Oyu Tolgoi is located 80 kilometers (50 miles) north of the Chinese border and is forecast to account for about a third of Mongolia's economy when fully operational.
The shares fell 5.7 percent to C$4.14 at 9 a.m. in Toronto. (Mogi: but rebounded to trade +5% at US$4.37 at time of this writing)
BHP Billiton Ltd. is the world's largest mining company by market value.
Turquoise Hill Resources Ltd Rating Lowered to Underperform at Bank of America Corp.
November 18 (WKRB News) Bank of America Corp. downgraded shares of Turquoise Hill Resources Ltd (NYSE:TRQ) from a buy rating to an underperform rating in a research note released on Friday morning, Stock Ratings News reports.
Separately, analysts at Zacks downgraded shares of Turquoise Hill Resources Ltd to a neutral rating in a research note to investors on Monday, September 23rd. They now have a $5.10 price target on the stock. Two research analysts have rated the stock with a sell rating and four have issued a hold rating to the stock. Turquoise Hill Resources Ltd presently has a consensus rating of Hold and a consensus target price of $6.53.
Shares of Turquoise Hill Resources Ltd (NYSE:TRQ) traded down 1.22% during mid-day trading on Friday, hitting $4.06. The stock had a trading volume of 2,957,135 shares. Turquoise Hill Resources Ltd has a 52-week low of $3.81 and a 52-week high of $9.62. The stock has a 50-day moving average of $4.47 and a 200-day moving average of $5.44. The company's market cap is $4.085 billion. Turquoise Hill Resources Ltd also was the recipient of unusually large options trading on Friday. Stock traders purchased 8,424 put options on the stock. This represents an increase of approximately 623% compared to the typical volume of 1,165 put options.
Turquoise Hill Resources Ltd (NYSE:TRQ) last released its earnings data on Monday, November 11th. The company reported ($0.09) earnings per share (EPS) for the quarter, missing the consensus estimate of ($0.03) by $0.06. During the same quarter in the previous year, the company posted $0.12 earnings per share. Analysts expect that Turquoise Hill Resources Ltd will post $0.20 EPS for the current fiscal year.
Turquoise Hill Resources Ltd Price Target Lowered to C$5.50 at CIBC, Maintains Underperform Rating – WKRB News, November 15
Mongolia hopes to end Rio Tinto dispute by 2014, interview with Saikhanbileg
November 25 (CNBC) Saikhanbileg Chimed, Chief of the Cabinet Secretariat of Mongolia is positive the conflict between Rio Tinto's Oyu Tolgoi mine and the Mongolian government will soon subside.
Mogi: outsiders? Hmmm, not a very nice word
Financial reality forcing Mongolia to accept outsiders like Rio Tinto
By TERRENCE EDWARDS, Contributing writer
ULAN BATOR, November 21 (Nikkei Asian Review) Just over a kilometer south of Genghis Khan's statue in front of Mongolia's government house sits the headquarters of Oyu Tolgoi, the local joint venture of global miner Rio Tinto.
The gaze of the 13th-century leader of the Mongol horde, said to be on watch against invaders from the south, meets the logo of Oyu Tolgoi, which is developing the biggest foreign investment project in the country's history. But while the old warrior stands guard, the current government's wariness about foreign investors taking away the country's minerals is easing.
After years of clashes over the $6.5 billion Oyu Tolgoi mine, the first copper shipments are at last reaching customers.
That is not to say the government, which owns one-third of Oyu Tolgoi, and Rio Tinto, the Anglo-Australian company that indirectly controls the rest (Mogi: yes, "controls", not owns, one should always remember that), have resolved all their conflicts. The government continues to seek a higher share of the Gobi Desert mine's proceeds than that stipulated in the 2009 investment agreement (Mogi: no it is not, not anymore). With approval of a planned $4 billion financing package to build an underground shaft facing an uncertain fate in parliament, Turquoise Hill Resources, the company through which Rio has invested, said Nov. 14 that it may instead raise $2.4 billion through a share offer. The company halted digging of the shaft in July, resulting in the layoff of 1,700 workers, shortly after the open-cut section of the mine went into production.
Parliament, though, has softened its tone in light of the country's faltering finances. Lawmakers returned from recess two weeks early in September for an emergency session after the tugrik, the local currency, fell 7% against the U.S. dollar in a month. New figures also showed that Mongolia suffered a 43% on-year decline in foreign investment in the first half of 2013, and that this year's budget deficit would likely exceed the legal limit of 2% of gross domestic product (Mogi: no it would not, by law they cannot).
The chastened parliament endorsed a new foreign investment law. This removed a restriction, imposed in 2012, requiring government approval for foreign private companies' investments in "strategic sectors," including mining (Mogi: should also mention it's not a "foreign" investment law, but an investment law, meaning equal treatment for both local and foreign).
To narrow the deficit, parliament is now considering budget amendments that would cut spending for the year by 10.8%, to 6.6 trillion tugrik ($3.78 billion). Expected revenue has fallen 13.7% to 6.3 trillion tugrik (Mogi: it already HAS passed that amendment).
The shortfall in returns traces back to Oyu Tolgoi, which the International Monetary Fund has projected will generate a third of Mongolia's GDP when it reaches full production. Ulan Bator received $280 million from the mine last year, according to Rio, which made it the country's second-largest source of tax revenue before commercial operations had even begun.
For Mongolia, the good news is that royalties are finally coming in. Shipments to companies in China, the primary customers for the mine, were held up until Oct. 19. The copper languished at a bonded warehouse just over the frontier, blocked from entry by Chinese customs officials ostensibly over missing paperwork.
Meanwhile, the opening of the mine has expanded Rio's copper output by almost a quarter, according to Surenjav Odbayar, head of research for Ulan Bator broker National Securities. Yet copper prices are expected to fall in the coming months as supply growth, mostly from other mines, outpaces demand.
The appetite of China, the metal's biggest consumer, is a key variable. Analysts surveyed by Reuters expect supply to exceed demand this year by 182,000 tons, with the surplus rising to 328,000 tons next year.
A positive resolution of the Oyu Tolgoi saga is critical for reassuring foreign investors, such as U.S.-based Peabody Energy and French uranium miner Areva (Mogi: well, these guys, I wouldn't describe them as waiting for OT resolution. Areva's signed a deal with Mon-Atom already, Peabody is waiting to take part in TT), that Mongolia will not continually seek to revise terms of investment.
But the business environment remains unpredictable.
The Mineral Resources Authority earlier this month canceled exploration licenses held by Canada's Kincora Copper and 77 other companies after the officials who issued them were found guilty of corruption. The government and the licensees are discussing how to proceed.
YAK closed -0.41% at C$2.40
Mongolia Growth Group Ltd. to Host Mongolian Stock Exchange in New York City
Ulaanbaatar, MONGOLIA, November 26, 2013 /FSC/ - Mongolia Growth Group Ltd. (YAK - TSX Venture),("MGG") or ("the Company") is pleased to announce that it will sponsor a multi-city road show undertaken by the Mongolian Stock Exchange "MSE" to educate investors about recent positive changes to the Investment Law, the Securities Markets Law and the Investment Fund Law of Mongolia.
As part of this road show, MGG will host a presentation by Altai Khangai, CEO of the MSE, and Saruul Ganbaatar, Deputy CEO of the MSE, on December 5th at 6pm at the TKP New York Conference Center, East Village Room, located at 109 West 39th Street in New York City. Following the presentation, there will be a question and answer session moderated by Harris Kupperman, Chairman and CEO of MGG.
If you wish to attend the presentation in New York City, please contact Amanda Loubier at Amanda@MongoliaGrowthGroup.com
For more information about Mongolia Growth Group, please visit the Company's website at www.MongoliaGrowthGroup.com
For more information about the Mongolian Stock Exchange, visit www.MSE.mn
For more information on TKP New York Conference Center, visit www.TKPNY.com
ERD closed +8.7% at C$0.125
November 26 (MIBG Weekly Market Analysis) --
Erdene (TSX:ERD) - 12 Mth Chart
Erdene Resource Development Corp (TSX:ERD) reported its trenching results on its Altan Nar Gold Discovery on November 18th. As soon as the results were released Erdene's share price took off from $0.10 CAD to $0.14 CAD (+40%), eventually hitting $0.155 CAD (+55%) on the 20th. Pricing wasn't the only positive change, volume reached 141,000 shares, up from the 52 week average of 55,000 shares or a +158% increase.
The trenching program announced results from four trenches that were conducted within the "Discovery Zone" of Altan Nar. The length of the trenches ranged from 25 – 50 meters and depths of 1.5 – 4.0 meters.
Erdene (TSX:ERD) - Altan Nar Discovery Zone
These trenching results demonstrate that Altan Nar has the potential to become a deposit with mineralization starting at surface. Also the continuation of at surface mineralization in association with previous drill programs on the "Discover Zone" adds to our confidence that Erdene is on the verge of discovering a mineable gold resource in Mongolia.
It is very encouraging to see that the at surface gold mineralization is much higher than we had originally anticipated, with grade averages ranging from 0.5 g/t to 1.2 g/t Au in each individual trench with a maximum interval of 3.0 g/t Au over 11 meters and 15 meters respectively in two of the four trenches.
The trenching program has the potential to act as the fundamental base for Erdene's exploration team to understand the surface geology of their licensed area, hence making future discoveries a possibility. Due to the nature of the Gobi region's geology, the intense weathering of the altered, sulfide-rich, stockwork breccias zones leaves little surface expression of the targets. As a result, Erdene's assessment of surface geology and identification of potential mineralization targets will be enhanced significantly. We are very encouraged by Erdene's recent success and continue to hold a BUY recommendation on the stock.
Erdene was able to secure a financing of $685,825 CAD earlier in November. Yet another positive sign for the company in what has been a very challenging financing environment. Similarly, the fact that Teck Resources participated in the financing is a sign of continued confidence in Erdene's exploration success in Mongolia.
How Mongolia is creating stable investment, interview with MSE CEO
November 19 (CNBC) Altai Khangai, CEO of the Mongolian Stock Exchange describes the exchange's growth trajectory and how it plans to adopt global index methodology by next year.
Doing business in North Korea: Interview with HBOil CEO
November 19 (CNBC) Joseph Naemi, Director at HBOil (MSE:HBO) talks about the impact of sanctions, risks & opportunities in going beyond borders from Mongolia to the untapped oil fields of North Korea.
Why's HB Oil Taking a Stake in a N. Korea Refinery?
Nov. 20 (Bloomberg) -- HB Oil President Joseph Naemi discusses why the company is taking a stake in a North Korean oil refinery with Rishaad Salamat on Bloomberg Television's "On The Move Asia."
Montsame MSE News, November 26: Top 20 +0.47%, Turnover ₮46.7 Million
Ulaanbaatar, November 26 /MONTSAME/ At the Stock Exchange trades held Tuesday, a total of four thousand and 40 shares of 24 JSCs were traded costing MNT 46 million 736 thousand and 402.00.
"Olloo" /490 units/, "Suu" /440 units/, "Tavan Tolgoi" /423 units/, "Aduunchuluun" /410 units/ and "Baganuur" /396 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Suu" (MNT 36 million 960 thousand), "Material Impex" (MNT two million 40 thousand), "Tavan Tolgoi" (MNT one million 851 thousand and 697), "Baganuur" (MNT one million 827 thousand and 433) and "APU" (MNT one million 424 thousand and 500).
The total market capitalization was set at MNT one trillion 531 billion 261 million 865 thousand and 916. The Index of Top-20 JSCs was 14,847.88, increasing by MNT 69.22 or 0.47% against the previous day.
BoM FX Rates: November 26 Close
BoM FX auction: CNY36 Million at ₮286.61, $76 Million Swap Agreements
November 26 (Bank of Mongolia) On the Foreign Exchange Auction held on November 26th, 2013 the BOM has received from local commercial banks bid offers of USD and 73.0 million CNY. BOM has sold 36.0 million CNY as closing rate of 286.61.
On November 26th, 2013, The BOM has received bid offer of USD for Swap agreement from local commercial banks and sold 76.0 million USD by accepting all offer.
Mogi: what is a political system where a MP can't resign on its own accord and has to get "approval". If a MP feels he can no longer serve his constituents, why is he forced to stay and keep the party color on the seat?
MP Amarjargal's resignation request rejected by standing committee
November 26 /news.mn/ The Standing Committee on State Structure discussed the issue whether or not to accept MP R.Amarjagal's request to resign from Parliament, on Tuesday November 26th, 2013.
The majority of the Standing Committee believed the request was not necessary in the discussion, therefore MP R.Amarjagal`s request was cancelled.
The plenary session meeting of Parliament will hold a vote on the issue this week to decide if MP R.Amarjargal will be required to stay in Parliament.
MP R.Amarjargal submitted a request to resign from Parliament to the Speaker Z.Enkhbold on November 12th. The DP caucus rejected his request and Speaker Z.Enkhbold commented on the request during an interview on television saying that "Parliament must have MP R.Amarjargal. It is not only his own business. R.Amarjargal once served as Prime Minister of Mongolia. He was nominated from DP and elected as a member of that Party in Parliament. So the seat in Parliament is not his asset. Therefore the DP caucus rejected his request."
Since the budget amendments were discussed in Parliament MP Amarjargal raised queries about who should take responsibility over the budget deficit.
The Diplomat's Jacopo Dettoni speaks Sereeter Javkhlanbaatar head of the new Invest Mongolia Agency, about the investment climate in Mongolia and its new foreign investment law.
Mineral-rich Mongolia has had something of a fall from grace with international investors since a 2012 law introduced tight investment limitations, including government and parliament approval for deals in key sectors such as mining, telecommunications, banking and finance. Foreign investment plummeted in 2013 and a widespread skepticism fell over the Ulan Bator business community as troubles at major projects like Rio Tinto's multi-billion Oyu Tolgoi (OT) copper/gold mine hit the headlines.
In a push to improve business climate, the new government sent to parliament a new, friendlier foreign investment bill, which was eventually approved in October. The new law establishes Invest Mongolia Agency, the country's first investment development agency, as a vehicle for investment promotion and development.
The Diplomat's Jacopo Dettoni spoke to Sereeter Javkhlanbaatar (Mogi: Man, we really gotta come to some agreement on how our names are written in English. In this case I would've written Javkhlanbaatar Sereeter (first name, last name)) on his third day at the head of Invest Mongolia Agency about the current investment climate in Mongolia and the opportunities created by the new foreign investment law.
Why has the government decided to establish Invest Mongolia Agency (IMA)?
The key reason to establish the IMA is to attract more investment into the economy. Foreign investment is one of the key pillars of Mongolia's economy. Today, it creates more than half of total GDP, and it's also one of the main sources of state revenues. As Mongolia doesn't have much manufacturing, our key resources for foreign currency are trade and foreign investments. We have to improve these two channels in order to attract more direct revenues and more foreign currency to stabilize and secure economic development. That's why foreign direct investment (FDI) should be one of the government priorities.
How is the agency going to attract more investment into Mongolia?
The IMA should be an independent agency able to work closely with investors. Political institutions generally deal with policies and there is some distance between policymakers and the man in the street. We need to close that gap. To do that, we have to establish mechanisms to listen to investors, solve their problems, assess projects and eventually attract more investments.
International investors have been continuously spooked by political interference in investment issues. When you say that the IMA is going to be an independent agency, should we expect it to be free from political appointments?
If you look at its structure, the IMA is not that independent, because it's under the umbrella of the Economic Development ministry. However, in terms of daily functions and operations it actually is an independent agency. The decision-making process is reduced as there is only one man in charge [the head of the agency] and investors don't have to wander around political institutions collecting signatures any more.
Foreign direct investment (FDI) inflows decreased sharply in 2013 and a general scepticism permeates the business community. What is the agency's view on the current business climate in the country?
In 2010, FDI inflows were around $1 billion per year. They then skyrocketed, reaching $4.7 billion and $4.4 billion in 2011 and 2012, respectively. The mining sector is behind this steep increase, and specifically Rio Tinto's OT phase I development. This project alone impacted FDI (requiring investments totaling $6.5 billion]. As phase I wrapped up in 2012, there has been no more investment coming in from that side during 2013, which led to the sharp drop we are facing. Next year, if we decide to continue the OT project, FDI figures will likely bounce back.
Still, the skepticism affecting the business community seems to go beyond OT itself and many blame the investment limitations introduced in 2012.
OT has been a major reason for the drop in investment inflows, but other reasons played a role too. Market conditions haven't been that good this year, with international markets slowing and key commodity prices going down. Domestically, we also had some challenges as 2012 was election year and a few regulatory changes were approved, including the Strategic Entities Foreign Investment Law (Sefil) in May 2012, just before the elections. That law froze many deals. It's difficult to give an accurate estimate, but there were many talks out there before the law was approved. Overall, the drop in FDI inflows traces back to a combination of factors. As the new government took office, it decided to improve the investment climate by drafting the new investment law approved in October.
How is the new foreign investment law going to improve the country's business climate?
The new law introduces a more liberal business environment. Previously there were many approval systems in place for companies willing to enter Mongolia's market, a lot of bureaucracy. The new law now eliminates entry barriers. Obviously some registration system should still be in place, but investors don't have to apply for permission any more, they just go straight to the registration body with the required documents. In addition, the new law lifts any foreign investment limitation for key sectors such as mining, telecommunications, banking and finance and introduces equal treatment for foreign and domestic investors. It also includes international standardized protection clauses such as no expropriation and free repatriation of profits. And it establishes the IMA in order to better serve investors.
FDI rules have been continuously changed over the last years. Does the new law mitigate regulatory change risks?
The new investment law cannot be changed or amended unless two thirds of parliament agree on it. We don't have any other such law in Mongolia expect for the constitution, which needs three fourths of all MPs. Also, (the new investment law) provides investors with stabilization incentives as it stabilizes four main taxes over the investment period. The key concept here is that when an investor really implements a project reaching a predetermined investment threshold we make sure his taxes will be stable for certain years – from five years to 22 years, depending on the project size.
The FDI rules introduced in 2012 quickly derailed a $1 billion bid by Chalco, China's biggest aluminum producer, to secure a controlling stake in one of the country's largest coal deposit. Many read them as an attempt to limit the influence of Chinese state-owned firms over Mongolia's mineral resources. Does the new law introduce any discrimination among foreign investors?
Both international agreements and the new investment law don't allow Mongolia to discriminate against anybody. We even treat foreign investors as our own citizens. And we treat all foreign investors equally – Russians, Chinese, it doesn't matter. That's our principle.
As the new foreign investment rules gain traction, what are your expectations for FDI inflows in 2013 and following years?
We expect FDI to reach $2.5 billion by the end of 2013, from $4.4 billion in 2012. Of course I hope we can attract more than that over the coming years. If the government and private investors strike an agreement on some big projects in the pipeline, FDI figures will fly. Then, nobody will be surprised if FDI reaches $10 billion per year.
Which projects are you referring to?
Obviously OT phase II is an important one. Besides, there are many coal deposits to be developed, and the policy is to upgrade the coal process industry introducing coal-to-liquid and coal washing technologies. Then there are many power plant projects in the pipeline, including renewable power plants. And agriculture projects too, an area where we have a lot of potential as we have many resources and it's a traditional industry. We are also thinking of using our coal to produce steel. We have many ambitions, now we have to make sure we put in place the right conditions.
A new FDI legislative framework has been introduced and the IMA established. Are the "right conditions" now in place to fulfill Mongolia's ambitions?
We cannot say that just adopting one single law and creating an investment agency is enough. There are many sectors involving rules and bureaucracy. For example mining, where we are discussing the mining policy and law; or energy and transport infrastructure such as railways and highways. All laws and regulations should be correlated and meet the same quality standards. We should improve the legislative framework as a whole.
Mongolian mining sector update: regulatory uncertainty and risk mitigation strategies
November 25 (King & Spalding LLP) Recent developments in the Mongolian mining sector depict an increasingly unpredictable business environment, which severely constrains the foreign mining companies' ability to invest and operate in the country. Major regulatory uncertainties ranging from the security of mineral tenure and resource rights to the enforcement of commercial contracts have resulted in an increased number of foreign players delaying capital investment projects or canceling them altogether. Foreign direct investment in the country has been reduced by almost half over the past year, triggering a sharp drop in the country's reserves and causing an 18% depreciation of the Mongolian tögrög against the U.S. dollar. The resulting economic crisis has in turn ratcheted up the pressure on the Mongolian government to capture an increased share of the mineral revenues generated in the country.
The uncertainties plaguing the Mongolian mineral sector run deeper than the government's ability to navigate this challenging economic environment. The parliament's ongoing efforts to overhaul the mineral law have caused increasing apprehension with respect to royalty rates, extent of state ownership in mineral projects, and the concept of strategic deposits accompanied by restrictions on foreign investment. More recently, a series of corruption cases involving Mongolian mining officials has brought into question the validity of 106 mining licenses covering an area six times larger than the currently-active mining licenses in Mongolia. The uncertainty associated with these cases has caused foreign mining companies to suspend investments in these areas for an indefinite period of time. Experts predict that many of these foreign investors will definitely leave the country if the issue is not resolved in a timely manner.
In this rapidly deteriorating context, international companies operating or investing in the Mongolian resources sector are advised to pay particular attention to ensuring that they will be able to navigate through potential disputes under the best conditions possible. These conditions may be optimized in investors' investment agreement, in the structure of their investment, and in their relationship with their local partners and the government.
First, all of the parties involved should clearly delineate individual areas of responsibility for the different risks associated with mining projects (political, fiscal, trade, environmental, supply, or price risks—to name a few) and provide for adequate adaptation and dispute resolution mechanisms. As a way to achieve that allocation of risks, parties to mining agreements should consider the opportunity to provide for stabilization and force majeure provisions in their contracts.
Second, foreign parties in mining projects must obtain or preserve the right to seek resolution of their contractual disputes before international arbitration tribunals. Failure to do so would expose them to the uncertainties associated with litigating their disputes before local courts.
Third, all parties involved in mining projects should actively manage the structure of their investments to obtain or preserve access to investor-state arbitration in case of adverse regulatory actions. A party should invest through a corporate vehicle from a country providing comprehensive treaty coverage (bilateral investment treaties (BITs), free trade agreements, or multilateral agreements) in order to obtain optimal protection. Adequate investment treaty protection plays a substantial role in procuring political risk insurance (particularly when offered by international organizations or public entities) and/or reducing the insurance premiums associated with international projects and operations. Mongolia currently has BITs in force with thirty seven foreign countries, including the United States, United Kingdom, France, Germany, Netherlands, Belgium and Luxemburg, but also China, Russia, Singapore, Japan and Israel. Subject to the provisions of the applicable investment treaty, the definition of investor and investment (enabling treaty protection and investor-state arbitration) will generally cover the investment and activities of the wide array of parties involved in mining or metals projects. Operators and direct investors, as well as lenders, long-term purchasers, and traders are advised to evaluate how to structure (or re-structure) their activity in a way to maximize available treaty protection.
Finally, mining and metal companies should continue to engage with governmental entities in Mongolia to develop a better understanding of the value that a project brings to the country and its population. Mining companies investing in Mongolia could also partner with foreign state-owned companies that have strong State-to-State ties with the Mongolian government or its State-owned companies. Judicious choices of lenders (including public or multilateral lenders, such as the International Finance Corporation or the European Investment Bank) and financial partners can also play an important role in unlocking disputes caused by adverse governmental actions.
Will foreign investors give Mongolia another shot?
November 26 (CNBC) Foreign investors abandoned one-time frontier-market darling Mongolia over the past 18 months amid a dispute over a mine development, but the country hopes a resolution and its new investment law can lure them back.
Rio Tinto's $6.6 billion Oyu Tolgoi mine in Mongolia has been at the center of a prolonged dispute over revenue sharing between the government and its private sector partners, including concerns the company disagreed with demands that all revenue remain within the country at a Mongolian bank.
The dispute "greatly undermined foreign investment," while a "restrictive and unpredictable" investment regime deterred foreign investors, Moody's said in an October note. Foreign direct investment (FDI) fell 17 percent in 2012 and then fell a further 42 percent in the January-to-August period this year.
But now, Mongolia appears to have both issues licked.
In mid-December, Rio Tinto is sending a high-level delegation to Mongolia to finalize negotiations on developing the Oyu Tolgoi mine, Saikhanbileg Chimed, chief of the cabinet secretariat of Mongolia, told CNBC.
"Hopefully we're going to announce the timetable for next year when this project financing starts and when the second phase is going to start," he said. Rio Tinto didn't immediately return a call requesting comment.
In addition, Saikhanbileg expects the country's new investment law will restore foreign investors' confidence. The law eliminates distinctions between foreign and local investors and offers long-term tax stability. With a two-thirds majority in parliament required to push through any changes to the law, it might be considered very nearly written in stone, easing uncertainty over changes to regulations.
"I think it's a great first step," said Travis Hamilton, managing director at Khan Investment Management, which offers a single-country Mongolia fund.
"Mongolia is doing all of the right things in terms of the new legislation," Hamilton said. "It's recognizing they need foreign investment."
But will foreign investors return?
While Saikhanbileg expresses confidence they will, Hamilton is less certain. "When I talk to investors, the confidence is not there just yet. They need to see a little more happening," he said. But if the Rio Tinto resolution materializes, it will be "a huge positive. If that in fact does happen, that may be the catalyst that turns on the tap of foreign investment," Hamilton said.
Resolution of the Rio Tinto dispute is key to Mongolia's development, with Saikhanbileg saying the Oyu Tolgoi project potentially represents about a third of the broader economy. And in the resource-rich country, "It's only one of 50 more potential projects," Saikhanbileg said.
Over the past 18 months, asset prices in the country have been "beaten up horrendously" as foreign investors pulled back, Hamilton noted. "There's an inherent need for FDI," he said.
"Mongolia is going to see huge money flows; it's going to see infrastructure being built. It will inevitably bring a significant multiplier effect across the entire economy," Hamilton said.
Getting around Mongolia's resource regulations, interview with ETT CEO
November 19 (CNBC) Batsuuri Yaichil, CEO of state-owned Erdenes Tavan Tolgoi describes the outlook for foreign investment in the nation's mining sector.
Mogi: highly recommend subscribing to MIBG's free weekly market analysis
MIBG: Mongolia Investment Summit in Review
November 26 (MIBG) Last Monday, investors from around the world made their way to Hong Kong for the Mongolia Investment Summit. Accompanied by politicians and the country's business elite, the mood was apathetic, unexcited and from where we sit utterly perfect.
Two years ago, when Mongolia was at its peak investors were flocking to the forum and couldn't open their cheque books fast enough. Last year, the change in Government attracted a standing room only crowd and blind optimism filled the air. This year with a 49% drop in FDI, a 25% depreciation of the currency, a 17.7% drop in the MSE Top 20 and an overall slowdown in economic growth the crowds have thinned. The market has finally reached a breaking point.
With expectations for further downside in Q4 and Q1, the winter looks like it will be tougher than usual in Mongolia. Seasonality of mineral exploration and the outstanding resolution of the OT dispute will keep money from flowing into the country until Q2 of next year.
However, from a fundamental perspective Mongolia is better off than it has ever been. Strengthening legislation, supportive policy, an advancing capital markets and what we believe is the only functioning democracy in Asia are all key factors underlining our long term view for the country – not to mention an estimated 3 trillion USD in mineral resources.
Few speakers were able to drive home the Mongolian story as clearly as Randolph Koppa, President of the Trade and Development Bank. In previous years he portrayed the Mongolian story as a horse galloping across the steppe. However, his metaphor has since changed. Realizing, as many of us have the challenges and difficulties of economic growth within a frontier economy such as Mongolia he now envisions the path forward to be better represented by the camel. Highlighting the strength and stamina that is required to succeed and the sometimes hostile terrain that it can encounter.
Koppa was joined by many of the true believers. James Passin of Firebird Management, perhaps the most bullish of all foreign investors active in Mongolia, highlighted the positive changes that have been taking place in the capital markets. He specifically pointed to the new securities law and the new investment law as methods to facilitate much needed volume and liquidity in the domestic exchange.
The views of Koppa and Passin provide a good indication of how serious market participants assess the Mongolia story, through a long term lens that accounts for the hardships and the upswings. With mainstream sentiment tackling short term catalysts we're not surprised with the continued fall out over the past few months. In fact, as you may have gathered we're actually encouraged and believe that it indicates a pending shift in both sentiment and market performance.
All things considered, we believe that 2014 is going to be the most exciting time in Mongolian equities since the ramp up in 2009/2010 where the domestic exchange grew by more than 130%. While external considerations remain, this period of growth will likely reward those investors who have remained committed to the market.
HUNDREDS OF BUSINESSES IN MONGOLIA BENEFITING FROM EBRD'S SMALL BUSINESS SUPPORT TEAM
With donor funding from the EU and others, the EBRD's Small Business Support team helps small and medium-sized companies in our new countries develop and get ready for EBRD financing
(Video: Growing Businesses in Mongolia with EU support – EBRD, November 21)
November 26 (EBRD) Hundreds of companies in Mongolia - and thousands across the EBRD region - are developing new strategies and improving their products' quality with the help of business advice from the EBRD's Small Business Support programme.
One of them, Hungun Beton, already Mongolia's largest producer of cement bricks, plans to further modernise its factory and boost the quality of its output to compete not only with local producers but also with imports from China.
"This is our raw material section. Lime arrives here by train or truck," Hungun Beton's automation engineer, Odbileg, explained in good English.
"We have conveyors and crushers here. That's cement. Lime, sand and cement get transported from here to the plant".
Funded in Mongolia by the EU, and by multilateral and bilateral donors and the EBRD itself across the region, the SBS know-how is transforming businesses from many countries. Mongolia's rapid growth makes this success even more obvious.
Mongolian companies such as Hungun Beton, cashmere garments manufacturer Ezio Foradori or the kitchen cabinet maker Kitchenall have grown into market leaders since SBS first started working with them.
SBS puts businesses together with the best local and international experts, from product design to marketing. Quality control is especially popular in Mongolia, where businesses want to raise competitiveness.
Learning how to work with international partners is crucial too – especially to companies like the cashmere garment manufacturer with an unexpectedly Italian name, Ezio Foradori, which supplies menswear to Dunhill.
It also helps prepare companies to apply for and receive financing from banks, including multilateral banks like the EBRD itself.
Charlotte Ruhe, the Director of the Small Business Support team, said: "You can call us the fast response team, because we can start working with the donor resources in new countries of our operations, before the EBRD is able to start financing as a bank.
"This was the case in Mongolia: we started here before the Bank was able to start lending. We built up the companies and later enabled them to take advantage of financing from the EBRD.
"And I see this happening now in the Southern and Eastern Mediterranean region, where we were also present before the Bank, and our clients are starting to access financing from the Bank".
Ms Ruhe often visits client companies to hear more about their plans and needs. On the way to see clients in Darkhan, Mongolia's second largest industrial city, she called on Kitchenall, the leading Mongolian manufacturer of high-end kitchens, to see the building site for their new factory outside Ulaanbaatar. The work was in full swing. Kitchenall received both expert advice, donor-funded by the European Union, and a loan from the EBRD.
Matthias Reusing, the European Union Delegation's Head of Section for Mongolia cooperation, said: "We know from the European experience that SMEs – such as Kitchenall - are drivers of an economy, and the EBRD is a natural partner for us in helping them develop in other transition countries in Eastern Europe, Central Asia and now in Mongolia.
"We are here to stay, to be on the Mongolian side and to support them in the future".
Small and medium-sized business is key to EBRD activities anywhere, but in Mongolia, the EBRD has a unique programme to develop small and medium-sized businesses, funded by the European Union.
The programme works both with individual enterprises and with the organisations in the country that support the SME sector, like the SME Department in the Ministry of Labour, the Chamber of Commerce and the Banking and Finance Academy.
The EU has contributed €3.8 million for the programme for the five years from 2012 to 2016. Funding has also been received from the EBRD's Shareholder Special Fund and the Early Transition Countries (ETC) fund, the government of Japan and private companies.
Since 2001, SBS has provided over 350 small businesses in Mongolia with know-how and expertise. As of November 2013, the programme already supported more than 60 businesses, with a focus on wool and cashmere, mining services, tourism and construction. There is also an emphasis on regional development and gender – since 2012 over 40 women-owned and managed SMEs have become clients.
One of these women-managed SMEs is Hungun Beton, the concrete blocks manufacturer, which developed an investment business plan and received support with management and human resources.
The female CEO is soon expected back from her maternity leave; her team knows that big changes are on the way.
"Our factory last modernized in the 1980s," said Odbileg, the engineer. "Thanks to our previous cooperation with SBS and EBRD bankers, we know our direction; now we need to find financing and get going."
Mogi: an Islamic finance focused IB looks like. Increased attention from financial firms is one of the first signs of optimism returning I guess.
Mongolia: Stand-out Among Frontier Economies
November 23 (Codexa Capital) Mongolia reached a milestone in mid-November with the completion of a paved highway between Ulan Bator and Zamyn-Üüd, at the Mongolia-China border. In addition to bolstering trade with China—already Mongolia's most important trading partner—the road will provide the country's well-heeled urban population with greater access to tourist destinations in Dornogovi Province.
Mongolia hardly needs an added catalyst. The country is set to see real GDP grow by 11.7% in 2014, according to the World Bank. That figure heralds some of the best economic momentum anywhere in the world. Much of that activity will be driven by the recovery of the omnipresent mineral sector, but we caution against viewing Mongolia so narrowly.
Employment in the retail/accommodation field, for instance, is more than four times that seen in mining.
Still not convinced? Frontier-market skeptics should take a look at the new investment law which is set to wipe out the missteps of recent years. Among other things, it will streamline the investment approval process.
Note on Codexa Capital
Codexa Capital bridges Islamic and conventional markets. Our expertise crosses project finance, product structuring, and capital introduction activity. Our issuer audiences are global; our investor audiences spread primarily across the Muslim world.
Education & Mining Leading Opportunity Sectors for Canadian Companies in Mongolia
(The Canadian Trade Commissioner)
Manama Declaration on Tourism Development adopted by Asia Cooperation Dialogue
November 26 /news.mn/ The 12th Asia Cooperation Dialogue Ministerial Meeting was held in Manama, the Kingdom of Bahrain, on Monday November 25th, 2013.
At the Ministerial Meeting, Mongolia was represented by special envoy ambassador L.Galbadrakh, Advisor to Foreign Minister A.Batpurev.
Mongolia joined the Asia Cooperation Dialogue in 2006. A decade ago in 2002 the Asia Cooperation Dialogue was launched with the aim of promoting relations and strengthening cooperation among the Asian countries in all fields.
Since then, the Asia Cooperation Dialogue has expanded to include 32 countries in Asia. Most recently the Republic of Turkey has become the 33rd member of the Asia Cooperation Dialogue.
At the 12th Asia Cooperation Dialogue Ministerial Meeting, a draft Manama Declaration on tourism development along with recent changes as proposed by the drafting group was adopted. Member countries agreed on these suggested appeals and plans to expand cooperation on investment, energy, infrastructure and security.
One item included the plan for Asian cooperation on energy, which was negotiated, and also initiatives by several countries to establish Asian Infrastructure Bank and Asian Development Fund were discussed.
World Bank: Global Call for Proposals from SCOs in Mongolia to Monitor Work on Education and Infrastructure
Deadline to submit proposals: January 6, 2014
The Global Partnership for Social Accountability (GPSA) supports civil society and governments to work together to solve critical governance challenges in developing countries. To achieve this objective, the GPSA provides strategic and sustained support to CSOs' social accountability initiatives aimed at strengthening transparency and accountability. It builds on the World Bank's direct and ongoing engagement with public sector actors, as well as a network of Global Partner organizations, to create an enabling environment in which citizen feedback is used to solve fundamental problems in service delivery and to strengthen the performance public institutions. Through a country-tailored approach, GPSA-supported activities are implemented in sectors where the World Bank has a strong involvement and can help governments respond to citizen feedback.
The GPSA works to "close the loop" by supporting citizens to have a more articulated voice, helping governments to listen, and assisting government agencies act upon the feedback they receive.
The GPSA is pleased to announce its 2nd Global Call for Proposals. In Mongolia the GPSA seeks proposals for Social Accountability initiatives and programs from Civil Society Organizations to address one or all of the following:
Ø Monitor construction and/or maintenance of roads and public buildings from the planning phase to the delivery, including budgeting and procurement. The information produced will be used by local governments, the Ministry of Finance, the Ministry of Construction and Road Agencies to improve the quality of roads and public buildings.
Ø Monitor and evaluate the quality of the education service to stimulate parental involvement and citizen demand for school performance, by (i) improving the availability of information to parents and the public on the quality of service delivery; (ii) using different mechanisms to make such information accessible to schools, communities, regions, and national stakeholders; and (iii) assessing the impact of such information dissemination. The information produced will be used by the Ministry of Education and local governments to improve the education services at the aimag and he National level.
President of Mongolia Conducts State Visit to Singapore
November 26 /infomongolia.com/ In the frameworks of his state visits to Southeast Asian countries, President of Mongolia Tsakhia ELBEGDORJ and his accompanying delegation has landed at the Changi International Airport, the Republic of Singapore on November 24, 2013.
The delegation was greeted by the Ambassador Extraordinary and Plenipotentiary of Mongolia to the Republic of Singapore Banzragch DELGERMAA and other officials from Singapore Prime Minister's Office and Foreign Ministry as well.
Earlier on Monday, November 25, President Ts.Elbegdorj toured the Singapore Botanic Gardens, it is customary for a foreign visitor to plant a flower and President was involved in gardening an orchid hybrid, which was named after him.
Later, President of the Republic of Singapore Tony Tan Keng Yam welcomed his counterpart Ts.Elbegdorj at the Istana, an official residence and Office of the President of Singapore, with state arrival ceremony followed by the performance of the two national anthems.
After which the two state heads held bilateral talks aiming to promote economic ties between the two countries.
During his meeting, Mongolian President noted, "Thank you for the Government and People of Singapore for your warm welcoming. We glad to acknowledge that the bilateral relations of the two countries has been broadening and we will work to further enhance the opportunity of the mutual collaboration. In particular, the air and water transportations, industrialization, and big network of technical technology are being centralized in Singapore, therefore we are willing to cooperate in these sectors.
Moreover, in order to develop a knowledge-based economy in Mongolia, we should also broaden partnership in educational sphere".
Sides also exchanged views on bilateral cooperation in defense sector and Shangri-La Dialogue, where President Tony Tan Keng Yam affirmed to support initiatives proposed by Mongolian state head.
President Launches Visit to Singapore, Montsame, November 26
Mogi: it should be mentioned that Khan Investment Management, managers of Khan Mongolia Fund were sponsors of the business forum.
President Meets with Singapore PM, Highlights Need for Direct Flights and Attends Mongolia-Singapore Business Forum
November 26 /infomongolia.com/On November 25, 2013, President of Mongolia Ts.Elbegdorj, who is undertaking a state visit to Singapore, received the Prime Minister of the country Lee Hsien Loong.
At the meeting, Premier Lee Hsien Loong forwarded his confidence that the state visit would bring the bilateral ties into a newer level.
President Ts.Elbegdorj mentioned his Office recently initiated the national consultative meeting on "From Big Government to Smart Government" and in conjunction he requested to study Singaporean experience.
President also expressed his interest that the Government of Singapore would collaborate with Mongolia's state organs on reducing corruption, enhancing state services and strengthening its activities.
Further, he underlined that the direct flight between the two states is necessary to set up in order to develop the reciprocal tourism sector.
Later on the same day, Mongolian delegates have attended the Mongolia-Singapore Business Forum organized by Mongolian Embassy in Singapore, where over 300 local and foreign businessmen were present.
The Forum was opened by Ambassador Extraordinary and Plenipotentiary of Mongolia to the Republic of Singapore B.Delgermaa and President Ts.Elbegdorj also delivered a speech.
President receives PM of Singapore, Montsame, November 26
President discusses defense cooperation with Singapore
November 26 /news.mn/ President Ts.Elbegdorj was welcomed by the President of Singapore, Tony Tan Keng Yam, on Monday November 25th, 2013. President Elbegdorj was greeted at the Istana, formerly known as the "Government House of Singapore", by an honor guard parade and the national anthem of Singapore.
President Ts.Elbegdorj and his counterpart of Singapore, President Tan, met for discussions on the broadening of bilateral relations and cooperation between the two countries.
President Elbegdorj made the following speech to President Tan; "I am grateful to the state officials and people of Singapore for receiving us with warm hearts. I am glad that our two countries keep expanding our bilateral relations and cooperation. Further, we will work on creating more opportunities and fields to boost bilateral cooperation. The air and sea transport system and the huge industrial and technological network is centralized in Singapore. Mongolia is willing to cooperate with Singapore on this more closely. It is important to boost bilateral cooperation, in particular in the education sector, between the two countries as Mongolia struggles to develop a knowledge based economy".
Parties also exchanged ideas on how to boost bilateral defense cooperation and the Shangri-La Dialogue.
President Tan of Singapore expressed his agreement with President Elbegdorj's suggestions and promised to pay attention to his proposals.
Mongolia Welcomes Successful Outcome of Iran Nuclear Talks in Geneva
Ulaanbaatar, November 26 /MONTSAME/ The Spokesperson of the Foreign Ministry Tuesday made a statement regarding outcomes of the talks on the Iranian Nuclear Program in Geneva.
In the statement, Mongolia welcomes the successful outcome of the talks in Geneva on the Iranian Nuclear Program, where G5+1 and Iranian representatives reached a principle agreement on November 24. The talks will help fully resolve this complex issue in the future, the statement says.
"Mongolia views that the Geneva agreement demonstrates that any issue related to the nuclear program can be resolved through negotiations in accordance with the principles and norms of international law in the interest of all the parties concerned," the statement notes.
Mongolia marks first year anniversary of OSCE membership
Ulaanbaatar, November 26 /MONTSAME/ Mongolia marked its first year anniversary of joining the Organization for Security and Cooperation in Europe /OSCE/ on November 21.
At a meeting of the Permanent Council of the OSCE, the Permanent Representative of Mongolia to OSCE G.Batjargal addressed the meeting. He was followed by Permanent Representatives of Canada, the European Union and the USA who highly spoke Mongolia's contribution to the ideas of the organization, one of examples of which became the presidential elections.
They stated again that will consider Mongolia's request on the establishment of OSCE Representative Office in the UB city in near future.
The OSCE has a comprehensive approach to security that encompasses politics, military, economic and environmental and human aspects. It comprises 57 participating States that span the globe, encompassing three continents--North America, Europe and Asia--and more than a billion people.
Mongolia is the 57th participant country of the OSCE.
Mongolia Establishes Diplomatic Relations with Republic of Rwanda
November 26 /infomongolia.com/ Within its aim to establish diplomatic relations with all UN members, Mongolia has established diplomatic relations with the Republic of Rwanda in New York City on November 25, 2013.
Setting mutual aspirations to develop and strengthen friendly relations and cooperation as a guideline, the two countries agreed to adhere to the Vienna Convention on Diplomatic Relations, the UN Charter and international legal principles and standards.
The Permanent Representative of Mongolia to the United Nations and Ambassador Od OCH and the Permanent Representative of Rwanda to the United Nations and Ambassador Mr. Eugene-Richard Gasana signed the joint statement to establish diplomatic relations. The joint statement to establish diplomatic relations has been registered at the UN and the permanent representatives of Mongolia and Rwanda have sent the statement to the UN Secretary-General, Mr. Ban Ki-moon in order to inform the UN member countries.
The establishment of diplomatic relations with the Republic of Rwanda provides better opportunities for both countries to support each other in bilateral and international organizations.
Diplomatic Relations established with Rwanda - Montsame, November 26
Sino-Russian Competition in Mongolia
November 22 (The Asan Forum) In recent years China and Russia have presented a solid façade of "strategic partnership," with leaders emphasizing complementarity of national interests and common approaches to many international problems as reasons that work hand-in-hand. Beijing and Moscow have dismissed suggestions that their relationship is, in fact, plagued by hidden tensions as Western fabrications. Yet, there must be a middle road somewhere between naïve assertions that the relationship is made in heaven and unrealistic claims that this clay colossus is about to come undone. This article looks at policies towards their common neighbor Mongolia in an effort to locate this middle ground. Once a part of the Chinese Empire, later a de facto Soviet satellite, Mongolia has not been shy about asserting its distance from both China and Russia in pursuit of what it calls the "third neighbor" policy. This policy entails active engagement with Mongolia's virtual "third neighbor"—a collective entity that includes the United States, the EU, countries of the Asia-Pacific rim, India, Turkey, and various international organizations. The "third neighbor" policy adds a layer of complexity to Mongolia's relations with China and Russia.
Russia has tried to boost its waning influence in Mongolia by leveraging its existing assets—mainly, its stake in the trans-Mongolian railroad—to secure preferential access to the country's natural resources. China, for its part, has tried to pull Mongolia ever closer into the structural embrace of its giant economy. Russia has had to defend its interests in a much more assertive fashion; China has had the luxury of just waiting for the ripe fruit to fall into its hands. Although the two have been careful not to step on each other's toes, their economic interests are basically at odds. In this sense, it is appropriate to say that China and Russia have been in "competition" over Mongolia. However, in its current form this competition is mainly commercial and only implicitly geopolitical, and Russia's declining economic fortunes need not translate into tensions in the broader context of the Sino-Russian relationship. In addition, Mongolia's "third neighbor" policy offers assurance that one's loss is not necessarily seen as the other's gain.
Perhaps, the most interesting aspect of the Sino-Russian-Mongolian relationship is the growing importance of Mongolia's agency. Ulaanbaatar has learned to keep both neighbors in check by playing one against the other and both against the West. This is not new or unique. Many small states engage in this kind of geopolitical manipulation; in Mongolia's neighborhood, North Korea is but one example, but the rules of this geopolitical game are complicated by Mongolia's unique domestic context. Unlike Central Asian states, which have succumbed to authoritarianism (Kyrgyzstan is still to prove that it is an exception), Mongolia has enjoyed a high level of political contestation. Its democratic politics have had a great impact on both China and Russia's efforts to extend their influence, neither of which has succeeded at the Mongolian poll box.
Nothing better illustrates Russia's declining fortunes in Mongolia than the row over the upgrade of the trans-Mongolian railroad, known as UBTZ. Russia has maintained a 50 percent stake in the railroad, which connects Russia and China through Mongolia—a privilege dating back to the 1949 Soviet-Mongolian agreement on joint ownership. As its economic presence in Mongolia shrank in the 1990s, the railroad has assumed even greater importance as one of Moscow's few remaining assets in the country. Although its strategic importance is undeniable, the railroad has suffered from serious economic woes: Russia paid scant attention to its upkeep in the 1990s and the early 2000s; Mongolia, too, had little money to spare to upgrade its crumbling infrastructure, much less to expand the railroad network. This is where matters stood when, on October 22, 2007, President Nambaryn Enkhbayar and George W. Bush signed the Millennium Challenge Compact, committing some US$285 million to Mongolia's economic development.1
The Compact, disbursed through the Millennium Challenge Corporation (MCC) was widely perceived to be a "reward" for active support of the US "war on terror," for Mongolia had sent troops to both Iraq and Afghanistan. The money was to come in the form of grants, never to be repaid. The lion's share of the Compact funds—more than US$188 million—was earmarked for the upgrade of the trans-Mongolian railroad, an effort to remove the bottlenecks that an antiquated rail system posed for Mongolia's economic development. Enkhbayar deemed this investment "vital,"1 but a major obstacle to successful realization of the plan was Russia's likely reaction.
Moscow had perceived Enkhbayar as a fairly loyal politician. A fluent Russian speaker with longstanding connections to Russia, Enkhbayar, in Vladimir Putin's words, "kn[ew] what Russia is like," which was one reason Moscow delighted in his election as president in 2005. "The Mongolian people elected me to a large extent because I have very good relations with the Russian leadership, with President Putin," Enkhbayar later told Putin to the latter's clear satisfaction. Putin had invested himself in a better relationship, in November 2000 becoming the first Russian leader since Leonid Brezhnev to visit Ulaanbaatar, after which he and Enkhbayar developed what the latter called an "intimate" relationship.3 This intimacy was bolstered in 2003 when Putin agreed to write off nearly 98 percent of the Soviet-era Mongolian debt (US$11.4 billion), a generous gesture that bolstered Russia's standing in the eyes of Mongolian public opinion.
Nevertheless, Moscow and Ulaanbaatar remained at odds over the future of the trans-Mongolian railroad. The existing agreement, which provided for a rotating chairmanship, did not suit Enkhbayar, who resented Russia's veto over Mongolia's transport lifeline. Since the early 2000s he unsuccessfully lobbied Putin to change the ratio from 50/50 to 51/49, in Mongolia's favor. 4 "The Russians said 'OK, let's discuss it' but they would not go beyond talking," said one Mongolian diplomat involved in the thorny negotiations. After discussing railroad issues at a SCO summit in June of that year, Enkhbayar concluded that Russa's cooperation was "unlikely" and, in talks with US officials, began to "press ahead with a Mongolian-owned second rail."5 Such ambitious plans were unrealistic, but he probably hoped that once the rotating chairmanship fell into Mongolia's hands, he could succeed in bringing in US cash to modernize its infrastructure. Although the two countries battled for months over the appointment, the Russians yielded in the end, allowing for the appointment of a Mongolian citizen, V. Otgondemberel, as the head in 2007.
At the announcement of the MCC compact, however, the Russians dug in their heels. Bringing in US investments required opening the account books of the joint enterprise. "Why would we do that?" wondered Ambassador V.V. Samoilenko. "Why would we allow outside people to get to the documents of a Russian-Mongolian joint enterprise? This is our and the Mongols' business, our documents."7 In addition, there was fear that the upgrade would entail purchases of US-made locomotives at the expense of their Russian-made competitors. Underlying these considerations was Moscow's resentment at having the United States meddle with one of its key assets in Mongolia. As a result, when the US auditing team arrived in Ulaanbaatar in 2009 to begin implementation of the MCC agreements, they failed to gain access. Moscow found itself in an awkward situation. The Mongolian media, not unjustly, cast it in the role of obstructionist bullies, hanging on obstinately to its strategic assets, undermining Mongolia's long-term economic potential and effectively holding the Mongols by their throats. In the meantime, Russian observers succumbed to conspiracy theories to the effect that the whole idea of offering US money for the railroad—knowing that it would have to be refused—was hatched up by strategists in the State Department, who had sought to, and succeeded, in embarrassing Russia in the eyes of the Mongolian public.7
Concerned by this loss of face, Russia hurried to appear generous. In 2009, Russia and Mongolia set up a new company, Razvitie Infrastruktury, to invest in the trans-Mongolian railroad; the latter soon advertised tentative plans for a major upgrade at the cost of billions of dollars. At the same time, Moscow offered to add US$250 million to the coffers of the joint enterprise and, when Ulaanbaatar failed to come up with its 50 percent share, underwrote the entire amount. Earlier, Russia agreed to extend US$300 million as an agricultural credit. Gifts were bestowed in rapid succession in an unprecedented display of attention to Mongolia.
With money came honor: Putin and Medvedev both turned up in Ulaanbaatar in 2009, a clear sign of how important Mongolia figured at the time in the general thrust of Russia's Asian policy. Putin's visit occurred days before the Mongolian presidential elections, a gesture of support for the incumbent Enkhbayar, whom the Russians still perceived as someone who would look after Moscow's interests in the region. Medvedev came to celebrate the 70th anniversary of the Khalkin Gol battle, which had pitted the Soviet Union and Mongolia against the Japanese. The intended message was that Russia had always been Mongolia's most reliable partner, and that, as the Russian saying goes, an old friend is better than two new ones. The message was well received, though it did not prevent Ulaanbaatar from asking the MCC to reassign the forfeited railroad funds to other projects inside Mongolia. In the end, the money was used to build paved roads, proof that Mongolian policy makers managed to have their cake and eat it, too.
The Russian imperial expansion in Asia in the 19th century arguably pursued three interrelated goals: first, security; second, great power prestige, and, third, economic interests. These goals informed Russian policymaking well into the Soviet era. Certain legacies of this imperial past remain even today, underpinning renewed interest in former clients, not least in Mongolia. If, broadly speaking, prestige was the key motive for Russia's imperial enterprise in the 19th century, and security in the 20th century, in recent times the economic component has played the most important role in Moscow's regional policies (though the other two factors are of continued relevance). Moscow is primarily interested in Mongolia's natural wealth, not only for the investment opportunities that they offer but also because they would allow Russia to maintain a "presence" in the region at a time when the law of economic gravity has pulled Mongolia into China's orbit.
Whereas until the late 1980s, the Soviet Union dominated Mongolia's foreign trade, the 1990s witnessed China's return, as both a purchaser of Mongolia's natural resources and a seller of all manner of goods. Today, approximately 50 percent of Mongolia's total foreign trade is with its southern neighbor, and China has practically monopolized Mongolia's exports.8 Russia continues to supply petroleum—its key export to Mongolia—but even this is under the shadow of the Mongols' recent attempts to invest in oil exploration and refining, and the potential of oil shale reserves. Russia's economic position has been slipping, and is sure to slip even further, which makes it all the more eager, for commercial as well as strategic reasons, to secure access to a share of Mongolia's natural resources.
Russia's involvement in Mongolia's mining goes back decades. Soviet geologists did most of the groundwork in identifying key copper, gold, and coal deposits, and the Soviet Union invested heavily in their extraction. The most important investment was the 1973 deal to build the copper and molybdenum mining complex at Erdenetiin Ovoo. Russia owes 49 percent (to Mongolia's 51 percent) in the joint venture Erdenet, which has been in operation for over thirty years.9 This complex, one of the world's largest, has not proven to be much of an asset. Until Mongolia repealed its windfall profits tax, over 90 percent of Erdenet's revenues ended in the government's coffers, leaving scraps for the Russians. The Russian government–ever since Putin's rise to power signaled a renewal of interest in Mongolia—has tried to expand its investment in the joint venture and to regain majority control. Leading media outlets have alluded to Russia's imminent "takeover" of Erdenet, and, to this end, Russian shareholders still make fool-hardy (and a priori unacceptable) proposals to Mongolia about privatizing and floating parts of the venture.10 Investments were, and are, welcomed, but Russia's efforts to regain control proved futile. Russia thus finds itself in an awkward situation of having invested heavily in a venture that it cannot, and will not control, and that, selling most of its produce to China, does not serve Moscow's strategic interests in any obvious way. All of this makes Erdenet an uncertain base for extending Russia's economic influence in the country, which has not deterred the Russians from trying.
Moscow worked hard to secure access to one of the world's largest undeveloped copper and gold deposits in South Gobi, the Oyu Tolgoi, and proposed connecting the site to the trans-Mongolian mainline as a quid pro quo for its investment. Enkhbayar reassured Putin as late as January 2009 that "we [the Mongols] cannot imagine these big mining projects without Russia's participation." The head of Russian Railroads Vladimir Yakunin had reportedly been promised by Prime Minister Sanjaagiin Bayar in 2009 that Russia would be given access in return for building a railroad, which would connect the mining site with the trans-Mongolian line, and, via Russia, with ports in the Far East,11 but Enkhbayar was ousted later that year by the Western-oriented Tsakhiagiin Elbegdorj. In October 2009 the Oyu Tolgoi contract was awarded to the Canadian Ivanhoe Mines (now a subsidiary of the giant multinational Rio Tinto). Russian railroad services were not required: the mining site is only 80 kilometers from the border with China and, since the site became operational in 2013, the copper has been taken to China by trucks.
Having lost out on Oyu Tolgoi, the Russians have tried to gain access to the world's largest undeveloped coal deposit, nearby Tavan Tolgoi. The key lever has once again been the railroad. In 2010 matters seemed to be heading in Moscow's direction, when the Mongolian parliament approved a program of infrastructural development, which confirmed adherence to the Russian railway gauge (1520 mm) instead of the narrower Chinese standard. In November 2010, the Russians wrote off 97.8 percent of the US$172 million of recent Mongolian debt (in addition to the massive Soviet-era debt that it had already forgiven), in exchange for reassurances that Russia's interests would be taken into account in awarding the contract for Tavan Tolgoi. In March of the following year, a consortium headed by the Russian Railroads submitted an official bid to be given access to 50 percent of the Tavan Tolgoi deposit, including a proposal to build a rail line, which would take the coal to Sainshand (along the trans-Mongolian railroad), at which point it could be exported south, to China, or taken north, via Russia. Moscow appeared sure of victory, given that the Russian Railroads' bid entailed upgrading Mongolia's rail infrastructure, an on-going concern for the Mongols ever since the unrealized promise of MCC funding.
Once again, however, the Russians misread the situation. Only weeks after the Tavan Tolgoi bid had been submitted, it transpired that Mongolia had secretly conducted negotiations with South Korea's Lotte Group for construction of the railroad from the mine to Sainshand.12 Moscow was outraged and, later, puzzled, when in July 2011 Mongolia announced that the winning bid for Tavan Tolgoi would be awarded not just to the Russian Railroads or to its Chinese competitor Shenhua or the American Peabody Energy, but to all three. Yakunin aired his frustration: "The Mongolian side still maneuvers… between us, the Americans, the Chinese, the Japanese, and all the others; the options that are being offered are not causing us great enthusiasm."13 He was later heard complaining that he could not understand how the crawfish, the swan, and the pike (three characters of a Russian fable) would move the cart of Tavan Tolgoi.
The cart, to be sure, remained where it was, because Ulaanbaatar failed to endorse the results of the bid it had announced in July 2011. The Tavan Tolgoi discussions soon ground to a halt, partly because of a sharp decline in the price of coal on the international market. In the meantime, the Mongolian government has decided to construct a railroad directly from Tavan Tolgoi to neighboring China, and has offered Russia a chance to participate as an investor on the condition that Mongolia would own 51 percent of the railroad. These efforts were rebuffed by Yakunin who, in March 2013, sent a letter to Mongolian Prime Minister Norovyn Altankhuyag, complaining about Mongolia having broken the promises it had made to Russia.14 "You know, we are fairly serious people, and we can count our money. It is understandable that such a scenario does not suit us," noted the Russian ambassador to Mongolia. There is reason to be disappointed. After all, in spite of the capital (political, as well as financial) expended on "coming back" to Mongolia since 2000, and even more since 2009, and in spite of the personal commitment of both Putin and Medvedev to upgrading ties with a country that Russia still considers to lie within its immediate sphere of influence, Moscow has not attained even a fraction of the results on which it counted.
The question is why. Part of the answer is Moscow's poor understanding of the political landscape in Mongolia. In recent years, policymakers consistently misread the political situation, placing their bids on the wrong players. Putin's support for Enkhbayar, for instance, proved a costly mistake; Enkhbayar was not only ousted from power but ended up in jail on charges of corruption and embezzlement of funds. His replacement Elbegdorj, whom Putin neglected to meet when he visited Ulaanbaatar in May 2009, proved much less inclined to make compromises with Russia. Prime Minister and former Ambassador in Moscow Sanjaagiin Bayar, who reportedly promised to deliver mining licenses to Russia, resigned in October 2009, ostensibly due to ill health. What Moscow failed to realized was that Bayar had not been speaking for Mongolia but for his party and, specifically, for himself. Lacking friends across Mongolia's political spectrum, the Russians invested themselves heavily into a relationship with just one end of this spectrum, as it turned out, the weaker end. The Mongolian People's Revolutionary Party (MPRP), which Putin's United Russia had seen as its partner, split into two factions, which benefited the more-Western leaning Democratic Party. The People's Party (a successor to MPRP) was unable to dislodge Elbegdorj, who was reelected in July 2013, which guarantees that Russia will be kept at arm's length at least for the following four years.
It is striking to what extent Putin had allowed his personal sympathies and antipathies get in the way of his policymaking. Unlike Barak Obama, who recently honored Elbegdorj by co-hosting with him a civil society conference in New York and Abe Shinzo who, quite without precedent, invited Elbegdorj to a meal at his residence, and to the latter's astonishment, had his wife serve dishes to the Mongolian president in a display of intimacy and respect, Putin has basically ignored Elbegdorj, counting perhaps on better luck with the next Mongolian leader. If so, Putin is badly miscalculating. For Russia's difficulties are not so much a function of Putin's relations with specific politicians, and more a result of a policy consensus in Ulaanbaatar. Since the 1990s, Mongolian political elites have internalized the policy of maneuvering between China, Russia, and the "third neighbor," so that even the idea of being "pro-Russian" in orientation has been discredited. No politician can afford to appear in the role of defender of Moscow's interests, just as no one can plausibly defend a one-sided orientation towards China, or towards the West. Over the last twenty years Ulaanbaatar has perfected the skill of playing their neighbors against one another, something that the Russians—with their mindsets still partially rooted in the colonial past—have been unable to fully grasp.
If Russia has suffered from Mongolia's changing political circumstances, China has taken a hit as well. On the one hand, Mongolia's hopes of economic growth are rooted in recognition that, China, as the main buyer of its resources, has been the engine behind its spectacular economic performance in recent years. On the other hand, hopes are counterbalanced by apprehension of China's penetration of the economy and the long-term economic and political consequences of such penetration for the fiercely independent nation. The potency of the China threat theory in the Mongolian political context has given rise to a number of counterproductive policies, which have taken a toll on Mongolia's international reputation as a reliable investment partner. At the same time, however, these policies have, to some extent, frustrated China's efforts to turn its economic leverage to political advantage.
One characteristic example of China's setbacks in Mongolia has been the experience of Chalco, the Chinese aluminum giant. Like the Russian Railroads, Chalco has long eyed the coal of South Gobi. In July 2011 it signed a contract with Mongolia's state-owned Erdenes Tavan Tolgoi worth US$250 million for supplying coal from the Tavan Tolgoi deposit, which set it up as the key customer at a time when Yakunin and others were just dreaming of gaining access. Separately, in April 2012, Chalco made a takeover bid for South Gobi Resources, then majority owned by the Canadian Ivanoe Mines, whose main asset is a coal field just 45 kilometers on Mongolia's side of the Sino-Mongolian border. Describing negotiations with Chalco to international media, the overly confident South Gobi CEO Alexander Molyneux claimed the deal was basically done and did not even mention the possible reaction of Mongolia's authorities. This was a fatal mistake.
The Mongolian media was outraged. It was one thing that a Canadian company owned an important coal deposit in the country, and quite another to have this sold to a Chinese state-owned company without any consultation with Ulaanbaatar at a time when the same company was also buying coal from Tavan Tolgoi for what many Mongolian pundits believed was a very low price in comparison with the world market price. Fears of real economic loss from China's ability to dictate prices were augmented by nationalist sentiments at having been completely ignored in such a major transaction. "They are insulting us," fumed one editorial.15 "Which is more powerful, Chalco's money or the Mongolian law?" ran another headline.16 The political controversy caused by the proposed takeover happened at the worst possible time for Mongolian policymakers—just ahead of the parliamentary elections of June 2012. "Selling out" to China was just the kind of publicity that could ruin its chances at the polls, the ruling party recognized. As a result, the parliament hurried to pass a law, which required Mongolia's official approval for any acquisition of controlling stakes in the "strategic" sectors of the economy by foreign entities. South Gobi's mining permits were suspended. The company promptly fired Molyneux in a bid to appease public sentiment and restart production. Chalco had to beat retreat.
Chalco suffered another unexpected setback in January 2013 when Erdenes Tavan Tolgoi announced that it would stop delivery of coal to the Chinese because Mongolia did not like the price the Chinese were paying and, moreover, the company was facing transportation hurdles in the absence of a railroad. Prime Minister Altanhuyag suggested that the contract with Chalco should be "cancelled," so that the Mongols could get a better price. The Chinese, who, unlike the Russians, had been usually tight-lipped about their dealings with Ulaanbaatar, openly voiced their frustration, threatening to sue. Ulaanbaatar tried to play Chalco against China's biggest coal producer Shenhua, but the ploy did not work. In the end, Chalco agreed to a small increase in the price of exported coal, and the supplies resumed, proving, perhaps, that there were strict limits to Mongolia's ability to alter the rules of the game that China had set.
The quarrel with Chalco, which coincided with the government's efforts to revisit the 2009 investment agreement with Rio Tinto for the development of Oyu Tolgoi and also overlapped with continued wrangling with the Russians over the railroad, tarnished Mongolia's international reputation, amid accusations of the dangers of "resource nationalism." Mongolia experienced a severe drop in foreign investment and a decline in the rate of economic growth in 2012-2013. To allay these concerns, Parliament passed a new foreign investment law, which promised to offer equal treatment to foreign and domestic investors. Ulaanbaatar has also tried to appear friendlier to Beijing. To this end, in October 2013 Altanhuyag, on an official visit, called on the Chinese businessmen to invest in Mongolia and promised that the legal environment, "changeable" in the past, would now be "stable." In what must have pleased Beijing, he also pledged active participation in Xi Jinping's proposed "Silk Road Economic Belt" and voiced support for Chinese companies' involvement in the construction of Mongolian infrastructure, including railroads, so that Mongolia may connect Europe with China.17
Ironically, Altanhuyag's visit to Beijing coincided with the visit there by the Prime Minister Medvedev. Just as Altanhuyag carried away an agreement to supply China with coal for twenty years, so Medvedev, too, signed a deal to increase supplies of oil to China. In a strange way, then, Mongolia and Russia were indirectly competing for a share of China's favors. This does not bode well for Russia's position. In fact, these relationships are more and more reminiscent of the sort of relationships the Qing Empire had with vassal states before China's encounter with the West.
China first encountered Russia's presence along the line that roughly corresponds to today's northern Mongolian frontier in the 17th century. The Qing were strong back then and easily checked Russian encroachments through the treaties of Nerchinsk (1689) and Khyakhta (1721). But in the late 19th-early 20th centuries, imperial Russia moved aggressively to secure its position in Mongolia at China's expense. China's ouster from Outer Mongolia in 1921 determined the outcome of that competition in Russia's favor, allowing Russia to dominate Mongolia politically, economically, and militarily. There was a brief period in the 1950s, at the height of the Sino-Soviet alliance, when China and the Soviet Union cooperated in Mongolia, investing funds, building the infrastructure (including the railroad), not at all in competition with each other but as partners, helping a junior ally. But the collapse of Sino-Soviet relationship obliged Mongolia to choose friends; its leadership sided with the Soviets.
One-sided reliance on the Soviet Union ended with the Soviet collapse and Russian retrenchment from Asia. In its place, Ulaanbaatar developed a fresh approach to international relations, which emphasizes balancing Russia, China, and the "third neighbor." When Putin attempted to reassert Russia's influence, he found it much more challenging than his Soviet predecessors had. The Russians would have to compete fiercely with other players for Mongolia's loyalties. Russia has performed quite poorly in this competition.
In view of the "strategic partnership" between Moscow and Beijing, both the Russians and the Chinese have been very careful with respect to each other's positions in Mongolia; neither is openly calling the other a "competitor." The Russians, for instance, have been much more vocal in their criticism of US activities in Mongolia, as the MCC railroad funding debacle revealed. Instead, the Sino-Russian competition is more like shadow boxing, with each trying to undercut the other's interests but only indirectly. Unfortunately for Russia, it is almost certain to lose this match, simply because it is in the wrong weight category. The Sino-Russian relationship today is a throwback to Nerchinsk and Kyakhta, and will certainly not change in Russia's favor.
Russia's method for advancing its interests has been to use the leverage afforded by its stake in the trans-Mongolian railroad backed by the belief that Mongolia needs Russia's cooperation in checking China's growing influence. Moscow's strategy backfired, however. First, it created the impression that Russia was holding Mongolia hostage, using its veto over the railway to sabotage projects deemed unsuitable for Russia, even when such obstructionism also retarded Mongolia's economic development. At a time of rising nationalism in Mongolia, Russia's bulldozer tactics certainly hampered its image as a self-proclaimed friend of the Mongolian people. Second, the Russians were unwise to place all their eggs in one basket—that of the defunct MPRP—which fell apart in the morass of Mongolian factional politics, leaving Moscow scrambling to understand who its allies were. And third, Moscow does not seem to fully grasp that Mongolia's "third neighbor" policy and its constant maneuvering between different players are not so much an evil ploy of Western-oriented Mongolian politicians, but a product of elite consensus that transcends party division. Russia, moreover, is not just Mongolia's neighbor—it is an "issue" of domestic importance, an issue that matters at the polls to such an extent that it can often trump all other issues, except for one: China.
Unlike Russia, which has had to pursue an active policy, bestow gifts (in the form of loan forgiveness), and apply naked pressure, just to stay in the game, China has not had to do much of anything, certain as it is that it will ultimately win. In spite of its relatively passive position, it has come to control Mongolia's external trade. Only in recent years has Beijing shown interest in pushing its agenda more forcefully. Its policy towards Mongolia is part and parcel of what China has also tried to accomplish with many other countries, notably in Central and Southeast Asia, in Africa, and in Latin America. Takeover bids, hard-bargained purchase of raw materials through state-owned companies, and like assertiveness are relatively new tools in China's arsenal of economic diplomacy. The fact that it is now more willing than ever to deploy these instruments not just half-the-world away but in Russia's immediate neighborhood, raises further questions about the future of the Russia-Mongolia-China triangle. But Mongolia's ever-closer connection to the Chinese market will not necessarily translate into Beijing's increasing political influence.
China, like Russia, cannot escape being a domestic issue on Mongolia's heated political landscape. This issue can and will be exploited during elections, as exemplified by the Chalco case. "Unchangeable" foreign investment laws are certain to change when political expediency so requires. Previous agreements may be breached or denounced as selling-out by unpatriotic politicians. Mongolia is thus both an object of a geopolitical competition and an important player in its own right, whose motivations are often hard to discern, because they are a product not only of successful strategic triangulation but also of a complicated domestic political environment, which allows Mongolia neither permanent friends nor permanent enemies, nor, indeed, permanent interests, but supports unstable coalitions with unstable policies, as Mongolia's three proverbial neighbors have found out all too often to their frustration and dismay.
Mongolia's foreign trade review, May 2013, .
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MCC's Mongolia Compact Health Project Helped Fight Spread of NCDIs Among Mongolians
by Dr. Adiya Munkhtaivan, MCA Director of Mongolia's Health Project
November 22 (Millennium Challenge Corporation) I travelled to Washington this summer for a weeklong set of meetings with MCC staff and representatives from all of MCC's health-focused projects. The week drew Millennium Challenge Account (MCA) representatives from health projects in Lesotho and MCA representatives from other education and community development projects around the world. It provided a wonderful opportunity for us to discuss the challenges and successes we have seen in our projects. We had each developed our own strategies and solutions to address the similar challenges we faced, so we had a unique opportunity to learn from one another through our shared experiences.
I directed Mongolia's health project, which has spent the past five years fighting the growing spread of non-communicable diseases and injuries (NCDIs) among Mongolians. Our project has had a huge impact on human capital in the health sector. Among its achievements, the project has provided training for more than 18,000 medical and administrative staff from all 21 regions in Mongolia, awarded competitive grants to 219 organizations in the health sector and helped bring the world's top researchers to Mongolia by sponsoring two international NCDI conferences in Ulaanbaatar in 2010 and 2013—the first conferences of this type in the country's history.
At the time of the conference, Mongolia's health project was close to completion—but because several other countries' projects were just beginning, I was able to share ideas and experiences that they could integrate into their projects from the start. The health project was successfully completed on September 17, 2013.
One of the things I emphasized during the meetings was how well partnerships worked in our project. As part of the project, Merck, an American pharmaceuticals company, donated 14,000 vaccines for human papillomavirus (HPV) to help protect Mongolians against cervical cancer. The partnership helped open doors for further investment in health from the private sector in Mongolia, including by Merck itself.
Through a partnership with The George Washington University, the project supported 35 health care workers in a masters of public gealth (MPH) program in Ulaanbaatar, Mongolia's capital. The MPH program incorporated field practicums in which the students focused on a project in their local health clinic. These 35 MPH graduates will serve as a new cohort of public health and NCDI advocates in Mongolia.
The collaboration and conversations we had during the week were vital. The ideas and strategies born in meetings like this help strengthen our knowledge as health project practitioners, as well as our ability to effectively implement projects to benefit the maximum number of people possible—which is a goal we all strive toward.
State Hospital No.3 opens heart attack and cerebral hemorrhage treatment center with WHO, MCA assistance
November 25 (UB Post) The Ministry of Health, the World Health Organization (WHO), and Millennium Challenge Account in Mongolia have jointly completed the "Heart Attack and Cerebral Hemorrhage Project 2010-2013" at State Hospital No.3 recently. As part of the project, the hospital has acquired a treatment center for heart attacks and cerebral hemorrhage that meets international standards.
Director of State Hospital No.3 Ts.Tumur-Ochir said, "It is the first time that Mongolia's health sector is opening a center specialized in the treatment of specific illnesses. The center will act as a model for other hospitals and set a new benchmark. Staff of the center were appointed from State Hospital No.3, but we will hire other experts and doctors next year. Patients suffering from heart attack and cerebral hemorrhage for extended periods of time have started taking treatment at the center. We are providing recovery treatments for those patients."
The center is equipped with 124 pieces of diagnostic, treatment, recurrence prevention, and recovery equipment, 40 beds and it offers 24/7 emergency services. The doctors and staff that are operating the center were trained to use the equipment. The cost of the equipment totaled 14 billion MNT, which was provided by the state.
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