Friday, August 29, 2008

Hopes rise for huge Oyu Tolgoi copper/gold mine agreement ratification as Mongolian Pariament sworn in

After five deaths in post-election riots and a nearly two-month political boycott, Mongolia finally gets its parliamentary house in order. Next on the horizon—forming a new government.

Author: Dorothy Kosich
Posted: Friday , 29 Aug 2008

The eternal flame of hope burned more brightly for miners and explorers as Mongolia's Parliament resumed its first session since a July 23rd walkout by the main opposition party.

Legislators were sworn in Thursday as the new parliament hopes to quickly elect a new chairman who will form a new Mongolian government. The original swearing-in day was halted after opposition Democrats staged a walkout.

Rioting after Mongolia's disputed June 29 election left five people dead, as thousands of people took to the streets to protest against alleged election fraud. The election gave the ruling Mongolian People's Revolutionary Party (MPRP) a comfortable margin of victory with 47 of the 76 seats in parliament, while the Democratic Party won 26.

Democratic Party Leader Tsakhiagiin Elbegdrj originally vowed to not allow his party to return to parliament until a number of demands had been met. The violence and squabbling had convinced a number of foreign analysts that Mongolian Government mine ownership is not a good idea.

The biggest hostage of the stalemate was the hoped for ratification of the Oyu Tolgoi gold and copper project investment agreement between the Mongolian Government and JV partners Rio Tinto and Ivanhoe Mines. Rio and Ivanhoe have devoted four years to seeking government approval to develop the massive deposit. The Mongolian Government has sought amendments that would give the country a higher stake in the $3 billion project.

Meanwhile, the U.S. State Department has noted "a creeping expropriation" on the part of both Mongolia's central and provincial governments

Other mining and exploration projects are expected to benefit from the announcement that the Mongolian Parliament is finally back in session. In an interview with Bloomberg Thursday, Eurasia Capital Management said it planned to increase the world's first Mongolian-focused fund to $100 million to take advantage of the economic growth generated by the nation's mining sector.

Alisher Djumanov, managing partner of the Singapore-based fund, said he believes that the spillover effect from the mining sector will be significant. "We're investing in companies that are expected to growth significantly on the back of this strong economic growth." Among the hedge fund's investments in companies with projects in Mongolia listed outside the country are Ivanhoe Mines and Centerra Gold.

The World Bank estimated that mining accounted for about 20% of real GDP, 56% of gross industrial output, 69% of exports, and 36% of revenue for Mongolia in 2007.

Successful future mining sector development in Mongolia "will to a large extent depend on the government's ability to establish and maintain an effective regulatory and fiscal framework, prudently and transparently manage its mineral wealth to the benefit of all its population and ensure sound environmental and social performance of the sector," according to the World Bank.

Monday, August 18, 2008

Polo Resources finds coal at Hud site, Mongolia

Aug 18 (Reuters) - Natural resources investment and mining company Polo Resources Ltd (3PO.L: Quote, Profile, Research, Stock Buzz) on Monday said it intersected coal seams from the initial four diamond drill holes completed on its Hud Coal Project in South Gobi in Mongolia.

The two-month drill programme is ongoing and a total of 15, 200-metre deep drill holes are planned in five sections, each 400 metres apart, the company said.

The Hud project is one of 11 coal occurrences that Polo Resources has acquired in the South Gobi coal basin, with the combined licence area covering a total of 6,834 square kilometres in the region, it said.

Sunday, August 17, 2008

BCM Mongolia NewsWire Highlights: Syndicated Loans, Trouble at Home & Fun in Beijing

EBRD syndicated loan to MCS, first in Mongolia; Baganuur Mines to expand development operations; USD 100 million Kazakh-Mongolian investment fund being set up; Take-over bid circular and QGX directors' circular mailed; Ivanhoe explains delay on Oyu Tolgoi; French expertise for coal liquefaction; Inspection agency halts mining at Tavan Tolgoi; Leighton looks to expand into Mongolia, Siberia.

Monetary policy implementation by Central Bank; Budget surplus comes down from last year; GDP rises 13.3 per cent; Unemployment up as new jobs are created; More freight makes up for fewer passengers; Costs rise along with petrol, diesel prices; More money for Mongolia Development Fund.

Parliament tries twice to meet, and fails; Leaders mix business with pleasure in Beijing; MPRP shows up inconsistency in DP stand; Polar Star for Japanese Ambassador; Embassy in Canberra soon; Ruling party continues to be homeless; People prefer stocks to cash in “wealth share"

For more business news and membership information on BCM, visit

There were two attempts to hold a session of the new Parliament on August 14 and both failed. The first meeting was called at 11.30 am. All MPRP members were present, and so were S.Oyun from the Civil Will party, and the lone Independent, Z.Altai. The two DP leaders who are now supporting an early swearing in, E.Bat-Uul and B.Batbayar, were also seen. With the rest of the DP members staying away, however, there was no quorum and it was decided to meet again at 3 pm. This also did not have enough members and so could not be held. A resolution seems likely in the next few days. Hectic consultations are pointing to some sort of a coalition being worked out. The MPRP has two factions, one led by the present Prime Minister, S.Bayar, and the other by his predecessor in office, M.Enkhbold. A rough count gives both leaders the support of an equal number of 23 MPs. Both factions would like to dominate the next government, formed either by the MPRP or by the party with others’ support. The winner at the stakes might well be the one who succeeds in getting the DP’s support. There is division within that party also on which faction to support and on what terms. One group is led by E.Bat-Uul and B.Batbayar, who have come out in open favor of new MPs taking the oath without any further delay. Meanwhile the DP Executive Board has decided to discuss the issue of expelling E.Bat-Uul and B.Batbayar from the party.share”.

As its first syndicated loan in Mongolia the EBRD is providing a US $13 million credit to MCS Coca-Cola LLC, a privately-owned local soft-drinks producer, to help it raise production, expand its product range, and most importantly, improve its wastewater treatment and recycling processes. MCS will use the funds to construct a greenfield bottling plant to increase its production capacity. The new wastewater treatment and recycling plant, to be used by a neighboring MCS-APB brewery, will allow the company to recycle water up to five times more than now to discharge to the municipal sewage system (once treated).
MCS, which holds the franchise for Coca-Cola products in Mongolia, is one of the largest private companies in the country. According to the President of MCS Holding LLC, this expansion project partially funded with EBRD support will help take the company’s business to a different level and promote local manufacturing, employment, and environment-friendly production.\\

The Baganuur Mines Company has decided to enlarge its development area to twice its present extent. The 30-year-old company currently spends Tg 40 billion annually on development operations, and in recent years it has been facing financial challenges in conducting exploration and development work.
Coal from Baganuur’s mines meets 40% of the entire demand of Mongolia. More important, the mines supply 60% of the demand in Ulaanbaatar and thus their coal is indispensable for generating electricity and heating in the capital city

State leaders of Mongolia, invited to watch the opening ceremonies of the Olympic Games, took advantage of their visit to hold important talks. President N.Enkhbayar has met with Chinese President Hu Jintao to suggest several new areas of cooperation. These include projects like building a second railway line connecting the two capitals, building a new railway in north Mongolia as part of the North East Asia Project, developing the capacity of Zamyn Uud to handle trade, increasing oil exploration efforts, building a refinery, particularly for the petroleum that Mongolia will be importing from China, and building a power station in south Mongolia near the Shivee Ovoo coalmines.

President Hu promised careful consideration of all the proposals, and suggested setting up a mechanism to work on food safety and security as soon as possible, renewing the present general agreement on cooperation in several sectors, and working on a new agreement on labor.
Ulaanbaatar Mayor T.Bilegt, also in Beijing, met with officials of the Chinese Road and Bridge Construction Corporation, which is listed among the world’s 500 biggest corporations. The company has expressed interest in road building jobs in Mongolia and has conducted related surveys. It also presented proposals to the Mayor about solving the problems of Ulaanbaatar road networks.

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Thursday, August 14, 2008

Leighton to Sell A$700 Million Shares to Expand

Aug. 14 (Bloomberg) -- Leighton Holdings Ltd., Australia's largest engineering and construction company, plans to raise A$700 million ($609 million) selling shares to expand contract mining in India, Indonesia and Australia.

Leighton, which gets about a quarter of its sales operating mines for companies such as BHP Billiton Ltd., will sell stock to shareholders at A$35.35 apiece, 17 percent less than its close yesterday, the Sydney-based company said in a statement.

Chief Executive Officer Wal King, 64, forecast profit will rise at least 15 percent this year as a resources boom continues into the next decade. Demand for coal and iron ore sent prices to records this year, encouraging investment in new mines in Asia.

``The upside is very strong indeed,'' said Peter Russell, head of research at brokerage Intersuisse Ltd. who rates the stock a ``buy''. ``Demand for commodities is not suddenly going to decrease.''

Leighton, halted from trading pending the sale, fell 5.3 percent to A$42.36 yesterday. The stock has fallen 31 percent this year compared with a 21 percent drop in the benchmark index.

Leighton said it will use the money to invest in plant and equipment in Indonesia, Australia and India. The share sale will be the sixth-largest in Australia this year, according to data compiled by Bloomberg.

Indonesia is the second biggest coal exporter after Australia. India is the No. 3 iron ore exporter behind Brazil and Australia.

Strong Demand

``Strong demand for global commodities, particularly iron ore and coal, continues to support contract mining activity and resources-related opportunities for the group,'' the company said today in the statement to the exchange.

Mining and resources generated 25 percent of Leighton's sales in the year ended June 30, behind engineering and infrastructure's 42 percent share.

Demand for infrastructure projects in Australia helped underpin a 35 percent gain in 2008 full-year net income to a record A$607.8 million, Leighton said today in a separate statement. The result compared with the A$613.4 million median estimate of five analysts surveyed by Bloomberg News before today.

Sales rose 22 percent to A$14.5 billion in 2008, it said. Sales in 2009 are expected to rise 15 percent and more than 10 percent the following year, Leighton said today.

ABN, Macquarie

The share sale is being managed by ABN Amro Holding NV and Macquarie Group Ltd. Funds raised from the share sale will also be used to buy back debt, Leighton said.

``Now is a good time to raise equities rather than debt,'' Intersuisse's Russell said.

Leighton's work in hand was A$30.3 billion as at June 30, compared with A$21.1 billion a year earlier, the company said.

The company, seeking to expand into Mongolia and Siberia, has proposed establishing a joint venture with Oleg Deripaska, Russia's richest man, through his Basic Element company, Leighton's King said today on a conference call with reporters.

``Our proposed activities with Basic Element falls into two categories of activities,'' King said. ``Mining activities in particular in Mongolia and eastern Siberia and activities outside those regions.''

Wednesday, August 13, 2008


Миний Монголын салхи хүний нутагт салхилах нь үгүй
Миний Монголын морьд хүний нутагт давхих нь үгүй
Миний Монголын зэрэглээ хүний нутагт дуниартах нь үгүй
Миний Монголын юм бүхэн хүний нутагт байх нь үгүй
Хүмүүн бидэнд эрдэнэ гэж байдаг бол
Хөхрөн униартах уулст МОНГОЛ эх орон гэж хэлье
Хүмүүн бидэнд эрхэмлэж явах зүйл гэж байдаг бол
Хөх толбот морьтон заяат МОНГОЛ угсаатан гэж хэлье...

Thursday, August 7, 2008

China to cut diesel imports as domestic supplies thrive

CHINA, the world's second-largest energy consumer, will cut diesel imports this month and next after domestic supplies improved, insiders said.

China International United Petroleum & Chemical Corp, the nation's largest oil trader, will halt, purchases in August and September, an insider told Bloomberg News. China National United Oil Corp will reduce imports this month by a "big margin" from July after it increased purchases in the past two months, another insider said.

China raised gasoline and diesel prices by about 18 percent on June 20, which encouraged refiners to increase fuel supplies and reduce inventories. State oil companies had stepped up imports to end shortages and build stockpiles before the Olympics Games.

"The improved Chinese supply may also be attributed to refinery upgrades which boosted yields of diesel," Ong Eng Tong, a Singapore-based consultant with Mabanaft International GmbH, said yesterday. "The move will increase diesel supply in the Far East region and weaken regional prices."

Unipec, as China International is known, more than halved diesel imports to 200,000 tons last month from June after the nationwide fuel-price increase. Chinaoil, as China National is known, bought a similar amount in July from June's 400,000 tons, an insider said. Chinaoil, the nation's second-largest oil trader, has not decided on the volume of September imports, the insider said.

China increased diesel purchases to the highest in at least five years in June to meet rising demand during the Olympics Games and for reconstruction after the Sichuan earthquake in May. Diesel imports rose to 960,000 tons, the Customs General Administration of China said on July 15.

Chinese oil refiners boosted crude processing to the highest in at least 17 months to 29.61 million tons in June.

China controls the cost of diesel, gasoline and jet fuel to limit their impact on inflation.


Tuesday, August 5, 2008

Ivanhoe says to list in Australia on Wednesday

KALGOORLIE, Australia, Aug 5 (Reuters) - Canada's Ivanhoe Mines Ltd (IVN.TO: Quote, Profile, Research, Stock Buzz) will list its Australian division on the Australian stock exchange on Wednesday, Ivanhoe's executive chairman, Robert Friedland said on Tuesday.

An initial public offer of 62.5 million shares priced at A$2 each closed on Aug. 1 oversubscribed, raising A$125 million ($116 million), Friedland said during an address at an outback mining conference.

Friedland first suggested the idea of an Australian listing two years ago during the same conference.

The new company will focus on prospecting for iron oxide, copper, gold and uranium in eastern Australia's Cloncurry mining district, he said.

Ivanhoe, which is 10-percent owned by Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz)(RIO.AX: Quote, Profile, Research, Stock Buzz), has been trying to nail down an investment agreement in order to start construction of the massive Oyu Tolgoi mine in Mongolia, considered one of the world's largest copper and gold deposits.

Ivanhoe already mines coal in Mongolia through its 80 percent-owned SouthGobi Energy group.

In Australia, Ivanhoe holds 100 percent of almost 2,460 square kilometres (950 square miles) of prospecting ground and a further 560 square km in partnership with Exco Resources Ltd.

Friedland is best known for his discovery of a large nickel deposit at Voisey's Bay in Newfoundland, Canada, which he sold for C$4.3 billion in 1996 to Inco, now part of Brazil's Vale