Archive for ‘Mining’

Dalanzadgad Expected to Have Highest GDP Per Capita

By , 21 April, 2011, No Comment

Dalanzadgad is the capital of the South Gobi province and fastest growing provincial capital in Mongolia.

Our Firm (Eurasia Capital) estimates that the population of Dalanzadgad will quadruple in the next five years and by 2015 this town will enjoy the highest GDP per capita in Mongolia. South Gobi is home to two crown jewels of Mongolia: Tavan Tolgoi, the world’s largest untapped coking coal deposit and Oyu Tolgoi, the world’s largest undeveloped copper & gold mine.  We anticipate Dalanzadgad becoming a regional center for dozens of mining companies and hundreds of firms in multi-billion dollar mining supply chain.

FYI, Erdenet, the second largest city in Mongolia has estimated US$6,400 GDP per capita, the highest in Mongolia.  Erdenet is the capital of the Orkhon province, founded in 1975 as a new industrial center after discovery of the world class Erdenet copper mine in 1974. Erdenet is home to Erdenet Mining Corp., Mongolia’s largest company, biggest taxpayer and exporter, and accounts for 13% of the country’s GDP.

Source: Eurasia Capital

Hong Kong Listed Companies Rush to Mongolia

By , 22 July, 2010, No Comment

Hong Kong-listed Companies as Major Acquirers of Resource Assets in Mongolia. Over the last 12 months, Mongolia has become an attractive investment destination for the companies listed on the Hong Kong Stock Exchange (HKEx). Attracted by the country’s huge mineral resources, the HKEx-listed companies have become the biggest acquirers of Mongolia resource assets since the second half of 2009 ($966mn worth of M&A deals or over 90% of total). 

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Mongolia’s 2010 State Budget and Talks of Revision Amid Inflation Concerns

By , 23 May, 2010, No Comment

Sensitive financial issues were discussed at a “secret” meeting on Monday attended by members of the Standing Committee on the Economy, and representatives of the International Monetary Fund, the MongolBank, and the National Statistics Office. They talked mainly about the budget deficit and the threat of inflation.

The Finance Ministry has proposed revisions to the 2010 budget following the increase in the price of copper and gold. If this has meant MNT 364.2 billion in extra revenue, the decision to increase the salary of civil servants by 30 percent, and reinstatement of the child allowance will lead to more expenses. Some new public projects have also been proposed. Taken together, these will take the budget deficit beyond the proposed 5% of GDP as stipulated by the IMF.

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Mongolia Mining Policy Report Card – Mongolia Ranked Near Congo (DRC), Zimbabwe, and Venezuela

By , 13 May, 2010, No Comment

Few days ago, we posted an article on Fraser Institute’s Mining Survey as obtained from the NAMBC newsletter:  Mongolia Drops in Annual Fraser Institute Mining Survey.  In this post, we will attempt to break down what it exactly means.

Mongolia Mongolia’s ranking dropped in the Fraser Institute’s Mining Survey – what exactly does it mean?

The “drop in Mongolia’s ranking” was in the “Policy potential index”, which aims to be “a ‘report card’ to governments on the attractiveness of their mining policies”.  Please see image below.

Fraser Institute Mining Policy Potential 2009/2010 showing Mongolia ranked near bottom

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Mongolia Drops in Annual Fraser Institute Mining Survey

By , 9 May, 2010, No Comment

Mongolia has dropped from 55th place to 67th place out of 72 jurisdictions in the annual Survey of Mining Companies 2009/2010, released on April 15 by the Fraser Institute, one of Canada’s leading public policy think-tanks.

This is Mongolia’s lowest ranking since 2006.  Mining industry executives rate Quebec as the world’s most attractive jurisdiction for mineral exploration and development for the third straight year

In the “policy potential index,” Mongolia was in the bottom 10 of 72 jurisdictions rated. Countries rated lower than Mongolia were the Congo (DRC), Zimbabwe, the Philippines, Ecuador and Venezuela.  In 2008/2009, Mongolia ranked 55th out of 71, in 2007, 61st of 68, and in 2006-2007, 62nd of 65.  California was also in the bottom 10 this year, ranked below Indonesia.

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Khan Resources Uranium Mining & Exploration Licences Invalidated

By , 16 April, 2010, 2 Comments

Below is Press Release from Khan Resources.  Two related posts on our Mongolia Business Blog (MBB) website are Dornod Uranium, Khan Resources, ARMZ, Russia, & Mongolia and Khan Rebuts All Charges Based on “Inaccurate Information”.  On the day of the press release, the stock price of Khan Resources on the Toronto Stock Exchange dropped from 85 cents to 67 cents and then to 57 cents (33% drop).

TORONTO, ONTARIO, April  13, 2010 – Khan Resources Inc. (TSX:KRI) (“Khan”) announced today that its 58%-owned Mongolian joint venture subsidiary, Central Asian Uranium Company, LLC (“CAUC”) and its 100%-owned Mongolian subsidiary, Khan Resources LLC (“Khan Mongolia”) have received notice from  the Mongolian Nuclear Energy Agency (the “NEA”) stating that CAUC’s mining license 237A (the “Mining License”) and Khan Mongolia’s exploration license 9282X (the “Exploration License”) have been invalidated. The invalidations purport to be effective as of October 8, 2009 and purport to be based on a failure by CAUC and Khan to address violations of Mongolian law stemming from a July 2009 report issued by an inspection team appointed by the Mongolian State Specialized Inspection Agency (the “SSIA”) in respect of the Mining License.

Khan continues to believe that it and its Mongolian subsidiaries have always operated and continue to operate in compliance with all applicable Mongolian laws, including the Nuclear Energy Law, and there is no legal basis for the NEA invalidation notices.  Khan intends to challenge the NEA’s actions through all legally available means.  In Khan’s view, the actions by the NEA are a clear violation of Khan’s rights and interests under the laws and Constitution of Mongolia, and are in breach of Mongolia’s obligations under international law.  Khan and its legal counsel intend to vigorously defend its rights and interests, and to pursue all available rights and remedies in the Canadian and Mongolian courts and, if necessary, in international arbitration.

Background

Khan believes that in order to understand the  latest action by the NEA, it is necessary to understand the background and recent history.

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Dornod Uranium, Khan Resources, ARMZ, Russia, & Mongolia

By , 5 April, 2010, 1 Comment

Editor’s note: I found this article online today.  It gives an overview of events involving the Dornod Uranium mines.  The players include Khan Resources, ARMZ, Russian Government, and Mongolian Government…

Despite the potentially huge profits, it can be difficult to do business in a former communist country — particularly one that is in Asia. Western companies have learned this the hard way.

One current example is in Mongolia, involving a Canadian company, Khan Resources, and a rapid chain of events that put the company on the verge of losing vast amounts of money and essentially being kicked out of Mongolia. In the end, however, Khan Resources would have the last say.

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Khan Rebuts All Charges Based on “Inaccurate Information”

By , 22 March, 2010, No Comment

In an open letter to MP Z. Enkhbold, Khan Resources has clarified its point of view about certain conclusions and recommendations recently made by the working group led by him after its visit to Dornod uranium district last summer.

The company notes that the license it holds was not included in the list of licenses whose legality was sought to be investigated. Reiterating that the company has been fully cooperating with Government officials, Khan says it would be pleased to provide all relevant documents to the working group if asked to do so. Expressing confidence that Khan has fulfilled all its obligations towards Central Asia Uranium Corporation (CAUC), the company says it is difficult to understand why only it should be investigated when there are two other partners in the joint venture. “It is most unfortunate that inaccurate information has been delivered…through recent official and unofficial sources that suggests that only Khan may have been in breach of the law,” the letter says.

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Environmentalists Urge Mongolian State Authorities to Probe “Illegal” Activities of Petro-China

By , 12 March, 2010, 1 Comment

A coalition of environmental protection movements in the country has sent a report to the President, the Parliament Speaker, the Prime Minister, and the Ministers of Minerals and Energy, Finance, and Labor and Social Welfare detailing “illegal activities” by Petro-China Dachin Tamsag and demanded an inquiry into how the company has been allowed to violate Mongolian laws, pollute the environment, and harm local communities in several ways.

Petro-China has been working in three oil fields in Dornod aimag since 2005 on the basis of a product sharing agreement with the Government. Petro-China has refused to make available to the coalition a copy of the agreement, as also of its performance and monitoring reports, even though the NGOs have a constitutional right to the information.  Petro-China says these are “company secrets that cannot be disclosed to a third party”.

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Goldman Sachs May File Case on Olon Ovoot

By , 12 March, 2010, No Comment

Goldman Sachs is believed to have filed a case against Mongolia in an international arbitration court in matters relating to Mongol Gazar and the Olon Ovoot mines.  This news comes in the wake of unconfirmed but strong reports that the Mongolian Government has lost the case against the Russian-owned Altan Dornod.

Mr. B.Lhagvasuren, director of the Inspection Department at the Central Bank, has denied any information about Goldman Sachs filing any case
Mr. Ts. Myanganbayar, a business magnate, mortgaged the Olon Ovoot gold mine license to several banks and to Goldman Sachs to borrow a total of MNT 210 billion. Of this, Zoos Bank, now known as State Bank, gave him MNT 60 billion, Anod MNT 30 billion, and Goldman Sachs MNT 15 billion.

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Nuclear Energy and Uranium in Mongolia

By , 11 December, 2009, 2 Comments

Mr. Eric de SEZE, General Director & CEO of Areva Mongolia, “Nuclear Energy and Uranium” “PART TWO of BCM Meeting Highlights”

On Monday, December 7, 2009, Business Council of Mongolia (BCM) held its last meeting of the year.  Guest speakers Mr. B. Enhuyag, First Deputy Governor of Bank of Mongolia and Mr. Eric de SEZE, General Director & CEO of Areva Mongolia discussed “Views on Current Macro-Economics and Mongolia’s Banking Sector” and “Nuclear Energy and Uranium”, respectively.

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James Passin Bullish on Mongolian Stock Market

By , 26 November, 2009, 2 Comments

Today, while going through some articles on Mongolia, I ran across an article that happened to cover the Mongolian stock market by a stock market guru named James Passin.  It was a lucky find as the article mostly talked about Berrylium.  Anyway, please read on.

As you will find, James is very bullish on the local Mongolian stock market.

Source:

Mongolian Stock Market Overview

TER: Any other regional international plays that you can discuss with us?

JP: Ivanhoe Mines Ltd. (NYSE:IVN, TSX:IVN) , the Canadian exploration company, finally executed an agreement with the Mongolian government with respect to the development of Oyu Tolgoi, the world’s largest undeveloped copper mine. This is a massive mine that will generate $5 billion of revenue per year for over 50 years. While this is a positive development of Ivanhoe, a stock that we’ve been trading from the long side all year, it will be much bigger story for the Mongolian stock market.

Mongolia GDP is only about $5 billion, so Oyu Tolgoi, or OT as the mine is called, will transform the prospects for employment and per capita GDP growth. A great wall of domestic liquidity will support the local stock market, creating a new bull market which will last for decades. The local stock market currently has depressed valuation and almost zero liquidity. Mongolia has structural similarities to other emerging markets that started out with very low market capitalizations, such Vietnam or the smaller Gulf states. There are 24 mineral projects that have been deemed strategic by the Mongolian government and that represent potential sources of commodity exports. The Ivanhoe deal marks the beginning of the Mongolian mining boom and I think the most leveraged long-term way to play this mining boom is through the local stock market.

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Ivanhoe Mines Financial Results and Review of Operations (Third Quarter of 2009)

By , 15 November, 2009, 2 Comments
On November 13, 2009, the following article was released on CNN Money.   It contains highlights from Ivanhoe Mines’ financial tesults and review of operations.  The full PDF can be downloaded from the Ivanhoe Mines website.

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Ivanhoe Mines Ltd. (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) today announced its results for the quarter ended September 30, 2009. All figures are in US dollars, unless otherwise stated.

HIGHLIGHTS DURING THE QUARTER AND SUBSEQUENT WEEKS

– On October 6, Ivanhoe Mines and its strategic partner, Rio Tinto, joined with the Government of Mongolia in a state ceremony for the signing of an Investment Agreement for the Oyu Tolgoi copper-gold project. The Investment Agreement establishes a stable legal, fiscal and regulatory environment for the construction and operation of the Oyu Tolgoi mining complex.

– On October 27, Ivanhoe received $388 million from Rio Tinto, increasing Rio Tinto’s equity ownership in Ivanhoe Mines to 19.7%. The additional funds will be used to help build and commission the open-pit mine and to advance development of the underground block-cave mine at Ivanhoe’s Oyu Tolgoi copper-gold project in Mongolia.

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Nuclear Energy Law Quietly Passed

By , 22 October, 2009, 1 Comment

After 18 months of negotiations and wrangling over a nuclear energy law, the Mongolia State Ikh Khural (Parliament) quietly passed the Nuclear Energy Law (NEL) in July of this year.  During a recent public forum on the NEL sponsored by the Mongolian National Mining Association several members of Parliament admitted the law had been proposed and passed in less than two weeks during July.  This, of course, begs the question of why a law that regulates such an important and potentially dangerous sector was passed so quickly and presumably without much input from other stakeholders in the nuclear sector in Mongolia.

Why a law that regulates such an important and potentially dangerous sector was passed so quickly…

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