Mongolia Business Blog » BCM

Democracy, Railroad, & Jim Dwyer of Business Council of Mongolia

mergen — Sat, 12 Dec 2009 13:05:44 +0000

MONGOLIA BUSINESS PODCAST #4 HIGHLIGHTS

20th anniversary of Mongolian democracy, railroad, & BCM Executive Director Jim Dwyer

December 11, 2009: December 10th is a very important day in Mongolian history. On this date, Mongolians gathered at the square and peacefully protested for democracy of Mongolia. It was one of the most peaceful yet successful demonstrations in history… (Download the podcast here: Mongolia Business podcast)

There is a dispute over the railroad between the private sector and Mr. Battulga, the Minister of Road and Transportation. Additionally, there is a need for a railroad in South Gobi. Current transportation methods do not meet the needs to transport the mining resources. Leighton LLC has just been contracted to build the railroad, separately from the mining contract…
Jim Dwyer, Executive Director of Business Council of Mongolia (BCM), has been in Mongolia for a total of 8 years. The membership of BCM has far outpaced expectations. Membership is now over 140. The needs of the business community, both foreign and Mongolian, are the same. BCM represents business community as a whole. Half of the 14 member board are represented by Mongolian companies…

Nuclear Energy and Uranium in Mongolia

mergen — Fri, 11 Dec 2009 05:46:31 +0000

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.

Rather than spit out their presentations verbatim, I will highlight points that I found interesting.

Please note these highlights are written NOT written verbatim; they are written in my own words and, in some cases, there may be quite big errors. Personally, I did not even anticipate that I might post some highlights online for view of the public at large. Please bear with me.

Mr. Eric de SEZE, General Director & CEO of Areva Mongolia, “Nuclear Energy and Uranium”

97-98% of enriched uranium can be recycled.
Uranium is typically found at 1-2.5% and enriched is considered at 3%.
Everything has radiation, including the water we drink. The question is the level or radiation. Radiation experienced by an average person is 2.4 mSv (per year?) while a radiation experienced by a person living at 1,500m altitude is 3.6 mSv
On Uranium pricing, the media tends to focus on the volatile spot price of Uranium, but the industry insiders and traders focus on contract pricing. Example pricing showed spot pricing at $42.50/lb and contract pricing at $65/lb.
Dornod & Dulaan Uul uranium reserve could propel Mongolia to #4 in the world (in term s of uranium mining?).
Rio Tinto mines 18% of Uranium in the world
Mongolia’s “almost neighbor“ Kazakhstan could become world’s #1 uranium mining country in either 2009 or 2010
There are three basic mining methods: rock 65%, sand 25%, by product 10%
Although Mongolia has two or three large uranium mining deposits, the methods needed will be at least two completely different methods. The mining north will be the more standard “rock” mining, whereas the deposits in Gobi or to the South, will require “sand” mining techniques, which is completely different in exploration and mining methods from the former.
World reserve for uranium mining is 4.5M tU, which is enough to use for 70 years. However, this number stays roughly the same year after year because more are found as more are used.
Mongolia is officially #14 in determined uranium reserve, which is basically the same as India, a country which has been doing uranium mining and using nuclear energy for decades now
Mongolia’s reserve is roughly twice that of China and 1/3 that of Russia
Uranium is two times heavier than lead. 1 Cubic Liter of Uranium will weigh 19+ times more than water… almost 20 kilos per cubic liter!

Current Macro-Economics and Mongolia’s Banking Sector

mergen — Fri, 11 Dec 2009 05:43:38 +0000

Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia, “Views on Current Macro-Economics and Mongolia’s Banking Sector” “PART ONE 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. Enhhuyag, 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.

Rather than spit out their presentations verbatim, I will highlight points that I found interesting.

Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia, “Views on Current Macro-Economics and Mongolia’s Banking Sector”

Inflation in 2008, 2009 YTD, 2009 Estim, and 2010 Estim are as follows: 34%, 2%, 3.5%, and 6%
Looking into questionable Mongol Gazar loans by Banks
Savings Bank and Post Bank merger evaluation pending (this was originally proposed as a three-way bank merger along with Zoos Bank)
Economic crisis revealed deficiencies in banking: over lending, fraudulent activities, and obscure ownership
Golomt Bank and Trade and Development Bank of Mongolia are in compliance with Central Bank regulations. Khan Bank is currently under evaluation, but so far its portfolio is looking OK.
These three large banks account for 70-75% of deposits and/or lending activities in Mongolia
There are, in total, 16 banks in Mongolia. This is far too many. We need fewer but stronger banks. As such, we hope this trend of consolidation in the banking industry will continue.
2010 budget spending as per Ministry of Finance is looking to remain high, especially in the first half of the year. As such, Central Bank of Mongolia may need to tighten its monetary policy.
When alluding to reasons for some of the banking/lending woes, Mr. Enhhuyag mentioned Goldman Sachs for its lending of 187 billion tugrugs (roughly 128 million USD) into the Mongolian economy/banking/mining (? Sorry, this was not quite real clear, but the focus was on the amount of money loaned by Goldman).
When addressing questions for expected GDP for 2009, Mr. Enhhuyag mentioned that essentially Mongolian economy is a 6 billion tugrug (meant USD, I believe) economy.