Business: Euromoney forum exudes Mongolian goodwill and investor optimism; Khan Bank to issue foreign currency bonds; Western Prospector re-urges shareholders to accept Tinpo offer; Canadian miners see bright future in Mongolia; Khan Resources submits uranium reserve calculation; Wagner Asia holds contest for mining equipment operators; Reminder to pay mining license fees; Questions raised about how MIAT spends money.
Economy: Importers unite to buy oil from cheaper sources; Policy rate raised; Power stations waiting for coal; Agency details wasteful expenses by Ministries; Rise in State investment in construction; Bus companies to lower fares, or lose compensation.
Politics: Parliament approves Bayar as Prime Minister; MPRP to have 60% of positions, DP 40%; All 7 Standing Committees get new head; DP accepts coalition offer after stormy debate; Mongolia monitoring Georgia developments, Russian Ambassador told; Bayar addresses CIS economic forum; 601 corruption probes last year; Survey ranks most bureaucratic services; Canada, Australia send new Ambassadors.
EUROMONEY FORUM EXUDES MONGOLIAN GOODWILL AND INVESTOR OPTIMISM
The two-day Euromoney Mongolia Investment Forum at the State Palace, co-hosted by FIFTA, ended on Thursday amidst great optimism. On Wednesday morning, the organizers said some 400 delegates from 25 countries had registered for the conference that aimed at helping them access investment opportunities in one of the most promising pastures among Asias emerging economies.
Tony Shale of Euromoney set the tone when he referred in his welcome address to the pulling power of Mongolias vibrant and fast-growing economy, and to how investors look covetously at its annual 10% growth and expanding middle class.
Mongolian speakers, including the mornings keynote speaker, Deputy Prime Minister M.Enkhbold, and B.Namkhaijantsan, Economic Policy Adviser to the Mongolian President, agreed. They detailed the several advantages of investing in Mongolia and the various measures the Government had adopted in the recent past to reinforce investor confidence. Increased and continued foreign direct investment was essential for the success of the present Comprehensive Development Policy that has a triple-15 set of priorities: it will be in force for 15 years until 2021, aims at a 15% GDP growth, and expects a per capita average income of US$15,000 per year. Our doors are open to you,Mr. Enkhbold said graciously, but we want only serious, reliable and ecologically responsible partners to help achieve growth that will ensure sustainable economic and social development, he warned in the same breath.
Investors were happy and eager to agree. Bankers reported a very healthy growth in grassroots economic activity despite runaway inflation, although foreign analysts and a Mongol bank official expressed views that national macro-economic policies or populist largesse was only partly to blame. Recent political developments clearly underlined an awareness of the need for stability and, imponderables notwithstanding, regular investment flow would be imperative and welcome. With upheavals unlikely, the mood at the forum was upbeat.
Participants had a busy morning on the second day, with three panel discussions to attend. Arguably the most important of these was on the outlook for the mining industry. Dogsom Ganbold, President of the Mongolian National Mining Association, considered the stand of Mongolian politicians to have been a disaster. In any case, the windfall tax has so far fetched a little under US$200 million, considerably less than what had been estimated. The figure would not rise substantially, as the Mongolian administrative structure lacked both skill and resources to make optimal use of its opportunities.
Dr Graeme Hancock of the World Bank stressed the need for moderation and pragmatic thinking. Playing the blame game will yield no results for either party in the dispute. Instead, one had to identify the factors why Mongolia wants to take a 51% share in exploring new strategic deposits, and then try to persuade the Government to decide on the feasibility and wisdom of investing more than the country's annual GDP on such exploration. Will it be able to withstand the social and economic costs of such extravagance? Owning equity is a double-edged sword, and there are several global models which entitle a nation to get a fair share of the value generated by its resources, without insisting on owning majority shares. Mongolia should study these, and also develop its legal framework and regulatory mechanisms so that loopholes are plugged. He said the windfall tax had proved to be counterproductive as what Russia paid more for its copper from Erdenet, it took back by imposing tax on fuels it supplies to Mongolia.
KHAN BANK TO ISSUE FOREIGN CURRENCY BONDS
Khan Bank announced on Wednesday it has established a US$300 million global medium-term note program, allowing it to issue foreign currency bonds to international investors. It planned to list the program on the Singapore stock exchange for one year. "The program will not only further diversify our potential funding sources, but will also help the bank to raise longer-term funds which in turn can finance the growing demands of our clients," chief executive Peter Morrow said in a statement. "It will also enable us to better manage the bank's liquidity and cash flow.
Credit ratings agency Moody's assigned Baa3 and Ba1 ratings respectively to the local currency senior and subordinated notes in the proposed program, while assigning Ba2 ratings to the foreign currency senior and subordinated notes. All had stable outlooks. Moody's said further supplements to capital might be warranted if the bank's risk-weighted assets continued to grow faster than internal capital formation. It warned the bank's liquidity profile could become less favorable if it increasingly relied on confidence-sensitive market funds such as the present program.
WESTERN PROSPECTOR RE-URGES SHAREHOLDERS TO ACCEPT TINPO OFFER
Western Prospector Group Ltd. (TSX VENTURE:WNP) has reaffirmed its recommendation that shareholders accept the superior offer from a wholly-owned subsidiary of Tinpo Holdings Industrial Company Limited to acquire all the outstanding common shares of Western for C$1.34 per share in cash, other than those shares beneficially owned, directly or indirectly, by Tinpo, its joint actors and affiliates. The Tinpo offer is open for acceptance until 5:00 p.m. Pacific Time on September 11, 2008.
"The Tinpo offer continues to be the most attractive option for Western's shareholders," said Gordon Pridham, Chairman of the Special Committee of Western's Board of Directors. "We strongly encourage shareholders to accept the Tinpo offer." The Tinpo offer represents an 86% premium to Western's closing price of C$0.72 on July 14, 2008, which was the last day of trading prior to the announcement of the Tinpo offer. The offer also represents a 140% premium to Khan Resources now-expired bid, which consisted of 0.685 of a Khan share for each Western share with no cash component and valued Western at C$0.55 per Western share, based on Khan's trading price of C$0.80 on September 3, 2008. The Khan bid expired on September 3, 2008.
IMPORTERS UNITE TO BUY OIL FROM CHEAPER SOURCES
A delegation from Mon Oil & Gas, a company newly formed by six petroleum importers including Petrovis, NIC, Magnai Trade, Shunkhlai and Just called on President Enkhbayar on Monday. Its members explained that they had set up the company to increase the number of suppliers of petroleum products and to help stabilize petrol prices in the local market. The delegation expressed its interest in setting up petroleum processing units in Mongolia, and sought Government help for this. The President asked the new company to prepare a detailed project proposal to be reviewed by the Government and the National Security Council. The question of State support will arise only after that.
The Executive Director of Mon Oil and Gas LLC, O.Sodbileg, later said, We are looking at the possibility of importing oil products at lower prices based on general negotiations with Arab countries and Kazakhstan. Oil importers joined hands because no one company can individually handle the business of importing oil on a large scale. Referring to the recent fall in global oil prices, he said the benefit would take time to reach Mongolia, as it does not buy directly from the world market. Our importing companies buy oil at a cost determined by others. The Government had tried to hold the price level by offering subsidies but this policy has its limitations when prices rise abruptly.
PARLIAMENT APPROVES BAYAR AS PRIME MINISTER
On Thursday morning Parliament approved of the choice of S.Bayar as Prime Minister in the next Government. All members were present when the vote was taken, and the only dissenting ballot was cast by Ts.Elbegdorj. The erstwhile DP leader had been sworn in only a while earlier.
Accepting his nomination, Bayar thanked members for their faith in him. Reaffirming his commitment to what he had stated as his guiding principles in political life, when taking over as Prime Minister nine months ago, the Prime Minister-designate affirmed that he would work to fulfill the Mongolian peoples desire for a stable and fair government, devoted to national welfare.
Bayar said he has always been willing to cooperate with other political parties for development, and had pressed for a coalition government to put an end to the prevailing atmosphere rife with sentiments of political dissension, division and hatred. In this he was following what citizens also wanted. He hoped cooperation between the MPRP and the DP would ensure that the incidents of July 1 were never ever repeated.
Sanjaa Bayar was born in 1956 in Ulaanbaatar and studied law in Moscow.