Grumble and Praise at Investors' Forum Print E-mail
Written by Ch.Sumiyabazar
Thursday, September 20, 2007.
THE second Mongolia Investment Forum 2007 was held in Ulaanbaatar on September 18. Over 200 delegates from around 20 countries attended the event, which had The UB Post as its sole Mongolian media partner. The first forum was held in New York in last March.
The forum was co-organized by Foreign Investment and Foreign Trade Agency of Mongolia (FIFTA) and Euromoney Conferences. The forum in four different panel sessions focused on economic outlook, financial sector, infrastructure, and mining.
�The GDP growth of the country has reached 8.4 percent last year. And foreign trade volume has overrun US$3 billion,� said Prime Minister M.Enkhbold in his opening address at the conference.
The hottest panel session of the forum was, of course, on the mining sector from which around 70 percent of the country�s export earning comes. At the session, Lu.Bold, Chair of the Minerals Resources and Petroleum Authority, whose annulment of mineral licenses has caused panic among some foreign investors, and John Brock, President and CEO of Western Prospector Group, who claimed his company�s share prices had fallen following the annulment, found themselves face to face.
�Investors do not like any uncertainty,� said Brock who sharply criticized the Government of Mongolia, its political system and legal codes. He said western investors have lost billions of dollars in international market capitalization because of the Mongolian Government�s stance on its minerals wealth. �State ownership is poorly defined, which is not a global common practice,� Brock asserted.
Last year, following an amendment to the minerals law, the Government gave itself the qualified right to acquire an interest of up to 34 percent in strategically significant deposits discovered with private funds, and up to 50 percent in deposits that had been discovered through the use of state funding in the past.
�The challenge lies in formulating a development policy to exploit resources and in proper management of revenue. The Government of Mongolia signed Extractive Industries Transparency Initiative, which we applauded. It was a very important step,� said Michael Ipson, Country Manager of the International Finance Corporation.
�We believe the future will find Mongolia as a leading country in the world in terms of attracting foreign investment in the exploration industry,� said Peter Akerley, President and CEO of Erdene Gold.
Over 6,000 mineral licenses are currently effective in Mongolia, where around 40 percent of the territory is licensed. The biggest project is Oyu Tolgoi, a large scale copper and gold deposit in Omnogobi province, whose investment agreement is still awaiting approval by Parliament after over five years of negotiation.
The agreement seems also vital at the forum for the real estate marketers. If the investment agreement is signed, the pace of expat relocation, construction and the growth in the real estate market of not only Ulaanbaatar but also outside the city will be more pronounced than ever. Darkhan, the second largest city of Mongolia, is also an attractive place for real estate builders where steel, cement and metallurgical factories are located, according to Lee Cashell, CEO of Mongolian Properties. �Production of steel and cement needs to be increased. One of the issues to be tackled is transportation of construction materials by railway. Also more and better need to be done in city planning,� said Cashell.
"No Hidden Agenda" in Annulling Licenses Print E-mail
Written by Ch.Sumiyabazar
Thursday, September 13, 2007.
LAST month, the Cadastral Center of the Mineral Resources and Petroleum Authority of Mongolia (MRPAM) annulled 34 mineral exploration licenses held by 18 national and international companies that cover deposits of coal, industrial minerals, base and precious metals, as well as uranium. The invalidation of the exploration licenses has caused serious concern among them as well as other potential investors in the mining sector. Some western companies plan to move Mongolian courts against the annulments.
MRPAM has explained that it will expedite the conversion of some exploration licenses to mining ones. Its Chairman, L.Bold, told media on September 10 that the notice was given following the recommendations of the State Auditing Committee, which had discovered that the area covered by the 34 licenses out of more than 6,000 currently effective licenses, had been explored with state budget funds in the past. According to a law passed by Parliament on July 8, 2006, exploration licenses for such areas had to be revoked, as they covered deposits ready for mining.
Bold said in a letter to the companies that the concerned stakeholders need to change the exploration licenses into exploitation or pre-exploitation or production licenses in accordance with the Minerals Law of Mongolia. �It is important to realize that under the law companies cannot any longer continue to hold exploration licenses in areas where exploration work has been finished long ago. They are now obliged to move on to developing the deposits. They have absolutely no fear of losing their rights, if they fulfill the legal requirements.�
Toronto-based Khan Resources said it is moving to convert its special exploration license in Mongolia�s eastern province into a mining license after the statement.
Concerning the Oyu Tolgoi investment agreement that is pending approval by Parliament, Bold said �I am confident that Ivanhoe Mines� Oyu Tolgoi Investment Agreement, which has been recently approved by the Government, will be passed by Parliament soon.�
�I wish to encourage companies, both international and national, to continue their oil and gas exploration projects and programs. Petroleum exploration has become another great investment opportunity in the Mongolian resources sector. Neither the mining policy of Mongolia nor our international standard licensing system will be changed, because they are the cornerstones of our national development and prosperity,� he said.
�The Government of Mongolia has no hidden agenda in taking away these licenses. MRPAM is fully committed to strictly following the Minerals Law, which protects the interests of both foreign and domestic investors. As a matter of fact every mining operation conducted according to law is running smoothly and with no disruption,� Bold stated.
Re:Ot Jaima; I see you're still deliberating over IVN while gaining a masters degree in Mongolian politics? Meanwhile a 'bottom' has come and gone and you're bickering with a 1 year old?
IMHO; IVN will get to $ 18< because "RIO TINTO" and China are the trump cards! The RR is now being built as well as a new power plant!
BTW, have yo been watching the action/developments for BRLC?
Better jump in before 9/11....(trump card; George Soros)<
The "Ultimatum" reads like a Globalitzation protest, very radical. If the government gave in to all those demands what would the "movement" demand next?
Ivanhoe has offered a good contract to a very undeveloped country. A 34% return w/o any investment money is a reasonable deal.
I say Protest Noise.
wpgintl, I see you are on BRLC. I came very close to buying last week but decided I could not cope with the drama of two electronics and Tech discussion boards. LOL
Did you look at MVIS at any point? I figure it to be like a trip to Vegas.
wpbintl, thank you for the advice, Im guessing we are the same page with the declining dollar. I had actually been doing a little studying on cash conversions and offshore accounts. I have also been trying to understand commodities. Im quite the novice at this and commodities are a little overwhelming. I was looking at some commodity newsletters but have not found one I was comfortable with yet but I am open to suggestions. Edward Jones has been handling my Investments and Ivanhoe was the first stock I picked on my own and Microvision was the second. Microvision will be the only American stock I buy. It was not a logical choice of stocks but the lure of the technology was too overwhelming. South Gobi will be the third. I was looking at it last week and evidently procrastinated too long..LOL
BTW, how do you feel about holding physical silver and gold? My answer to not understanding commodities and being insecure about the dollar up until this point has been taking my profits from stocks and buying metals.