Friday, August 1, 2014

Mongolia Brief July 31, 2014 Part II



Turning wind into profit

July 31 (UB Post) Mongolia is “a renewable energy paradise,” according to asia.nikkei.com. In fact, Mongolia has winds capable of producing 946 terawatts of energy per hour (one terawatt equals 10 trillion watts). However, 95 percent of all energy in Mongolia comes from coal.

“By 2025, it is necessary to produce a minimum of 1,545 megawatts of energy to meet domestic demand,” said Chief of the Regulatory Authority for Policy Implementation of the Ministry of Energy Ts.Bayarbaatar. If the government actualizes policy projects in the energy sector, by 2030, renewable energy will conquer 30 percent of all energy production in Mongolia.
Experts say Mongolia is perfect for producing renewable energy, and can take advantage of its resources to become an exporter. The 50 mw capacity Salkhit wind farm, the country’s first big source of renewable energy, was launched last year by Clean Energy LLC.
Umnugovi wind farm now in the works
CleanTech is leading the construction of a 250 mw wind farm in Khanbogdsoum of Umnugovi Province, 37 kilometers from Gashuunsukhait port. The construction of a wind power plant will start next spring. This project will be developed in two stages. The first stage, building a 102 mw power source, will be launched in six months.
CleanTech is developing an investment contract with HappyWind Holding (Sweden) and General Electric (USA), said an expert from the company. The power plant’s estimated cost will be 170 million USD.
Sinohydro, a leading construction company from China, is working on the construction of another wind farm in Khanbogd soum.
Big banks interested in investing
A 52 mw wind power plant will be built 15 kilometers from Sainshand in Dornogovi Province. “Since an investment contract with Ferrostaal of Germany was signed in February 2014, much work has been done. Domestic companies are working on landscape research. Construction of a wind power plant will start in spring next year, and will take 18 months,” said Director of Sainshand Wind Park R.Davaanyam. He added that they have announced a tender for power plant construction and wind turbine importing. Through August 8, they will receive the documents of tender bidders, and the results will be presented by August 25. General Electric, Siemens, Danish and Chinese companies have expressed interest in importing turbines. Several international banks and financial organizations have accepted credit requests, including European Bank of Reconstruction and Development, KfW Development Bank of Germany, and ten other financial organizations from the USA, the Netherlands and Belgium. To actualize this project, Mongolia needs 120 million USD.
Thanks to Sainshand Wind Park, every year, 100,000 families will receive energy. This is the fourth largest power producer in Mongolia, following Power Plant no.4, Power Plant no.3 and Darkhan Power Plant.
Mongolia can fetch nine billion USD
The main principles of the Asian Supergrid project “Gobitech” are to build big wind farms in the Mongolian Gobi and export energy to China, Japan and South Korea. Mongolia and Russia can export their produced energy to these three countries using transmission lines.
Last month, the Ministry of Energy organized a forum on “Renewable Energy in East Asia: Gobitech and the Super Network of Asian Power ,” which the Mongolian President attended.
“Mongolia has a certain initiative, which is called ‘Gobitech,’ to become an active user of the renewable energy of the Gobi,”said President Ts.Elbegdorj.
Within the “Gobitech” project, there is the possibility of constructing solar and wind power plants with a capacity of 50 gigawatts each. Project experts report that Mongolia will benefit most from the projects. Over a span of 16 years, Mongolia could earn nine billion USD, create 880,000 jobs, and build better roads by engaging in this project. There is a 100 percent chance of actualizing this project here report experts. The total cost of the project would be 237 billion USD, but the Gobi has resources capable of producing 2,600 terawatts of solar and wind energy per hour.
Turkish company Aydiner Global plans to spend 94 million USD to build a wind farm next year near Choir soum of Govisumber Province. Additionally, Clean Energy Asia is conducting research on building 50 and 100 megawatt wind farms in Umnugovi Province.
Source: Unuudur

World Chess Olympiad kicks off today

July 31 (UB Post) The 41st World Chess Olympiad kicks off today in Tromso, Norway.
The chess Olympiad is organized once every two years. Mongolian chess players first attend the Chess Olympiad in 1956 in Moscow, Russia. Since then, Mongolian male chess players attended 23 Olympiads and female chess players participated in 16th competitions. The Olympiad will continue for two weeks.
This time, the Mongolian team will be led by Ch.Chuluunbaatar, sport master and vice president of the Mongolian Chess Federation. Ch.Chuluunbat will train the women’s team and coach of the National team and Grand Master D.Sharavdorj will train the men’s team.
Mongolian National Chess team team
Men
1. Grand Master (GM) Ts.Batchuluun – Aldar Sports Committee, Century Chess Club
2. GM B.Gundavaa – Shunkhlai Group
3. International Master (IM) G.Munkhgal – Uvurkhangai Province
4. IM N.Battulga – Khangarid Sports Club
5. GM B.Khatanbaatar – Zavkhan Province
Women
1. GM B.Munguntuul – Aldar Sport Committee
2. GM T.Batchimeg – Monchess lub, Suld Sports Committee
3. FIDE master (FM) U.Lkhamsuren- Khan Altai Chess Club
4. IM B.Ankhchimeg- Mobicom Group
5. Sport master B.Bayarmaa- New Progress Group
The following are the results of Mongolian chess players in previous Olympiads.
- In 1960, Leipzig, Germany – IM L.Myagmarsuren – golden medal
- In 1964, Tal Aviv, Israel – IM T.Uitumen – golden medal
- In1970, Siegen, German – IM T.Uitumen – silver medal
- In 1992, Manila, Philippines – GM B.Khatanbaatar – bronze medal
- In 2000, Istanbul, Turkey – FM Z.Byambaa – bronze medal
- In 2002, Bled, Slovenia – FM Z.Byambaa – silver medal
- In 2004, Palma, Spain – GM B.Khatanbaatar – bronze medal
- In 2004, Palma, Spain – IM T.Battsetseg – bronze medal
Through team points, the Mongolian men’s team ranked 16th in the 13th World Chess Olympiad in 1970, held in Siegen, Germany and the women chess team ranked 13th in the 29th Chess Olympiad in 1990, held in Novi Sad, Yugoslavia.

Memorials of Tod script presented to public

July 31 (UB Post) Residents of Khovd Province celebrated the 370th anniversary of Galdan Boshigt Khaan from July 21 to 27. In relation to the anniversary, a scripture and sutra exhibition was held, and source material and academic treatise related to Galdan Boshigt Khaan are being presented to the public.
Memorials of Tod script are linked to the historical and cultural heritages of Galdan Boshigt Khaan.
Examples of Tod script, which were created in the 17th to 18th century, and other creations were displayed at the exhibition.
In addition, the Mongolian Language Department of Khovd University also brought Tod scripts that were stored at the Mongolian Heritage and Culture Institute.
Over 180 scriptures written in Tod script are kept at the Heritage and Culture Institute.

D.Galsandorj: Although copper export revenue doubled, coal export revenue dropped considerably

August 1 (UB Post) The following is an interview with the President of the Mongolian Exporters’ Association, state consultant mining engineer and professor D.Galsandorj about the recently released customs report.
The customs report for the first half of 2014 was released. Did export revenue increase or decrease?
Compared to last year, export revenue for the first half of 2014 increased by 450 million USD, specifically by 22 percent. Some 83 percent of total export revenue consists of mining products. Exportation for mineral products, cashmere and woolen products also increased. Foreign trade had a deficit of 157 million USD. Experts are saying that the deficit, which was measured in billions of USD in previous years, has decreased. This is connected to the decrease in importation. Equipment, material and fuel imports dropped due to the closing down of many factories, especially in the mining sector. Some have even started operating with smaller work capacity.
Overall, Mongolian mining industries are trying to operate without terminating completely. Fluorite, coal and iron mining operations are shrinking down. Even Energy Resource LLC isn’t doing exploration and instead, selling coal from their warehouse. MAK company is exporting small amounts of coal. On the other hand, Erdenes Tavan Tolgoi state-owned company is operating well.
You just mentioned that export revenue increased by 22 percent. Reports showed that export goods and raw material volume doubled. Is this true?
Both copper exportation volume and price doubled. People must have understood this as export revenue doubling. Total export revenue became 2.4 billion USD and the volume increased by 25 percent. In terms of volumes, compared to 2013, copper concentrate exports increased by 300 thousand tons, coal exports by 1.8 million tons, and oil exports by 1.1 million barrels. As for revenue, copper concentrate export revenue increased by 500 million USD and oil export by 117 million USD. Although coal exportation volume increased, the revenue dropped due to price decrease. The average price of a ton of coal exports in the first half of 2013 was 72 USD. The average price of a ton of coal exports of 2014 decreased by 30 percent and became 47 USD, meaning that coal revenue decreased by 97 million USD compared to the first half of 2013.
In general, how are Mongolia’s mineral product prices?
Apart from coal price decrease, iron export prices decreased by some 20 percent. Copper and zinc prices are rising in international markets. Compared to 2013, copper concentrate price increase by some 18 percent and zinc prices by 10 percent. Industries that use these minerals should be supported. The price of a ton of copper was set at 6,800 USD in the 2014 state budget. At the moment, the price has reached approximately 7,100 USD. Budget revenue will increase accordingly.
Can it be concluded that copper concentrate exports of Oyu Tolgoi led to this take-off?
Yes. Within the first six months of 2014, Mongolia exported 580 thousand tons of copper concentrate, specifically Erdenet Mining Corporation exported 260 thousand tons of copper concentrate and Oyu Tolgoi exported 320 thousand tons. Some 660 million USD came from copper concentrate exports of Oyu Tolgoi. Mongolia gets 100 percent of Erdenet Mining Corporation’s currency income. Unfortunately, only 20 to 30 percent of Oyu Tolgoi goes to Mongolia. In Oyu Tolgoi’s investment agreement, it was agreed that currency income would be transferred directly to the parent company so it doesn’t come into Mongolia. This is a major mistake in the agreement. At least 34 percent of its share revenue should go through Mongolian commercial banks. Australia and Chile requires revenues of foreign investors to be circulated through the nation’s commercial banks.
In addition, 5.4 tons of gold was exported from Oyu Tolgoi mine in the first half of 2014. Customs officers are including this revenue into the copper concentrate export revenue. They need to improve customs statistics by specifically reporting on how much USD revenue they got from gold and how much from copper concentrate.
Many are saying that mines are ceasing operations. Yet, why are mineral and raw material exportation amounts of Mongolia increasing? For example, coal export volume increased.
Until April, coal taxes were imposed in relations to a reference price, but now, we started imposing them on prices dictated by the contract. It’s beneficial for coal mines when taxes are paid from contracted prices. This is why mines exported large amounts of coals for some time and increased exportation. However, mines started closing up their work since June and some even stopped operations.
In terms of revenue, copper makes up 40 percent of total export, coal makes up 18 percent, and oil makes up 13 percent. Furthermore, iron ore makes up eight percent and zinc makes up two percent of total export revenue. For exports, copper and oil is covering revenues for products with reduced prices and offset overall export value.
It seems that Mongolia will get majority of its revenue from copper concentrate exports in the future. What do you think awaits the coal industry in the future?
It’s certain that copper concentrate will continue to be the leading export product of Mongolia for the next four to five years. If Tsagaan Suvarga copper mine is commissioned in 2016, copper export amounts will increase considerably. The time when coal made up 40 percent of export revenue has passed. I think it’s unnecessary to transport coal with trucks in an environment that’s initiating responsible mining and protection of the environment. Mongolia doesn’t have management for establishing coal export agreement. Therefore, it’s selling coal at low prices. One-ton of refined coal of Energy Resource Company is sold at an average price of 37 USD. The amount of valuable refined coal should be increased. Energy Resource Company is only utilizing 30 percent of its concentrator’s capacity. The concentrator can process up to 15 million tons of coal. Other companies can use the remaining capacity to process coal.
There are talks that Erdenes Tavan Tolgoi Company is negotiating to process coal at Energy Resource’s plant. Can you comment on this?
It’s correct. Our association sees that it’s required for the three corporations operating at Tavan Tolgoi mine to partner in coal production, transportation and logistics, and work with integrated policy and export agreement.
Is there hope for reviving coal and iron prices?
Iron prices may revive. Bargilt iron ore deposit of Mongolrostsvetmet Company is selling iron concentrate for 70 USD per ton. Bayangol mine is selling for around 50 USD and AltainKhuder Company for 40 USD. Since iron demands in the Chinese market are increasing, it’s likely for iron prices to increase. Coal prices dropped and made situations difficult because Mongolia didn’t have an integrated policy. We need price regulations. The Ministry of Mining is actively working to establish a Mineral Exchange. This work should be hastened. If an exchange is established, Mongolia will be able to sell coal at standard integrated price and quality. Mongolia gets price cuts because we’re unable to negotiate with big Chinese corporations. We only negotiate with smaller corporations.
If raw materials are processed, they can be sold for higher prices. What are your thoughts on this?
Actually, the government is talking about increasing the quantity of value added export products. Although they said that they’ll give funds from government bonds to iron concentrator plants, they still haven’t given them. They were supposed to give funds to major projects of Erdenet, Tsagaan Suvarga, and Bor-Undur concentrator plants. They’re wasting time. They even said that they’ll build a plant to produce final products at Sainshand city in Dornogobi Province. However, there’s no finalized technical and economic feasibility study or investment. It’s a good dream. They talk so well on television. Even if Mongolia produces final products, will China purchase? Chinese exportation tax increases as products are refined. Many things need to be considered. It’s enough to utilize our capacity and sell 15 million tons of refined coal a year. Yet, people are talking nonsense by saying that they’ll export 31 to 50 million tons. It’s useless to build a railway if we can’t supply competitive products consistent with Chinese standards. I’m not sure if Mongolia can benefit from constructing a railway with a huge amount of money. If Mongolian coal isn’t going to be sold, what’s the point of constructing a railway?
Do you think that it’s better to establish at least a steel mill?
Mongolia will probably export iron from 2015 to 2030. MPs are saying that two to three plants will be built in the next two years, and then, steel will be exported. This is a lie. Before talking about exporting, Mongolia needs to be able to domestically produce 600 thousand tons of steel bars that it imports from foreign countries. Mongolians love to talk about exportation when they aren’t even able to supply their own domestic demands. There are people who even talk about increasing oil exports when the country isn’t producing a drop of petroleum fuel. People also mentioned exportation of energy. But Mongolia is buying energy from Russia and China. Instead, they should be talking about supplying Mongolia with domestic energy.
Source: Unuudur news http://mongolnews.mn/w/53624

Ulaanbaatar’s only rollercoaster operates with faulty brakes

August 1 (UB Post) The Ulaanbaatar City Specialized Inspection Agency inspected the maintenance of the rollercoaster at the National Amusement Park early this week and detected several safety issues.
The rollercoaster was installed at the park last year and was tested and approved by the State Special Commission on April 16, 2014.
However, the on-site inspection revealed that the front spring of the train’s brake which prevents rollback on tracks was missing, while its rear spring was broken, which is a clear sign of poor daily maintenance and check-up.
The rollercoaster operators were trained and documented, although they didn’t have professional licenses.
In addition, the inspection found that the rollercoaster staff and operators violated occupational safety and internal regulations by not showing up to work.

Mongol Rally 2014 is the last for Mongolia

August 1 (UB Post) Mongolia to welcome the Mongol Rally for the tenth and final year
Around 500 adventurists in 300 “unusual for travelling” cars gathered at Hyde Park in London, for the launch of the 2014 Mongol Rally and set off to Mongolia on Saturday, July 20. They are due to arrive in Ulaanbaatar on August 31, after crossing 17,000 kilometers of challenging terrain in some 20 different countries along the way.
The Adventurists, founded by Tom Morgan, organizes the Mongol Rally. The first rally was completed in 2004 with four teams. The rally is famous worldwide, as there is nothing like it in the world of rally courses. Organizers say the core point of it is adventure and the challenge drivers face along the way, rather than who gets to the finish line first.
This year, no rally cars will stay behind in Ulaanbaatar. They will either be shipped back to their countries of origin or rally drivers will travel home with their cars, unlike previous years.
Though the rally increases the flow of travelers to Mongolia and contributes to the state budget, some local residents are critical about the fact that rally cars, which have been massively degraded on the way, stay in Mongolia for charity.
For the past nine years, Adventures for Development Mongolia (AFDM) NGO was the Mongolian organizer and was responsible for receiving and selling the rally cars and using the profit for charitable donations, according to AFDM representative G.Baigal.
She also highlighted that all the Mongol Rally cars which were left in Mongolia passed AFDM’s requirements for vehicle standards (rally cars must not be older than ten years), unlike the public’s misunderstanding that the cars are practically scrap metal, staying only to pollute Ulaanbaatar.
This year, news that none of the 300 cars faced vehicle-age restrictions spread in the media, which upset the public. Shataraa, an AFDM representative, spoke with us about plans for 2014.
We heard the rally cars didn’t have to pass any requirements on years of usage this year. Why is that?
None of the rally cars will stay in Ulaanbaatar this year and that is why we haven’t set age restrictions on them. Shipping issues are currently being processed.
The rally cars used to stay in Ulaanbaatar every year. Why is this year being organized differently?
Mongol Rally will not be held here starting next year. The organizers couldn’t deliver accurate information about the rally to the public, so people seem to have negative ideas about it. The media spreads false information about the rally, saying we are willingly bringing scrap metal to the city. Because of this, The Adventurists are not pleased. So this is the last year to welcome the rally cars.
How much profit did Mongol Rally bring to Mongolia in total for the past nine years?
Each rally car paid special customs tax, and regular customs tax together with VAT. Mongol Rally brought almost two billion MNT to the state budget in total. Plus, a total of 4,000 tourists have travelled to Mongolia and spent about six billion MNT here.
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