1 FOREIGN RELATIONS OF MONGOLIA’S ROAD TRANSPORT SECTOR BROADENING WWW.MONTSAME.MN PUBLISHED:2019/02/21      2 MONGOLIA EXPRESSES READINESS TO CONTRIBUTE TO STRENGTHENING ASIA-EUROPE COOPERATION WWW.MONTSAME.MN PUBLISHED:2019/02/21      3 OYU TOLGOI FUNDED 35.1 KM ROAD OPENS IN KHANBOGD WWW.GOGO.MN PUBLISHED:2019/02/21      4 POLYMER BITUMEN TO BE DOMESTICALLY PRODUCED WWW.MONTSAME.MN PUBLISHED:2019/02/21      5 KHURELBAATAR CHIMED: 319 ENTITIES DREW LOANS FROM TWO FUNDS WWW.ZGM.MN PUBLISHED:2019/02/21      6 CONSTRUCTION OF TAVANTOLGOI-GASHUUNSUKHAIT ROAD TO BE INTENSIFIED WWW.MONTSAME.MN PUBLISHED:2019/02/20      7 OVER 30 MEASURES PLANNED FOR REDUCTION OF ENVIRONMENTAL POLLUTION WWW.MONTSAME.MN PUBLISHED:2019/02/20      8 MONGOLIA SAYS IT EARNS OVER 169 MLN USD FROM COAL EXPORTS TO CHINA IN JAN WWW.HELLENICSHIPPINGNEWS.COM  PUBLISHED:2019/02/20      9 RUSSIA’S GAZPROM TO START CHINA GAS PIPELINE BY DECEMBER 1 WWW.RT.COM PUBLISHED:2019/02/20      10 MONGOLIA'S FOREIGN TRADE UP 41.6 PCT IN JAN. WWW.XINHUANET.COM PUBLISHED:2019/02/20      УГСАРМАЛ ОРОН СУУЦНЫ ДУЛААЛГАД ЗОРИУЛЖ 12.7 ТЭРБУМ ТӨГРӨГИЙГ УЛСЫН ТӨСВӨӨС ГАРГАХААР БОЛЖЭЭ WWW.IKON.MN НИЙТЭЛСЭН:2019/02/21     2018ОНД ЦАГААН БУДАА , ЭЛСЭН ЧИХЭР , ТАХИАНЫ МАХНЫ ИМПОРТ 24-32 ХУВИАР ӨСЖЭЭ WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/21     ДЦС IV: 2018 ОНД НИЙТ АШИГ 4.7 ДАХИН ӨСӨЖ , 4.48 ТЭРБУМ ТӨГРӨГ БОЛСОН WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/21     ТУСГАЙ САНГУУДААС ГАРГАСАН ЗЭЭЛИЙН 100 ОРЧИМ ТЭРБУМ ТӨГРӨГ ХУГАЦАА ХЭТЭРСЭН ӨР БОЛЖЭЭ WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/21     МОНГОЛ УЛСЫН БОРЛУУЛАЛТЫН МЕНЕЖЕРҮҮДИЙН ИНДЕКС СҮҮЛИЙН 12 САРД АНХ УДАА УНАЛТЫН БҮСЭД ШИЛЖИВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/21     2018 ОНД ХАМГИЙН ЧИНЭЭЛЭГ БҮЛГИЙН ХЭРЭГЛЭЭ ЯДУУ БҮЛГИЙНХНЭЭС 5.1 ДАХИН ИХ БАЙВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/21     ХОВД ГОЛД ОСОЛДСОН 6 НАСТАЙ ХҮҮХДИЙН ЭРЛИЙГ ЗОГСООЛОО WWW.MONTSAME.MN НИЙТЭЛСЭН:2019/02/21     ДБНХ-НООС П.ОРХОНЫ БАРИЛДАХ ЭРХИЙГ 4 ЖИЛЭЭР ХАСАВ WWW.MONTSAME.MN  НИЙТЭЛСЭН:2019/02/21     УУХҮЯ: II САРЫН БАЙДЛААР НИЙТ НУТАГ ДЭВСГЭРИЙН 5.6 ХУВЬД АШИГТ МАЛТМАЛЫН ЛИЦЕНЗ ОЛГОСОН WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/20     300 ОРТОЙ ТӨРӨХ ЭМНЭЛГИЙН БАРИЛГЫН АЖИЛ 80%-Д ХҮРЧ ГУРАВДУГААР САРЫН 1-НЭЭС ДУЛААНД ХОЛБОГДОХООР БОЛЖЭЭ WWW.IKON.MN НИЙТЭЛСЭН:2019/02/20    

Events

Name organizer Where
“Doing business with Mongolia”, “UK Investors show” бизнес хөтөлбөр March 27-April 02. 2019 ЛОНДОН ХОТ, ИХ БРИТАНИ Mongolian Business Database London UK
SYMPOSIUM ON GLOBAL MARKETS Nationalism and Protectionism: The United States in the International Arena June 17-18, 2019 The Center for American and International Law Plano, Texas, USA The Center for American and International Law (CAILAW) Plano Texas June 17-18 2019
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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Rosneft and Ministry of Transport of Mongolia to Continue Cooperation on New Ulaanbaatar Airport www.rosneft.com

Rosneft and the Ministry of Road and Transport Development of Mongolia signed basic terms of cooperation for development of optimal technical solutions, commissioning of hydrant system and jet fuel supply in the new Khöshig Valley Airport in Ulaanbaatar. The document was signed by Rosneft Chief Executive Officer Igor Sechin and Minister of Road and Transport Development of Mongolia Dangaa Ganbatduat in the course of the Russian-Mongolian high-level negotiations on the sidelines of the Eastern Economic Forum.

The purpose of signing the document is to provide assistance to the Mongolian party in commissioning jet fuel supply facilities of the new airport and to ensure uninterrupted supply of Rosneft jet fuel to the Mongolian market which is strategically important for the Company.

"Development of business in Mongolia is a part of our strategy, our Subsidiary Rosneft-Mongolia operates in the country dealing with wholesale fuel distribution offering the best financial conditions and committed to its contractual obligations. Over years of our work in the Republic we earned the reputation of a reliable and diligent supplier among our Mongolian colleagues. With our Mongolian colleagues we set up the joint venture Mergevan which supplies jet fuel for Chinggis Khaan International Airport in Ulaanbaatar. We have vast experience of work on this niche market and evident logistical advantages" - Igor Sechin said.

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Feature: Mongolia, China eye improving coking coal trade flows, but obstacles remain www.platts.com

Mongolia is keen to further its coking coal trade cooperation with China, though efforts will be needed to overcome regulatory hurdles and improve logistics, senior executives from large mining companies and trade associations said Thursday at the 7th Coal Mongolia conference at Ulaanbaatar.

"Coal mining plays a big role in [government] revenue and job creation," a Mongolian politician said on behalf of the country's prime minister J. Erdenebat, who could not attend the summit at the last minute.

"Mongolia has [coal] export capacity and China has demand... we hope this will continue," said Mongolian Coal Association president T. Naran.

China is also keen to explore "huge potential in coal cooperation" with Mongolia, said the deputy secretary general of China's National Coal Association, Sun Shouren.

Much of the rhetoric stems from the interdependence between China and Mongolia in the coking coal market and appears to be driven by anxieties caused by a recent slowdown in that trade flow due to significant bottlenecks at border crossings.

Two sources said current truck queues on the Mongolian side of the border were 150-160 km (93-99 miles) long, which has caused a huge slowdown in Mongolian coal imports to China.

This comes at a time when China's domestic supply is particularly tight after more stringent safety measures were imposed in its Shanxi production hub after a spate of mining accidents in August.

Premium low-vol coking coal imported to China was assessed at $219/mt CFR China Wednesday, up 20% since August 1, based on S&P Global Platts data.

The distance from coking coal mines to the Mongolian-Chinese border at Ganqimaodu is generally around 240-250 km.

Multiple sources said the sudden slowdown at the border came after the recent election of Mongolian President Khaltmaa Battulga in July, who appears to be more keen on enhancing relations with Russia.

However sources also noted that it was not only Mongolia-China cross border trade that had slowed recently. There has been talk in trading and procurement circles in recent weeks that China is more broadly trying to reduce its dependence on coking coal imports, including via the seaborne route.

China has seen a significant spike in coking coal imports this year, with imports over January-July surging 32% year on year to 36 million mt. Landlocked Mongolia was China's second largest coking coal supplier in 2016, accounting for 41% of its import supply. Almost all of Mongolia's coking coal exports go to China. The country also produced some thermal coal, but the majority of its output is coking coal used by steelmakers.

BOOST COMPETITIVENESS

Efforts to improve the competitiveness of Mongolian coking coal to drive greater trade should focus on regulatory actions, improving logistical infrastructure and lowering costs, said the CEO of Mongolian Mining Corporation, one of Mongolia's biggest coal miners, G. Battsengel.

Transportation and logistics bottlenecks needed to be fixed by completing required infrastructure, while better connections to railway networks would help Mongolian coal reach end-users in China, he added.

The current sales portfolio of MMC is spilt between direct end-user sales and, to a lesser extent, Chinese agents. A big proportion of MMC's sales are concentrated in Inner Mongolia, where end-users have little or no access to seaborne imports and "Mongolian coals dominate," Battsengel said.

In the longer term, Mongolian coals have to become more cost competitive, especially against lower-cost Australian supply, he said.

This is especially so when Chinese end-users do not need to pay 3% import duties for Australian coking coals due to a bilateral FTA, which Mongolia does not have with China, Battsengel added.

Efforts would need to be made to improve inter-governmental agreements on transportation and logistics, and on bilateral trade, Battsengel said.

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Nearly $44bn in deals signed at Russia's Eastern Economic Forum www.rt.com

A total of 217 agreement worth around 2.5 trillion rubles (nearly $44 billion) have been signed at the economic forum in Vladivostok, according to the presidential envoy to the Far East Federal District Yury Trutnev.

The two-day event in Russia's Far East attracted more than 700 business representatives and politicians from 55 countries, including China, India, Japan, South Korea and the US. Nearly 70 foreign companies took part.

This year's Eastern Economic Forum (EEF 2017) was attended by Japanese Prime Minister Shinzo Abe, South Korean President Moon Jae-in, and Mongolian President Khaltmaa Battulga.

The primary goal of the annual event is raising investment to develop Russia's Far East regions and reinventing the city of Vladivostok as an Asian hub for trade and transportation.

Issues discussed at the forum included the effectiveness of advanced development zones, the free port of Vladivostok, infrastructural support and the Far Eastern Hectare program giving away land to Russian citizens.

The is the third year of the forum, and at last year's event, 216 agreements worth 1.85 trillion rubles ($32 billion) were signed.

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Mongolia parliament votes out PM, cabinet www.dailymail.co.uk

Mongolian parliamentarians voted Thursday to throw out the country's prime minister and cabinet over allegations of corruption and abuse of power a little over a year after a landslide election victory by the ruling party.

42 out of 73 members of Mongolia's legislature, the Great Khural, voted to oust Jargaltulgiin Erdenebat along with his 15 cabinet ministers.

A majority of the ruling Mongolia People's Party (MPP) voted for the removal measure. The party now has 45 days to appoint a new PM.

Legislators accused Erdenebat of granting 800 billion tugrik ($328 million) in concessions to eight companies related to his cabinet ministers, providing illegal cash allowances to voters and presenting a poor image to the public.

Erdenebat has fiercely denied the allegations and in a statement before the vote he lashed out against "Mongolia's practice of ousting its cabinet", which he said had been toxic to the "country´s development and poisons our economy".

"Although, some of us point to foreign investments as economic killers, in reality we politicians are the internal killers of our economy and suffocate our own growth," he said.

Mongolia´s economy has performed well under Erdenebat's government, with a dramatic improvement in the first half of 2017 on the back of growing demand for coal from China.

Political instability, however, has been a constant problem for the young Central Asian democracy, which passed its first constitution in 1992 after decades of Communist rule.

The country has been through 15 different cabinets in the years since, each lasting an average of 1.5 years.

Late last month, the MPP issued a letter calling for Erdenebat and other senior leaders to resign, alleging they had violated the law in pursuit of their own business and political interests.

The letter came just weeks after a close loss by the party's candidate in a scandal-plagued presidential election.

The decision to demand Erdenbat's resignation was made after the party leadership declined to punish its bigwigs for their alleged role in a $25 million conspiracy to sell government positions that many believe cost the MPP the presidency.

The MPP won by a landslide in the 2016 elections, taking 65 out of 76 seats in the national parliament, and formed the cabinet headed by Erdenebat, who is alleged to have used his political powers to spy on fellow party members.

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Free trade zone between EAEU and Mongolia can be created in 2018 www.tass.com

VLADIVOSTOK, September 6. /TASS/. The conclusion of an agreement on a free trade zone between the Eurasian Economic Union (EAEU) and Mongolia may be held already in 2018, Russia’s Natural Resources Minister Sergey Donskoy told TASS on the sidelines of the Eastern Economic Forum.

He also co-chairs the intergovernmental commission on trade and economic cooperation between Russia and Mongolia.
"We plan it next year," he said.
Donskoy also stressed that interregional and cross-border trade is one of the key areas of interaction and development of economic relations.
"70% of the growth that we see is trade between neighboring regions, so from the point of view proposals to establish a free trade zone were made. No final decision has been made yet," the minister said.
Abolition of visas, growth of tourist traffic and trade
Introduction of a visa-free regime between Russia and Mongolia in November 2014 had a significant impact on the development of economic integration, acting Minister of Economy of Russia’s republic of Buryatia Zandra Sangadiyev said.
He referred to statistics showing that in 2016, 418,000 Mongolian citizens visited Buryatia, which is 2.2 times more than in 2015.
The annual foreign trade turnover between Buryatia and Mongolia exceeds $30 million. According to the Ministry of Economy of the republic, last year exports amounted to more than $26 million, imports were at about $6 million.
Today, the economic relations between the region and the neighboring state are governed mainly by the agreement between the government of the Russian Federation and the government of Mongolia on economic and transboundary cooperation that was signed in 1999.

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The Russian Railway have offered Mongolia joint participation in the capital of the Russian ports - RIA Novosti www.newletter.us

VLADIVOSTOK, 6 Sep — RIA Novosti. The Russian Railway have suggested Mongolia to study a possibility of joint participation in the capital of the Russian ports, the president of the Russian company Oleg Belozerov has reported. "I want to pay attention that at the potential of cooperation it is impossible to become isolated within one branch, one type of transport. As I have already told, goods have to move by rail and arise need of transportations through port capacities. Respectively, it is possible to consider specialization option, maybe, of joint participation in port economy — either repayment, or some other participation. Too it is necessary to consider it" — Belozerov has reported, speaking at East economic forum.© RIA Novosti / Vitaly Ankovpereyti in a fotobanksotrudnichestvo with Russia: the governor of California has told about the purposes on ВЭФОн has added that the company is ready to provide in return all necessary technical and technological assistance. "The Russian Railway holding has wide experience of implementation of the international infrastructure project" — Belozerov has emphasized. East economic forum is held in Vladivostok for the third time, this year from September 6 to September 7. The President of Russia Vladimir Putin, among guests of a forum — the prime minister of Japan Shinzo Abe and the president of South Korea Mun Zhe Ying takes part in him. IIA Russia Today is a general information partner of the WEF-2017.

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Korea, Mongolia collaborate on regional security www.korea.net

President Moon Jae-in held summit talks with his Mongolian counterpart, President Khaltmaa Battulga, on Sept. 6 during his visit to Vladivostok, Russia. The two leaders shared their ideas on how to cooperate on regional security. 

“Our two countries have many things in common, both ethnically and linguistically. We are like brother countries, as we are very close to each other, both historically and geographically,” said President Moon. He said that this meeting would help to increase the personal trust between him and the Mongolian president, and, also, would lay a solid foundation for better ties between the two countries. 

The president also outlined his plan to establish the “Northeast Asia Peace and Cooperation Initiative” through which six countries -- Korea, the U.S., Japan, China, Russia and Mongolia -- aim to pursue peace and security across the region by discussing ways to cooperate on threats like North Korea. 

“If we work together to launch this platform, it would be possible to combine it with the Ulaanbaatar Dialogue Initiative, a consultative body for Northeast Asian security initiated by the Mongolian government," he said.

As for the current security crisis on the Korean Peninsula caused by North Korea’s ceaseless provocations, President Moon said, “It’s inevitable that we increase U.N. Security Council sanctions and pressure the regime. I call on the Mongolian government to join forces with the international community if it decides to cut off crude oil supplies to Pyongyang.”

President Battulga said, “Our government takes advantage of the Ulaanbaatar Dialogue Initiative to deter Pyongyang from conducting its nuclear weapons tests. Just like Korea, our country, too, remains divided in two: Inner Mongolia and Outer Mongolia. We fully understand your pain.”

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Mongolia’s Local Leaders Essential to Urban Service Delivery www.asiafoundation.org

In Mongolia’s 2016 parliamentary elections, the opposition party won a landslide victory—taking 65 of the 76 seats, on a promise to boost the economy and tackle poverty. In 2011, Mongolia’s economy grew by 17 percent and attracted billions of dollars in foreign investment. Now, the country is in a state of financial crisis.

For years, Mongolia’s resource-dependent economy outpaced most of the world. But a decline in commodity export revenues and foreign investment sent growth to just 1 percent last year. Many see the opposition party’s win as a reflection of citizen frustration with a slumping economy and rise in unemployment. In the capital, Ulaanbaatar, where much of the city’s growth is taking place within its ger areas, which are sprawling, unplanned neighborhoods now home to 60 percent of the city’s total population, poor access to public services has risen as another major concern. While elected leaders set their priorities at the national level, unelected community leaders are playing an essential role in the delivery of public services in local areas.
Mongolia community mapping
According to an Asia Foundation survey, most people look to local, unelected leaders for assistance with public services. Here, local leaders are trained on how to use community maps to improve service delivery.
Mongolia’s civil service lacks a government-led, centralized personnel management agency, leaving the day-to-day management responsibility to respective budget and ministerial entities. Instead, Mongolia exercises the use of a Civil Service Council (CSC), which is an independent body that reports directly to Parliament. The CSC is tasked with personnel oversight, policy, and personnel management functions. This includes the monitoring of the civil service to assure adequate control of its functioning and the enforcement of its rules.
Ulaanbaatar has three levels of municipal administration: The Capital City mayor’s and governor’s office, nine district centers, and 152 khoroo offices. The khoroo represents the smallest sub-administrative unit within the city’s confines and is where citizens most frequently request services. According to a recent survey conducted by The Asia Foundation of 866 residents of Ulaanbaatar, more than half of respondents (53.2%) said that they seek out khoroo governors and staff if they need information and have complaints regarding public services. Interestingly, 42.5 percent of respondents said that they would seek out kheseg (neighborhood) leaders, who are community administrators serving local neighborhoods within a khoroo. According to the same survey, kheseg leaders are the preferred method for citizens to receive information regarding all government related public administrative services.
While the Capital City Governor and Mayor’s Four-Year Plan (2016-2020) places greater importance on training programs for its civil servants, there remain shortcomings. In the past, efforts to improve the performance of civil servants have lacked a comprehensive training framework to guide and provide continuous professional development to the city’s civil servants. Though training materials exist for some khoroo-level staff and administrators, they are neither standardized nor kept up-to-date. There is also no discretionary budget allocated at the khoroo-level for training.
Essential public services are delivered at the khoroo-level, including permanent address references, issuance of identification certificates, and reference materials for the unemployed. As a result, the lack of training at this level of municipality can impact the quality of services being rendered. Since khoroo staff receive ad hoc training, they often remain dependent on district staff for assistance, creating bottlenecks in terms of service delivery. Further, since kheseg leaders are not considered civil servants, they receive even less access to formal training and in terms of incentives, they receive modest remuneration, which can vary by district. Despite these administrators making barely above the minimum wage, they are often tasked with critical responsibilities such as gathering census data, registering citizens, health awareness, and as such, remain essential conduits for local support to citizens.
The Asia Foundation is working with the city to help train khoroo civil servants and administrators. In April and May of 2017, we organized the first-ever city-wide training for 1,412 kheseg leaders of the 152 khoroos of Ulaanbaatar, with a cost-sharing model with the Ulaanbaatar City government. The three-day workshop included trainings on improving workplace efficiency, communication skills, collecting data and evaluation skills, basic legal knowledge, and citizen participation and monitoring. Overall, the response from participants was overwhelmingly positive, and the Foundation plans to hold refresher trainings in 2018.
To ensure sustainable and inclusive growth, Mongolia must focus on improving its human capacity in the public sector. Trainings such as these are a critical first step toward empowering civil servants to better serve their communities. By enhancing the capacity of front-line administrators, this can systematically improve transparency and accountability of the government.

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Pasture degradation threatens Mongolia's cashmere industry www.asia.nikkei.com

NOMGON SOUM, Mongolia In the Mongolian Gobi Desert, Batchuluun's herd of more than 1,000 goats produces valuable cashmere wool that enables him to support a family of five in a traditional ger, or tent. It is equipped with solar panels, a TV and smartphones, and a Kia Frontier truck is parked out front.

But the nomadic herder is most proud that he is passing on this traditional way of life to the next generation. His middle son dropped out of school to return to the ger and take up herding.

"Our herding culture is thousands of years old in Mongolia, and I am very happy that he will continue," he said.

Proud though he is of his traditional lifestyle, it is threatened by its own success. The cashmere trade that underpins the herder economy is leading to widespread pasture degradation and desertification, putting the long-term sustainability of the industry in doubt. Some 70% of Mongolia's pastures, which make up over 70% of the country's landmass, are showing signs of degradation, according to research by the Wildlife Conservation Society Mongolia, while 2% are severely degraded.

"The main reasons for pasture degradation are livestock density per area and too little movement in summer," said botanist Bolor-Erdene Lkhamsuren, a rangeland specialist with WCS.


A worker on a farm in Mongolia's Omnogovi Province uses a comb to gather fine cashmere fibers from the hair of a bound goat. (Photo by Tim Ferry)
Mongolia is the world's second-largest producer of raw, or washed, cashmere. Exports of raw and processed cashmere amounted to nearly 9,000 tons in 2015, according to a report by Mongolia International Capital Corp. -- a compound annual growth rate of 36.3% since 2006. Herders generally sell their cashmere to dealers, who this spring paid anywhere from 65,000 to 100,000 tugrik ($26-$41) a kilogram, according to Mongolia's National Statistical Office, depending on the month and region. More than 25.5 million goats are being raised in the country.

Several nongovernmental organizations are involved in educating herders on better pasture management techniques and the value of focusing on product quality rather than quantity.

INCENTIVE TO CHANGE WCS Mongolia recently concluded its second annual direct buy of cashmere at the Nomgon soum (an administrative district) center in Omnogovi Province, in which it offered an incentive payment about 15% above the market price in exchange for a pledge by herders to engage in more sustainable practices. The incentive payment is "to demonstrate the concept that you can get paid more if you make the effort and do certain activities differently," said Onon Bayasgalan, coordinator of the WCS project.

The results of the sale were promising, and in only its second year the program attracted around 100 herders. Many more are looking to join next year.

One of the sustainable practices is adhering to a pasture use agreement, a pact made among groups of herders to prevent overgrazing and degradation. Nearly all of Mongolia's territory is public land, and herders are free to move their camps and herds as they see fit. But herders are also tightly regulated by tradition, with families claiming priority in recognized winter and summer camps. Herders move their herds from two to 20 times a year, depending on the rains and available fodder, and many say they are seeing degradation.

Through an established cooperative in the region, the WCS team helped to organize herders into groups of 10 families to map out their traditional pastures and coordinate more effectively. "Pasture rotation is the main solution," said Onon.

Pasture use agreements are also being deployed by other NGOs, including France's Agronomes et Veterinaires Sans Frontieres and Switzerland's Green Gold, as well as the Sustainable Fiber Alliance, a local community organization set up by Una Jones, a Mongolian who witnessed environmental devastation during the country's transition from socialism to a market economy in the 1990s. But the reach of these groups is limited, and even in regions where they are operating, not every herder will join.

NGOs envision a day when independent auditors will certify herders as engaging in sustainable practices for higher prices, akin to the "Fair Trade" system for coffee and other goods, but this remains years away.

Some herders, including Batchuluun's neighbor, Dalaisaikhan, suggest a tax on herds over a certain size. "If there is a tax on goats over 500 head, that would be good for Mongolia's economic development and would serve to limit herd sizes," Dalaisaikhan said, even though his own herd numbers more than 700 head.

Questions also remain about the scale of demand for higher quality cashmere. The high end of the luxury market has shrunk relative to the surging "fast fashion" market, and demand for high-quality cashmere has not kept pace.

Much of Mongolia's cashmere is exported for use in production overseas, despite ongoing regulatory reforms and investment in the local textile and apparel industries. An estimated 70-90% is sent to textile and garment mills in neighboring Inner Mongolia, a Chinese autonomous region, which receive state subsidies and produce 70% of the world's cashmere garments.

BUILDING VALUE However, recent legislation now prevents raw cashmere from being exported before it has undergone at least minimal processing, helping to build up a larger local processing and manufacturing industry. Several local cashmere apparel makers have achieved sizable international sales of locally produced clothing, including Oyuna, which contracts its designs to local manufacturers, and the Gobi Corp., a vertically integrated Mongolian manufacturer that operates outlets around the world.


A worker collects washed cashmere at a cashmere processing factory in Ulaanbaatar. © Reuters
U.S.-based startup Naadam Cashmere takes a different approach to sustainability by buying directly from herders in Mongolia in exchange for exclusive access to their cashmere. According to Matt Scanlan, chief executive and co-founder of Naadam, "No amount of nonprofit work will replace buying cashmere for business. We want to build a sustainable market."

The value of Mongolian cashmere apparel exports increased to $9.6 million in 2016, according to research by MICC, up nearly 200% since 2009, although still a small slice of the $4.3 billion global cashmere apparel industry as measured by Bain & Co.

Desertification is not the only threat to Mongolian herders' livelihoods. Global climate change has increased the severity of the dzud -- intense cold fronts that kill large numbers of animals. Early snows last winter, following an unusually dry summer, are estimated to have killed up to 6% of the livestock in affected regions. An outbreak of the infectious disease peste des petits ruminants, also known as sheep and goat plague, is also said to have impacted herds.

Jones said the SFA is working on building resilience into herder communities to help them withstand these impacts. "We support herding families and communities in how to identify risks and how they can be managed during difficult winters," she said.

Jones, who founded the SFA after research in Mongolia and Europe on cashmere supply chains, said she aims to bring together herders, manufacturers and environmentalists. "We want to increase the availability of sustainably produced cashmere to the world market that safeguards the livelihood of herding families and promotes high-quality cashmere fiber," she said.

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Japan and Mongolia agree on North Korea response and economic cooperation www.japantimes.co.jp

VLADIVOSTOK, RUSSIA – Prime Minister Shinzo Abe and Mongolian President Khaltmaa Battulga agreed Wednesday to cooperate in dealing with North Korea’s rising nuclear and missiles threat as well as economic matters.

The meeting, held on the sidelines of an economic forum in the Russian Far East port city of Vladivostok, is the leaders’ first since Battulga was elected president in July. Mongolia has diplomatic ties with North Korea, while Japan does not.

Abe told Battulga that North Korea’s nuclear test Sunday, which followed the launch last week of a ballistic missile that flew over northern Japan, poses an “unprecedentedly grave and imminent threat” and is “totally unacceptable,” according to the Foreign Ministry.

Prime Minister Abe underlined the need to strengthen pressure on North Korea, the ministry said.

The leaders confirmed the importance of strictly and fully implementing U.N. Security Council resolutions, it said. The resolutions impose sanctions on North Korea and ban it from conducting nuclear tests and testing ballistic missiles.

They also agreed to seek early resolution of the issue of past abductions of Japanese nationals by North Korean agents. Tokyo expects Ulan Bator’s help in resolving the issue with the country having served as a venue for Japan-North Korea talks over the long-stalled agenda.

“I attach importance to Mongolia as a crucial partner in the region. I hope to promote our bilateral relationship,” Abe said at the start of the meeting, which was open to the media. Battulga said, “I want to contribute to the development of East Asia and the Far East.”

Resource-dependent Mongolia aims to cooperate with Japan on rebuilding and diversifying its economy with a focus on agriculture, manufacturing and pollution control, based on a new medium-term action plan formulated in March.

Mongolia needs to implement fiscal reforms under an International Monetary Fund rescue program after its economy was hit by falls in commodity prices and a slowdown in the Chinese economy, according to the ministry.

Battulga thanked Abe for Japan’s support in developing the Mongolian economy under the IMF rescue program, the ministry said.

The Mongolian leader also told Abe that he has picked Dolgorsuren Dagvadorj, the former sumo grand champion Asashoryu, as his special envoy to promote cooperative ties with Japan.

Abe is on a two-day trip to Vladivostok, during which he will also meet Russian President Vladimir Putin and South Korean President Moon Jae-in.

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