China sets record daily steel output for third month in a row www.reuters.com

BEIJING (Reuters) - China’s steel mills churned out record amounts of the construction material in June as producers rushed to cash in on hefty margins, even as a trade spat between Beijing and Washington intensified.

China, which accounts for half the world’s capacity, produced 80.2 million tonnes of crude steel last month, National Bureau of Statistics data showed on Friday. That’s just shy of the 81.6 million tonnes the United States produced in the whole of 2017, according to World Steel Association data.

June output was below May’s record 81.13 million tonnes, but June has one less day, setting a new daily average production record for a third month in a row at 2.67 million tonnes, according to Reuters’ calculations.

“Steel mills were dashing to reap as much of the bumper profits as they could despite environmental checks,” said Richard Lu, analyst at CRU in Beijing.

The data may further inflame a bitter Sino-U.S. trade row. The United States and Europe have accused China of exporting its surplus metal cheap, hurting international rivals.

China’s steel exports rose last month to 6.94 million tonnes, their highest since July 2017, even after Washington imposed import duties to protect U.S. industries.

The production increase also comes as China has shuttered some mills to help curb choking pollution and ramped up environmental inspections, suggesting that newer mills have ramped up operations to cash in on fat margins.

China’s steel output in the first half rose 6 percent to 451.2 million tonnes.

BUMPER MARGINS
Steel prices SRBcv1 have soared over the past year due to firm demand and on concerns about tightening supplies of metal, used in construction and automotives, as Beijing seeks to close inefficient mills and clamps down on smoke-stack industries to clean the nation’s skies.

Lu estimated that mills were earning a profit margin of about 800 yuan ($119.50) per tonne of steel, while analysts at Huatai Futures put profit margins for mills in northern China at over 1,000 yuan a tonne, one of the highest on record.

Monthly utilization rates at mills reached 71.6 percent in June, the highest since October before winter production curbs had taken effect, according to Reuters calculation based on data from Mysteel consultancy.

Analysts say it’s not clear if China will continue its record-setting run.

Some particularly smoggy cities and provinces are also implementing ad hoc measures to beat bouts of pollution. Last week, top steelmaking city Tangshan ordered mills to cut production for 6 weeks over summer.

“Steel output may not necessarily go down even though stricter restrictions are on the way,” said Lu. “Steel mills in Xuzhou city could reopen soon, which will to some extent offset the production curbs in Tangshan.”

Producers are also racing to make as much metal as possible before a new round of production curbs are imposed in November ahead of China’s winter, when pollution is at its worst.

Last winter, government forced mills and heavy industry in 28 of the most polluted northern cities to shut up to half of their capacity between November and March. More are expected to adopt similar curbs this winter.

Reporting by Muyu Xu and Josephine Mason; editing by Richard Pullin

Russian Retailers, Hotels Emerge as World Cup Winners www.themoscowtimes.com

The World Cup has captivated host Russia for a month, proving a boon for the brewing and hotel industries while dampening spending on some expensive items and curbing trading on financial markets.

As well as the usual staples of the football fan — beer and snacks — the tournament also spurred domestic demand for loans for electronic appliances, primarily TV sets and smartphones.

Meanwhile, Russian car dealers will probably welcome the end of the party on Sunday after sales slowed last month.

Economists have played down the direct economic impact from the World Cup, predicting it would be marginal and unevenly spread.

That tends to fit the pattern of other countries that have hosted major sports events — a brief bounce but not enough to make a lasting impact on an economy.

The tournament, which kicked off on June 14 and ends when France play Croatia in Sunday's final, attracted more than 700,000 foreign fans to Russia, who packed the streets of the 11 host cities together with locals.

Moscow saw a 60-percent increase in foreign tourists, bringing the overall number of visitors to the Russian capital during the World Cup to 3 million people, said Nikolai Gulyaev, head of Moscow's sport and tourism department, said.

Booking.com warned 74 percent of properties in St. Petersburg and Moscow have been booked for the World Cup final weekend. Booking.com's website gave no such warning on availability for next weekend.

In the stadiums, Russian fans were the main spenders, having laid out $12 million over the first four weeks of the tournament, Visa said on Friday.

"Sales of beer, non-alcoholic beverages and snacks have visibly increased in the first two weeks of the World Cup," said the Perekrestok supermarket chain, part of Russia's largest retailer X5 Retail Group.

In host cities, some of which have never seen so many tourists, fans swarmed to cafes and bars, draining beer supplies to alarmingly low levels.

Planes and Screens
Kviku, an online retail lending company, said the number of its customers rose more than a quarter over the past month as people took out loans to buy flights to World Cup host cities.

It also saw increased demand for loans for devices on which to watch matches, Kviku added.

Sales of TV sets and smartphones had already posted a 20 percent increase in May-June compared with a year ago, Russia's leading electrical goods retailer M.Video-Eldorado said.

"Football is such a desire for most active fans that it prompts them to go for extra borrowing," said Nikita Lomakin, the CEO of Kviku.

Purchases of World Cup-related merchandise also picked up after Russia's surprising progress to the last eight of the tournament, according to Russia's leading classified ads platform Avito.

Some Russians appear to have opted to stay at home to watch the matches on television rather than take a holiday.

The number of Russians who had no summer travel plans this year rose to 23 percent from 7 percent seen in 2016, a survey by Russia's research centre Romir showed.

Competing for Attention
Other businesses in Russia were less excited about the tournament. New car sales growth slowed in June to 11 percent from 18 percent a month earlier, with analysts blaming the World Cup as the factor that distracted buyers.

Indeed, some measures announced while Russians were caught up in the World Cup excitement, such as increases in sales tax and the retirement age could have a more enduring effect on the economy.

While retailers and hoteliers tot up the takings from the month, it will take time to study the overall World Cup effect after it filters into official data.

"This is the question of no less than one year or maybe more," said Shlomo Weber, rector of the prominent New Economic School.

On the financial markets, activity fell on all sections of the Moscow Exchange apart from the bond platform as traders turned their focus to live action.

And even though its economic benefits are debateable, the World Cup certainly lifted spirits.

"The World Cup is a good thing but not always for trade, more for the mood," the exchange's CEO Alexander Afanasyev said.

Biography of Tavan Tolgoi residual coal deposits www.zgm.mn

OPINION: by Baabar

I published an article ”Tavan Tolgoi” in the “Daily News” newspaper dated July 21, 2007. This is not to retell the story, nor boasting about how “I told you so”. It has been exactly six years since then. Regretful six years. If we estimate only the coking coal, which is the highest-value part of Tavan Tolgoi deposits (TT), to be transported 20 million tonnes annually by rail, there is a 100 years of reserve. Geologists say extended explorations may double this figure. Furthermore, there is a high calorie coal reserves, currently estimated at 6 billion tonnes or enough to mine for 300 years. Overall, the TT contains 7.6 billion tons of coal reserve, according to Joint Ore Reserves Committee, an international evaluation system. In addition, South Gobi and Nariin Sukhait deposits each contain 400 million tons of reserve or enough to last 40 years to transport. Also, such high grade, large coal deposits have been discovered in Khovsgol and Khovd aimags. We do not know what else is there. Coal price was fairly good in 2007. Since the 1970’s, offers were made to Germany, Japan, North Korea and since the 1990’s, China, South Korean Samsung and Australian BHP were offered to use these reserves; however, they all refused. But when coal price started picking up since 2005, some companies from the U.S, China, Japan, Russia, Indonesia, Thailand, Australia, Chile, India and Brazil started showing interest and sent their proposals. Couple of years ago, a coal shortage occurred when coal mines of Hunter Valley of Australia, one of the largest coal mines of the world, were hit by a flood and coal price skyrocketed. Largest users of the coking coal are Japan, South Korea and China. Majority of coal expenses are in its transportation costs. Landlocked Mongolia have inadequacies in this aspect; however, Bugat, the area with the world’s largest iron production is not far from Mongolian border. Therefore, Mongolia has the advantage to cover its weaknesses. Naturally, Indonesia, the U.S and Brazil would not attempt to transport Mongolian coal to their lands. They just want to do business with Mongolia given the condition where the user is near. Japan and South Korea show interest in TT because they are highly dependent from Australian coal; thus, face risks of flood and other disasters, and wanted to reduce this import risk by creating a small dependence from Mongolia. Otherwise, coal is one of the most common minerals in the world. China, who is interested in Mongolian coal, is itself one of the largest coal producers in the world.

Chinese mine coking coal from the south of the country and ship it by sea to Tianjin and transport it via rail to Bugat. By mid-2012, coal price fell by 50 percent within just a couple of months. The deterioration of EU crisis led to a slowdown for Chinese economy. On the other hand, a new technology that can use alternative energy sources except oil and coal has been developed and began to be utilized. Chinese actively began adopting this technology of collecting combustible gases called methane gas which was developed in the U.S. Shale became the next trend. A couple of years ago when the former U.S President Bush stated “we invented a new alternative energy technology. The world will no longer depend on the Middle East soon,” he meant this shale technology. In the next few years, the U.S and Mexico will reportedly become the key energy producers in the world with shale. North China also have huge shale reserves and began utilizing it. Revolutionary changes have occurred in the renewable energy technology. A single windmill can generate 10 Megawatt power, they say. Such as this, coal is turning into ash. I said “coal will be ash” 6-7 years ago, not because I am a fortune-teller. Coal was never a valuable or expensive mineral. Because it is abundant. The dream of moving TT began in the 1970’s. Every economists knew that skyrocketed price of coal in 2007 was a temporary phenomenon. Therefore, I said something like “Tavan Tolgoi (Five Hills) coal will turn into ash if five hundred heads argue for five years,” in a bit of a rhyme. During this five year period, three government was formed and they all did nothing. They passed a law on strategic deposits and nationalized TT. According to a mapping of Tavan Tolgoi deposits made in 1970, a deposit named “Ukhaa Khudag” was given for use of a Mongolian company.

This almost led to civil war. Construction of a railroad south of the South Gobi province became a taboo. It seemed like all Mongolians owned the TT. It looked like the shares of TT was going to be distributed equally to the public. It looked as if the shares of TT was going to be sold for national companies at a discounted price. Then, a daunting investment law of 2012 banned foreigners from investing. Maybe, only achievement of this past five year was the birth of so many so-called fair citizens defending the wealth of their motherland and beating their chest! Russia, which had forgotten Mongolia, suddenly remembered us because of TT. They initially proposed to own shares worth USD 1.5 billion and repay by building a railroad. The plan was then altered to transport coal to Pacific ocean from 5 thousand km distance stretching through East Siberia and Far East. Then, it seemed as if they will be the only ones to build and own all railways in Mongolia in the future and that railway will have Soviet standard gauge. Then, they demanded majority stake of the TT shares. Actually, they were stirring up things with an ulterior motive to prevent any large minerals production in Mongolia and if that were to happen, no other countries except China and Russia were able to participate in it. Apart from that, they do not have any need for coal.

China actually had an interest to get coal from a neighboring country. Therefore, a Chinese state-owned enterprise (SOE) Shenhua competed in TT. However, they also did not like any involvement of a third country, causing as much trouble as possible for the US, Japan and South Korea. They were plotting to own the most of the shares of the TT. Japan and South Korea both wanted about 10 percent of the TT as they wanted to reduce their dependence from import and get certain supply from Mongolia even if the price was high. Because the Australian flood was a big lesson for them. The parties representing these countries are also SOEs. However, they have no mining experience and were just interested in its stake and did not plan on involving in mining and transportations. The U.S Peabody is not state owned, it is a stock-exchange listed, public shareholding company. It is the largest coal producer of the U.S and have over 130 years of experience in the field. They worked several years in the Chinese market with ever growing demand and gained some success. They mainly work with Chinese coal companies in Yunnan and Hunan, South Chinese provinces. They also acquired a deposit in Xinjiang. They are interested in working in the market of North China and seek new market. Government negotiated with all interested companies through the Chief of Cabinet Secretariat for three years. There were several cases where foreign company representatives were invited from abroad and then refused to see them, saying “no time, let us meet next time”. There is a say “those who ask bows and those who give sits”. The Parliament issued several resolutions and outlined that the interest of third countries should equal the two neighbors. However, Russia and China did not agree to this. Only Mongolians can think of a stupid idea to distribute TT equally among the public. TT is valuable because of its gigantic size. There are many deposits in Mongolia that equal one tenth of TT. Once you divide this huge residual deposits into ten parts, everything is reduced and will lose its meaning. Nobody will be interested in this divided strips. When nobody is interested, it is beneficial for the two neighbors. It is not like the world is missing out on Mongolian coal. During this period, a reason for Mongolian side, who was negotiating with international companies, to delay the TT negotiations emerged. Ivanhoe Mines Ltd was planning to use a deposit named South Gobi, which is south of TT. This company raised USD 500 million from the stock market. Not exactly raising. They loaned USD 500 million from China Investment Corporation under a share transferring condition and SouthGobi collected it at the Stock Exchange of Hong Kong. This way, their following works were accomplished very successfully. They obtained the mining license and permit to operate a mine. Other foreign investors were surprised at how Ivanhoe was succeeding in this country with much bureaucracy and tried to find the reason. Suddenly, they gained additional seven licenses without much of a hassle. Mongolian red tape fell apart before them. Soon, their stock value reached USD 4 billion. Such a valuable business. Ivanhoe Mines is a junior company that owns major stakes of the Oyu Tolgoi. They were not in a level to run this big scale operations. Rio Tinto was interested in buying their shares. Therefore, they sold SouthGobi along with Oyu Tolgoi shares. The deposit was valued at USD 4 billion at stock exchanges. They acquired it when it was expensive and tried to sell the rest to Aluminum Corporation of China Limited (Chalco). Actually, Rio Tinto lost so much from this deal. The value of SouthGobi which was raised in an instant, immediately fell by 10 percent after Rio Tinto’s acquisition. Illegally obtained licenses were confiscated and officials involved were arrested and put in jail. Ivanhoe intentionally inflated its share price and deceived Rio Tinto into buying it. The obstacle for SouthGobi to boost its share price in the stock market was TT.

Because if TT was taken by someone after enlisting, it will obstruct the growth of SouthGobi. Consequently, it may not even able to issue an IPO after TT. Therefore, they had to delay the development of TT as much as possible. Our people who participated in this operation, either knowingly or unknowingly, received their appropriate awards. I heard detail about this; however, no evidence has been found so far. So, let me not disclose it. It was an operation worth USD 50 million!. Actually, Mongolian side had no interest in moving the TT project. Because of personal gains. There were cases that Japanese and Korean sides were pressured to buy nine licenses owned by individuals for high prices if they want to be included in TT! Revenues earned from Mongolian coal sector began to exceed all other sectors. Even Erdenet Mining Corporation did not compare! Nouveau riche tends to show off their wealth lavishly. “To hell with foreigners! Down with the Imperialists! Let us kill the economic hitmen! It is enough to just shovel the coal and toss it beyond the Great Wall,” they said. Then they began to shovel and toss them across for real. “You see? There is no need for any infrastructure! Mongolians can run the TT,” they said. An SOE “Erdenes” was established. Everybody knows the outcome of that one. The Government, in order to “love” the people and distribute cash, always pressured and demanded Erdenes. They borrowed USD 350 million from Chalco and agreed to export coal until 2018. Took the money, distributed it, everybody got drunk and we ended up in debt. They needed to distribute again to win the next election and begged for another USD 200 million loan. Small-time swindlers began to sell trash to TT. Well, the businesses of SOEs are like that. It was only natural. Coal became ash! The situation before 2007 is back. Private coal companies were shut down. The old woman from the Golden fish folktale remains with her cracked pot, according to the tale. The debt amount borrowed from Chalco to distribute among the public is almost USD 300 million. Compared to this, the 70-year debt from former Soviet Union was repaid back in USD 250 million dollars. After getting rich by selling coal, there were boasts about developing other sectors and producing Mongolian brands. There are many things in the world that are more important than money. However, those are made possible by money. In order to develop other sectors, the “other sectors” must be founded first and that requires money. Mongolian brand coal has turned into ash. Felt slippers can never be a global brand. Our bad reputation became our brand in the end. 2013.5.11

Nagoya Basho loses last of three yokozunas www.montsame.mn

Ulaanbaatar /MONTSAME/ The Nagoya Grand Sumo Tournament will continue without a yokozuna (grand champion). On July 13, Yokozuna Kakuryu submitted a request to drop out of the Nagoya Grand Sumo Tournament due to elbow injury, joining the other two grand champions.

China's GDP hits 6.7% in Q2 of 2018 www.chinadaily.com.cn

China's GDP expanded 6.7 percent in the second quarter of 2018, the National Bureau of Statistics said on Monday.

US-China trade war dims bright future for semiconductors www.asia.nikkei.com

PALO ALTO, U.S. -- Even as new technologies offer the promise of an unparalleled stretch of growth in the global semiconductor industry, top executives fear the sector will be used as a chip in the U.S.-China trade war.

Global shipments of semiconductor equipment are forecast to grow 10.8% this year and 7.7% in 2019, according to a report released Tuesday by SEMI, an association serving the manufacturing supply chain for the electronics industry.

The forecast comes during this year's Semicon West trade fair in San Francisco. The three-day show devoted to semiconductor manufacturing equipment ended Thursday.

Other statistics suggest the value of global chip sales will increase 12.4% in 2018 and 4.4% next year, creating four straight years of growth. The market last enjoyed such a stretch with six years of growth that began in 2002.

Machines now generate more data than people do, a shift that heralds huge changes in the semiconductor industry, said Gary Dickerson, CEO of U.S. company Applied Materials, the world's largest maker of semiconductor manufacturing equipment.

The advent of technologies supporting the "internet of things" and the broader adoption of artificial intelligence portend hefty growth in semiconductors, particularly to meet the needs of data centers.

Equipment manufacturers like Applied Materials, ASML of the Netherlands and Japan's Tokyo Electron have been a great benefit to the parts makers that supply components for their equipment.

J&J Machine, a U.S. manufacturer of precision parts, has been very busy over the past year with many outstanding orders, operations manager Tim Frank said at the trade fair.

But the celebratory tone at Semicon West is tempered by worries about the trade friction and tariffs between the U.S. and China.

Even a company like Nanotronics, an American producer of optical inspection equipment, senses the danger. The company manufactures inside the U.S., so it avoids immediate impact. But Nanotronics also has Chinese customers, and CEO Matthew Putman hopes that demand will not cool.

Share prices have plunged by more than 20% for both Applied Materials and Lam Research, an American designer and producer of semiconductor equipment, since the U.S.-China trade battle intensified in mid-March.

A 25% added tariff on goods imported from China creates a $20 million to $30 million hit to the semiconductor supply chain, mainly due to higher procurement costs for parts like bearings and cylinders, SEMI said.

The tariffs might be extended to memory chips, which would inflate the damage beyond $500 million, said Jay Chittooran, a public policy manager at SEMI.

The industry's biggest fear is that President Donald Trump's administration might restrict exports of semiconductors and chip manufacturing equipment to China, said Robert Maire, president of consulting company Semiconductor Advisors.

U.S. producers hold a 60% share of the global market for semiconductor manufacturing equipment. And with chipmakers establishing fabrication bases in China, that country is poised to become the largest market for such equipment outside of South Korea come 2019.

Rights groups urge better treatment for Mongolia child jockeys www.reuters.com

ULAANBAATAR (Reuters) - At the opening of Mongolia’s traditional Naadam festival, red-cheeked child jockeys in brightly colored outfits and helmets raced over the muddy steppe in a 24-km (15-mile) endurance race, excitedly whipping their mounts.

Child jockeys ride their horses to the finish line during a horse race at the Mongolian traditional Naadam festival, on the outskirts of Ulaanbaatar, Mongolia July 12, 2018.

But the practice also faces criticism for putting children at risk and international organizations called for an end to what they say is the “exploitation” of vulnerable children, many of whom miss school to prepare for races, and work long hours for low wages at large stables.

The minimum age for a jockey is just seven, though authorities have struggled to enforce that.

Last year, as many as 10,435 children participated in 394 races nationwide, official figures show. More than 600 were thrown from their horses, 169 were injured and two were killed, the figures show.

Some children as young as five have been hurt in contests in previous years, Mongolia’s National Traumatology and Orthopaedics Research Centre says.

“Studies show that horse racing violates the right of children to survive, be educated and be protected,” said Tsolmon Enkhbat, program coordinator with Save the Children in Mongolia.

“There is no legal regulation to determine and punish perpetrators in the case of a child fatality,” she said.

Organizers of the Naadam festival said they were introducing new safety standards and registration methods.

Mongolia’s Authority for Family, Child, and Youth Development - responsible for child jockey safety - launched a fingerprinting registration system this year to improve regulation and enforce age restrictions.

“With public awareness rising on issues of child safety, of course child protection gets better,” says Enkhbaatar Altangerel, an official with the authority.

This is not about prohibition. This is about better regulation and better protection,” he said.

Though regulators plan to raise the minimum age for a jockey to nine years old, Tsolmon of Save the Children said Mongolia should impose strict limits on racing and that should include banning child racing in winter and spring, when conditions are most dangerous.

“We are against involving children in commercial racing. It is child labor exploitation,” she said.

During the endurance race on Wednesday, nine out of 338 child jockeys were involved in falls and two suffered injuries. Despite the concerns, many riders and their parents think the risk is worth taking.

“I like to race,” said 11-year old Usukhbayar Otgonbayar ahead of the race. “This time I will win.”

Reporting by Munkhchimeg Davaasharav: Editing by David Stanway, Karishma Singh and Neil Fullick

TPP chief negotiators to meet in Japan www.nhk.or.jp

Chief negotiators from the 11 countries that signed the Trans-Pacific Partnership free trade agreement will hold talks in Japan this week.

Mongolia's nomadic way of life threatened by climate change, neglect, modernity www.washingtonpost.com

It was another harsh winter on the central Mongolian steppe, with temperatures dropping to nearly 50 below zero Fahrenheit and thick snow covering the rolling grasslands. More than a million cattle, sheep and goats, already weakened by a dry summer, died, while nomads' precious horses froze to death on their feet.

"It was very hard, and the snow was deep," said 38-year-old herder Nyamdorj Tumursanaa, drinking milky tea in the nomads' traditional circular tentlike home known as a ger. "Even if the animals dug through the snow, there was no grass underneath. We had to buy grass for them, but still many of our animals died."

Here on the central Asian steppe, the ancient home of Genghis Khan and his Mongol horde, the nomads are brought up tough. Yet their ancient lifestyle is under threat as never before. Global climate change combined with local environment mismanagement, government neglect and the lure of the modern world has created a toxic cocktail.

Every year, thousands more herders abandon their way of life and head for Mongolia's crowded capital, Ulaanbaatar, which already holds half the nation's population.

The nomadic culture is the essence of what it is to be a Mongolian, but this is a country in dramatic and sudden transition: from a Soviet-style one-party state and command economy to a chaotic democracy and free market economy, and from an entirely nomadic culture to a modern, urban lifestyle.

Climate change is a major culprit, and Mongolia, landlocked and far from the moderating effects of the ocean, is suffering more than most parts of the world.

At the best of times, this is a fragile climate, with little rainfall and huge variations in temperature, which is why this vast territory supports a population of only 3 million people, making it the world's most sparsely populated country.

Now, government figures show average temperatures have risen by about 2.2C since systematic records began in 1940 - well above the global average rise of about 0.85C since 1880.

Summers, when most of the rainfall occurs, have become drier, and "extreme climate events" have become more frequent, says Purevjav Gomboluudev, head of climate research at Mongolia's Information and Research Institute of Meteorology, Hydrology and Environment.

The most dangerous event of all is a dry summer followed by severe winter, a phenomenon known as "dzud." Drought leaves livestock weak and reserves of grass low, making cold weather more dangerous: extreme cases in 1999-2001 and 2009-2010 wiped out a combined 20 million animals.

On the grasslands outside the small town of Altanbulag, 47-year-old Banzragch Batbold and his wife, Altantuya, remember how streams used to run off every mountain in their youth, how horses would dive into a local pond to cool off in the summer. "Now all that water is gone," she said.

Hundreds of rivers, lakes and springs have dried up across the country, the environment ministry says. And as the water retreats, the desert advances. Roughly three-quarters of Mongolia's land is degraded or suffering desertification, with about a quarter seriously affected, said Damdin Dagvadorj, managing director of the Climate Change and Development Academy.

But Mongolia's mismanaged twin transitions are also to blame.

In the Soviet era, Mongolia, a satellite state, kept nomadism under tight control. Animals were kept under collective ownership, but their numbers were limited, while the state supplied veterinary services, winter fodder and a guaranteed market.

In 1990, as the Soviet Union disintegrated, Mongolia threw off its one-party state and became a democracy. Three years later, it began privatizing the herds.

What followed was a huge expansion in animal numbers as individual herders valued their worth by how much livestock they held.

State support simultaneously vanished almost overnight.

Today, 66 million livestock roam the Mongolian steppe, nearly three times the 23 million cap maintained in the communist era. Overgrazing is a major cause of pastureland degradation, especially by the voracious and sharp-hooved goats whose numbers have exploded to supply the valuable trade in cashmere. Rampant, uncontrolled mining also uses huge amounts of groundwater, pushing the water table ever lower.

At the same time, the government has failed to extend education, health care and veterinary care to remote herding communities, says Ulambayar Tungalag of the Saruul Khuduu Environmental Research Center. "There is no incentive to stay in rural areas," she said.

Nor is herding as financially viable as it was. Middlemen traversing the grasslands pay herders knockdown prices for wool and other products while supplying consumer goods at sharp markups. Herders often go into debt to pay for their children's schooling.

And inequality is rising: Eighty percent of the livestock is controlled by the richest 20 percent of owners, among them elite city dwellers who pay others to look after their herds. More than 220,000 Mongolian families depend on herding, but more than half have fewer than 200 animals, government figures show, well below the 250-to-300 threshold considered economically sustainable.

Herders may have solar panels, smartphones and televisions, but life isn't getting any easier. Families are separated for much of the year as children head for boarding schools in the nearest towns, sometimes with mothers tagging along.

In the winter, Altantuya stays, getting up at first light to dig frozen cowpats out of the snow to build a fire, with Batbold heading out to protect the animals from wolves, wind and snow.

"In the winter, people get lonely," he admitted. "You can't go anywhere. You have TV now, but your children are in school. The women go crazy, and the men drink vodka."

The couple's children are being educated in Ulaanbaatar. Neither child has expressed any desire to follow in their parents' footsteps. "No one wants to be a nomad," Batbold said. "When I'm old, and If I am not able to ride, there will be no one left to look after the steppe."

Quentin Moreau, country director for AVSF (Agronomists and Veterinarians Without Borders), a French nonprofit supporting smallholder farming, says no investment is being made to make herders' lives easier. Projects to promote quality over quantity - for example, by rewarding herders with higher prices for better-quality cashmere - are still too small-scale to make a difference, and government plans to promote intensive farming make no sense on the water-starved grasslands, he says.

Moreau fears an acceleration of the rural exodus - to the point where the system of villages and towns serving herders is no longer sustainable. What few social services that are available could disappear entirely.

Yet the lure of the capital often proves to be a mirage.

A century ago, the town that is now Ulaanbaatar was little more than a trading post and a monastery. Today, it is a sprawling mess of 1.4 million people, half living in Soviet-style apartments, half in the sprawling, unplanned "ger districts" where people have pitched their homes on the hills surrounding the city.

Mongolians are a people deeply connected to nature, who call their country the Land of the Eternal Blue Sky. But their capital has become the land of choking smog, as ger dwellers burn coal to ward off the cold.

In winter, the capital has some of the worst air pollution in the world. Cases of respiratory infections have nearly tripled in a decade, pneumonia is a leading cause of death for infants, and children living in the center of the city have 40 percent lower lung function than those in rural areas, UNICEF says.

Residents of ger districts lack access to running water, while jobs for rural migrants are few and poorly paid - a watchman, a cook, a driver perhaps. Many people lack the skills to succeed here.

During festivals and important events, politicians like to don national costume - the herders' calf-length tunic, or deel - but are doing nothing to protect the source of that culture, Tungalag said. Meanwhile, in urban society, herders are often stigmatized, their lifestyles looked down upon.

"Nobody understands that actually Mongolian identity - being a nomadic person, being close to nature - is being lost," Tungalag said.

Mongolia, China, Russia discuss ways to develop cross-border tourism www.xinhuanet.com

ULAN BATOR - The third tourism ministerial meeting of Mongolia, China, and Russia was held here on Monday, with the aim to deepen trilateral exchanges in the tourism sector.