At its regular meeting on January 19, the Cabinet instructed 'Mongolian Railway' state-owned shareholding company to carry out the construction work of the cross-country railways in western and eastern region under the build-transfer-operate type of concession contract, reports Minister of Road and Transport L.Khaltar.

In accordance with the Government's action program for 2020-2024 and the ‘New Revival Policy’, the resolution to intensify the construction work of the railway has been approved.

As for the railway in the western region, it will stretch 1200 km in route Artssuuri-Nariinsukhait, Shiveekhuren. The railway in the eastern region is planned to be constructed with length of 420 km in route Choibalsan-Khuut-Bichigt. The project will be realized by the 'Mongolian Railway' company in cooperation with foreign and domestic investors and mining license holders.

With the implementation of the railway projects, the total length of railroad in Mongolia will stretch 4700 km, which means that it will be extended by 2700 km.

Newly-appointed head coach of the Mongolian national football team Otsuka Ichiro arrived in Ulaanbaatar, Mongolia yesterday.

Former head coach Shuichi Mase resigned and returned home in late 2021 due to health concerns.

As part of the cooperation between the Mongolian Football Federation and the Japan Football Association, Otsuka Ichiro, 57, has been selected. Thus, he will serve as the coach of the team on a one-year contract.

At the Cabinet’s regular meeting on January 19, Minister of Finance B.Javkhlan gave a progress report on the government procurements for projects and actions scheduled to begin in 2022 with state budget funding.

Bids have been announced for 140 or 19.5 percent of a total of 717 projects and actions and bids for eight projects and actions are in their final stages. Deadlines for 134 bids are not over.

Prime Minister L.Oyun-Erdene ordered general budget governors that bids should be announced for all projects by March 1.

UGIINUUR, ARKHANGAI PROVINCE, MONGOLIA — The endless prairie has become a colander, peppered with what look like golf holes. Small gray rodents dart in and out, growing more numerous as late autumn sunshine warms the Mongolian steppe in the country’s central Khangai region.

Munkh-Erdene Baasanjav, a herder for 30 years, drills a hole into a raised mound and puts his hand inside to confirm his fears: a nest of thick grass. After removing the material, he pumps 60 liters of water into the hole, an environmentally friendly method of freezing the creatures out.

“When I was a child, there were rodents in some places, but now they are bustling everywhere like dust rising,” he says.

The pests are Brandt’s voles, one of the fastest reproducing mammals in the world. Female voles can give birth three times a year, up to 11 offspring each time. Just one of these rodents, smaller than a man’s hand, can eat 34 grams (1 ounce) of grass per day and stockpile 9 kilograms (20 pounds) of hay for winter.

Rising temperatures and overgrazing in Mongolia have fueled a dramatic increase in the vole population, by making soil conditions more favorable for nesting. The infestation threatens one-third of the country’s grasslands (38.6 million hectares, or 149,000 square miles), according to the Ministry of Food, Agriculture and Light Industry, leaving less food for livestock. The burrow holes also pose a hazard, leading horses and people to sprain their ankles or break bones. In response, herders and government rangers are working to reduce the vole population without harming other animals.

Enkhbold Nanj, a doctor of biological sciences at the Plant Protection Research Institute, a national organization that studies Mongolia’s grasslands and pests, says it’s normal to have 100 voles per hectare, but now some areas have up to 2,000. Estimates put their total population at over a billion.

“It’s too much,” he says. “It turns the soil over.”

Mongolia’s grasslands are state owned, while livestock are privately owned. A mainstay of the economy, the livestock sector accounts for more than 10% of the country’s gross domestic product and 23% of its labor force. Herders raise horses, cattle, sheep, goats and camels, and earn money by selling dairy products, meat and hides.

Since the country’s shift to a market economy, the number of livestock has nearly tripled, from 25 million in 1990 to nearly 70 million in 2020. The resulting overgrazing has caused soil deterioration on 78% of its grasslands, according to the Mongolian National Federation of Pasture User Group, a self-governing association of more than 80,000 members working to develop pasture management policies.

Dr. Tseveendorj Dalkhaa, head of the Rodent Research Laboratory at the Plant Protection Research Institute, says that humans must accept responsibility for disrupting the ecosystem by hunting or driving out the vole’s natural predators, such as foxes.

“If an animal exists in nature in a balanced way, it will not cause any harm,” he says. “But voles are said to be harmful when the right balance is lost.”

The average temperature in Mongolia has risen more than 2 degrees Celsius (more than 3.5 degrees Fahrenheit) since 1939. When combined with overgrazing, the resulting dry, warm soil has created a favorable environment for voles to multiply, says Munkhnasan Tsevegmed, a pasture protection and restoration specialist at the Ministry of Food, Agriculture and Light Industry.

Before 2003, Enkhbold says Mongolians used pesticides to protect pastures, but these chemical methods have been discontinued due to their toxic environmental impacts.

Traditional extermination methods are far more labor-intensive. Since 2019, the government has provided a daily bonus of 2,000 Mongolian togrogs (70 cents) to herders and 20,000 togrogs ($7) to unemployed people who pour water into burrows, scatter rice contaminated with vole-killing bacteria and provide shelter for birds of prey.

These organized efforts have happened on 15% of the affected region so far, Munkhnasan says, which is not enough to overtake the vole’s reproductive success nor address the root causes of the infestation.

Enkhtur Badam-Ochir, a 41-year-old herder from Ugiinuur soum, or district, says that when she weighed a 1-year-old sheep to sell five years ago, it weighed 21 kilograms (46 pounds). Today, she says, the same sheep would not weigh more than 18 kilograms (40 pounds).

“The voles eat all the savory and nutritious grass,” Enkhtur says. “Therefore, animals do not fatten up.”

Both local and national levels of government are focused on tackling the vole problem. While province governors adjust pasture usage plans by consulting local herders and considering annual plant yields, the Ministry of Food, Agriculture and Light Industry works to regulate land use and protection nationally. This includes a Law on Livestock Tax, effective July 2021, that uses revenue to fund more pest-control efforts and rehabilitate the country’s grasslands.

“The most affordable, effective and long-term measure to regulate excessive multiplication of voles is to reduce overgrazing and allow vegetation to regrow,” Munkhnasan says.

The number of livestock needs to reflect the size of the pasture, and the economic turnover of livestock should accelerate, he says. And herders should have fewer animals of better quality, rather than many animals of poor quality.

Although they recognize the problems of overgrazing, many Mongolians can’t afford to thin their herds.

“We supply all our needs with livestock, and the price of raw materials is not enough, so we don’t want to reduce the number of livestock,” says Munkhtsetseg Tudev, a resident of Ugiinuur soum. Any less livestock, she says, “is not enough to live on.”

Odonchimeg Batsukh is a Global Press Journal reporter based in Mongolia.

Representatives of the Ministry of Foreign Affairs, the Civil Aviation Authority, MIAT and the Embassy of Mongolia in the United States held an online meeting yesterday in preparation for a direct flight between Mongolia and the United States.

During the meeting, they exchanged views and information on the progress of the work and further steps to be taken.

The meeting was attended by Mongolia’s Ambassador to the U.S. U.Batbayar, Director of the Department of Americas, Middle East and Africa of the Ministry of Foreign Affairs A.Anand, Executive Director of MIAT Mongolian Airlines B.Munkhtamir, Director General of the Civil Aviation Authority S.Munkhnasan and other relevant officials.

The Ministry of Health reported that 3,088 new cases of COVID-19 have been reported in the past 24 hours. Specifically, 1,708 cases were reported in Ulaanbaatar city, with 1380 cases in rural aimags.

It was also reported that no COVID-19 related death has been reported in the past 24 hours. Currently, 8,882 people are receiving hospital treatment for COVID-19 whilst 41,854 people with mild symptoms of COVID-19 are being isolated at home.

Of the total patients currently undergoing treatment at hospitals, there are 2,862 patients in mild, 5,092 in serious, 875 in critical, and 53 in very critical conditions.

The coverage of 1st dose has reached 69.7 percent (2,268,377), 2nd dose – 66.7 percent (2,168,827) and 3rd dose or a booster shot of COVID-19 vaccines – 30.0 percent (979,390) of the total population. Moreover, 49,504 people or 2.0 percent got 4th dose of the vaccines.

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Small and landlocked, the Central Asian nation struggles to

balance its economy with essential public health measures.

Food shortages, inflation, hundreds of thousands of people without an income, and thousands of shipping containers stuck on the border, not to mention rising Covid-19 cases, job losses, closed businesses, a crippled export sector, and a decimated tourism industry: this has been the situation in Mongolia for the past two years. In an interview with the author, Deputy Prime Minister Amarsaikhan Sainbuyan described the pandemic as “the biggest crisis of my career” and went on to explain the difficulties that a small, developing democracy experiences when it tries to balance the economy while safeguarding public health.

Mongolia is a lower-middle income country with a population of only three million and a per capita annual household income of US$1,787. For almost 70 years, Mongolia was a Soviet satellite. In 1992, the Soviets left, and the country abandoned communism, transitioning to capitalism and democracy. While the living standards of most Mongolians have dramatically improved over the past ten years, Mongolia’s economic development has been erratic, with a negative 9.3 per cent GDP growth in 1992 and a positive 17.3 per cent growth in 2011. In 2018, Mongolia’s economy was improving, with 7.5 per cent growth, but in 2020, as a result of pandemic lockdowns, growth dropped to negative 4.6 per cent.

Mongolia’s mining sector accounts for 90 per cent of exports and roughly 26.1 per cent of GDP.

One of the reasons for Mongolia’s boom-and-bust trajectory is that the mining sector accounts for 90 per cent of exports and roughly 26.1 per cent of GDP. But these numbers only represent direct income from the sale of commodities. Mining money ripples through the economy, supporting businesses, education, banking, finance, construction and many other sectors. Indeed, Investment Monitor considers the nation’s economy to be 100 per cent dependent on mining and rates Mongolia as the country most vulnerable to fluctuations in commodity prices.

In January 2020, when the first coronavirus cases were reported in China, Mongolia closed the international airport, as well as its only two borders, with China and Russia. This resulted in a severe decline in Mongolia’s export income. China accounts for more than 60 per cent of Mongolia’s total trade, providing 33 per cent of its imports, while buying 89.1 per cent of its exports. Finished products began thinning out on retail store shelves, and prices started to rise. The government implemented a stringent lockdown, closing schools and non-essential businesses. With no unemployment benefits to rely on, people began to suffer.

A World Bank survey found that those living in poverty and households whose income was reduced by the pandemic were more likely to experience food insecurity. Many children, dependent on school meals, suffered vitamin and nutrition deficiencies. UNICEF found that 62.1 per cent of children lost weight, while 20 per cent experienced decreased frequency of meals.

Mongolia relies on China for more than 60 per cent of its total trade (Nick Farnhill/Flickr)

The World Bank also estimated that as many as 260,000 more Mongolians had slipped into poverty in 2020, increasing the poverty rate to 33.6 per cent, while 35.2 per cent of households reported a decline in income.

To make matters worse, inflation skyrocketed to 9..6 per cent, with the prices of food, solid fuels and gasoline increasing the most. Ten months into the pandemic, meat prices in Ulaanbaatar had risen 16 per cent and fuel prices 38.8 per cent.

Deputy Prime Minister Amarsaikhan explained that the government was doing its best to follow the guidance of the Centres for Disease Control and Prevention (CDC) and World Health Organisation, but “Covid measures drained our budget”. With very little revenue, he said, “We had to depend on international donors, our neighbours, embassies and diplomatic missions.” Donations of medicine and equipment came from around the world, but it cost money to outfit ambulances with oxygen machines and to get the supplies to doctors in remote regions of the country. The cost of Covid relief measures increased the 2020 budget deficit to 9..5 per cent of GDP.

While Mongolia is ready to get back to work, China maintains a zero Covid policy, which keeps the borders closed, Mongolia’s exports low, and domestic consumer prices high.

About half of the population lives in the capital city of Ulaanbaatar, while between 30 and 40 per cent are nomadic herders. Across the entire country, the population density is only two people per square kilometre. “We had to bring these new ventilators, beds, pumps, new medicines…and we had to deliver it,” said Amarsaikhan. “In the rural areas, the countryside, in 21 provinces, there were almost no oxygen facilities, so in the past two or three months we had to import, transport and install oxygen facilities in 16 provinces.”

Since April 2021, things have improved a great deal. Private sector businesses have been reopening and people have been returning to employment in many sectors. Production and sales volumes have remained lower than pre-pandemic levels, as have incomes, but the deputy prime minister vows that the government has no plan to lock down the country again.

So while Mongolia is ready to get back to work, China maintains a zero Covid policy, which keeps the borders closed, Mongolia’s exports low, and domestic consumer prices high. National Statistical Office division head, Tseveenjav Lkhanaa, sums up Mongolia’s precarious economic situation as “disproportionally dependent on our biggest foreign trade partner, China.” Ultimately, Mongolia is hostage to China’s zero Covid mandate and the country’s recovery lies almost exclusively in the hands of Beijing and its border control policies.

Research by the International Organization for Migration (IOM) in Mongolia shows a migration ban aimed at reducing overpopulation in Ulaanbaatar only increased the vulnerabilities of the capital city’s urban migrants.

IOM found that rural-to-urban migration improved the lives of most internal migrants in Mongolia, providing them with more and better job opportunities and increasing their incomes.

Due to development discrepancies between rural areas and the capital, Mongolia has experienced a dramatic rural-to-urban migration flow, raising Ulaanbaatar’s population to almost 1.5 million – half the country’s total, according to its 2020 census.

The Municipality of Ulaanbaatar shut the door to new residents with annual bans between 2017 and 2020 in a bid to protect health and safety, and the environment, but given IOM's findings, it will not reintroduce a ban.

“The city administration does not intend to impose another migration ban as the study clearly shows that the ban did not achieve its intended purpose,” Deputy Mayor R. Dagva told a high-level panel discussion on Internal Migration in Mongolia.

“It is important to understand that the ban, based on the underlying opportunities and circumstances of the time, was an attempt to regulate migration.”

IOM's research findings – from two studies – were released during the panel discussion last month. The first study, Assessing the Effectiveness of Migration Restrictions in Ulaanbaatar City and Migrants’ Vulnerability, shows that while the ban prevented registration for official residency, it did not stop the flow of people into the city.

The lack of residency registration deepened the vulnerability of migrant households, as they could not access public services and suffered from exposure to economic, social and health risks.

The second study, Mongolia: Internal Migration and Employment, showed that better job opportunities, living conditions and education are the key factors pulling internal migrants into Ulaanbaatar.

“The internal migration issue is complex, and we should expect the response policies to be as sophisticated,” said Victor Lutenco, IOM Mongolia Programme Manager.

"By substituting restrictive policies with those supporting better integration of migrants, Ulaanbaatar and Mongolia will ensure that migration and migrants fill the ranks of the net contributors to the development of the receiving community and of the entire country.”

IOM cooperated with the National University of Mongolia and Independent Research Institute of Mongolia to conduct the research in Ulaanbaatar, having support from the Maastricht School of Governance and methodological endorsement from the National Statistics Office of Mongolia. The activity is part of an ongoing project implemented by IOM with support from Swiss Agency for Development and Cooperation.

For more information, please contact Erkhembayar Munkhbayar, communication consultant IOM Mongolia, at emunkhbayar@iom.int and +976-88101117

The gas exploration and development company has also achieved progress on multiple fronts for its green hydrogen project – Gobi H2 – including the recent signing of an MoU to support project finance.

Elixir Energy Ltd (ASX:EXR) is very well placed to benefit from Mongolia’s and China’s decarbonisation policies as it ramps up plans to set up Mongolia’s first gas-fired generation plant in the South Gobi region using natural gas, and at the same time develop the region’s first green hydrogen project.

The gas exploration and development company has already achieved progress on multiple fronts for its green hydrogen project – Gobi H2 – including the recent signing of a memorandum of understanding (MoU) to support project finance with the Mongolia Green Finance Corporate, a joint-public-private sector body.

It has also submitted a detailed analysis of the legal issues surrounding a potential green hydrogen project in Mongolia to the Ministry of Energy, which concludes that no new major legislation is needed for the development of green hydrogen projects in Mongolia.

Elixir is also confirming the bankability of the renewable power inputs for green hydrogen production and has procured expert water advisory services, with potential water sources for the pilot H2 project already identified.

The company recently lodged plans for its long-term coal-bed methane (CBM) pilot production testing project with the Mongolian petroleum regulator as part of the mandatory annual budgetary approval process.

Elixir Energy is currently primarily focused on an exploration and appraisal program in Mongolia targeting natural gas in the form of CBM, also known as coal seam gas (CSG) in Australia. More recently it has developed the Gobi H2 green hydrogen project, in the same area of operations as its CBM business.

First mover advantage

Elixir Energy has named the green hydrogen project the ‘Gobi H2’ project and is applying for a Mongolian trademark for the name.

Elixir managing director Neil Young said: “All the work we are doing on our Gobi H2 project serves to reinforce our original starting concept: the country is a potential tier-one location for large scale hydrogen exports.

“Elixir’s first-mover advantages are being progressively locked in and it is fantastic to see the rapidly growing interest in this future-facing industry from multiple local and international stakeholders.”

Investor of the Year for second consecutive year

Elixir Energy bagged the ‘Investor of the Year 2021’ award by Mongolia’s Minister of Mining and Heavy Industry, making it the second year in a row the company has been recognised for its efforts.

Elixir’s Young said: “It is a great tribute to our local staff and contractors that we have yet again been formally awarded as ‘The Investor of the Year’ by the Mining Minister.

“This recognises their great resilience in not just maintaining, but in fact greatly increasing, our exploration and appraisal efforts, notwithstanding all COVID has thrown at them.

“We look forward to even more growth in 2022 as we undertake Mongolia’s first sustained production pilot program and continue our ‘rinse & repeat’ model of adding new coal- bearing sub-basins to our inventory.”

2021 drilling program wrapped up

The company’s 2021 drilling program has been wrapped up, with the following results:

➢ The Nomgon-7S well has been successfully drilled and suspended as a pressure monitoring well for next year’s production pilot in the Nomgon sub-basin;

➢ The Richcairn-4 appraisal well reached a total depth of 560 metres and encountered 20 metres of coal and 6 metres of silty coal. Further appraisal work will be undertaken in the Richcairn sub-basin in 2022; and

➢ The Bag-1S exploration well reached a total depth of 779 metres but did not intersect coal.

Elixir’s final 2021 drilling program comprised 17 wells of which 65% successfully intersected coals in the CBM window.

Seismic acquisition program

Elixir’s 2021 2D seismic acquisition program in the South Gobi has been wrapped up as planned.

A total of 528 kilometres was acquired in a two-stage program that required 123 days of field operations – a program of record size for the region.

The data is now being processed and interpreted and is feeding into lead generation for 2022’s drilling program.

Nomgon CBM project

Elixir Energy is primarily focused on its 100%-owned Nomgon IX CBM production sharing contract (PSC) project in the South Gobi region of Mongolia.

The Nomgon Project licence area covers around 30,000 square kilometres and is on the Mongolian Chinese border, with excellent infrastructure, mines and planned pipelines. It is around 400 kilometres north of China’s main gas transmission grid.

This very large area has been independently certified to contain a giant CBM risked recoverable prospective resource of 7.6 Tcf (best case).

2022 forward program

After nearly 300 days of non-stop drilling undertaken in 2021, there will be a short hiatus in the field, whilst the mandatory annual regulatory processes for the 2022 program are underway.

These include:

➢ The company’s exploration drilling tendering process has closed and a number of bids are currently being evaluated.

➢ The pilot drilling tender is still open and to date a number of companies have informally expressed their interest. The award of the contract, which will involve the regulator, is expected to be handed out next month.

➢ The company’s currently open seismic tender has also attracted multiple informal expressions of interest. The tender will close imminently and is expected to be awarded next month.

➢ Standard discussions are underway with the petroleum regulator over the formal 2022 budget.

➢ Key long lead items for the pilot production program have recently been ordered.

Approvals from the petroleum regulator are expected to come through in February, followed by annual sign-offs from the Environment Ministry.

Final approval, depending on developments on the COVID-19 front, should be forthcoming in the first half of March.

Chinese gas markets

The company noted that the de-carbonisation efforts in China are real and realistic, with the security of supply arguably even more important than the price, as shown by the current exceptionally high Asian gas prices being paid by China.

China has already been actively reducing the carbon intensity of its economy, with the neighbouring province of Inner Mongolia changing its coal-heavy energy mix.

China has been accelerating its own hydrogen developments and in the long term is likely to turn to imports.

Furthermore, Russia’s increasing gas supply leverage over Europe has not gone “unnoticed” by China, Elixir noted.

Competitive advantage

Around two-thirds of the cost of producing green hydrogen is the cost of renewables.

Shipping hydrogen by boat costs multiples of shipping the same energy as methane.

The delivered cost of hydrogen is, therefore “all about the quality of renewable energy and the cost of delivery”.

Access to markets by pipeline is massively advantaged over seaborne supplies and Mongolia can supply hydrogen to the Chinese markets this way.

New business opportunities

Like many other oil and gas companies, Elixir has carefully considered what new business opportunities the energy transition might offer it that take advantage of its existing skillsets and do not present a value destructive distraction.

As the first mover in this area, the company signed a MoU with Mongolia’s Ministry of Energy to work with it in exploring hydrogen opportunities and other stakeholders are also being progressively engaged.

In the meantime, it is garnering bankable quality renewable resource data in the region from its SODAR equipment.

Its desktop analysis has concluded that the combination of wind and solar resources in the Gobi region is exceptional – and the locational advantages this region brings in terms of immediate proximity to Chinese steel mills, for example, should place green hydrogen produced in the globally lowest delivered cost category.

Expert water advisory services

Elixir has worked with Mongolian drilling company ErdeneDrilling LLC for a number of years on the CBM drilling front.

Although water is not a large part of the cost structures of producing green hydrogen, it is a vital input and the social issues surrounding it are a key priority.

Elixir’s CBM business, where producing water is a necessary part of gas production from coal seams, provides complementary areas of expertise and even potential H2O feedstock for the Gobi H2 project.

Elixir and Mongolian drilling company ErdeneDrilling LLC have recently formalised their relationship over procuring water for hydrogen through an agreement for the provision of water advisory services.

The parties are currently planning field-based water exploration and appraisal activities for later in the year.

Renewable resources

Other than water, the other key input for a green hydrogen project is high-quality renewable power sources, which desktop analysis indicates are of globally very high quality in the Gobi region.

On this front, Elixir is currently:

➢ Measuring wind and solar resources to a bankable standard through its Australian sourced SODAR unit imported to the country last year and deployed in the South Gobi region; and

➢ Importing a solar focused measurement tool (from the same Australian firm who supplied the SODAR – Fulcrum3D) to be deployed at its recently acquired Solar Ilch solar farm.