BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 221 – May 11, 2012

NEWS HIGHLIGHTS:

Business:

SouthGobi shares dive on fears of Chalco deal derailment;

Corruption investigation sinks Ivanhoe’s stock price;

Draig reports thickest coal intercepts yet at Teeg;

Xanadu Mines makes headway in Oyut Ulaan acquisition;

Prophecy Coal targets 2012 sales of 300,000 tons;

Altan Rio to begin exploration this month;

Xanadu Mines appoints Ulaanbaatar-based executive director;

Dennison: Q1 2012 report;

Khan Resources suffers USD 1.3 million net loss in Q1 2012;

Swedish fund FMG targets Mongolia consumer stocks;

GoConnect offers shareholders distribution of First Mongolian shares;

Rio defends spending on iron ore as higher costs hit Australian coal.

Economy:

Throwing out the baby with the bathwater;

Government ownership stalls domestic and foreign firms, per MNMA;

LSE hosts resource investors preparing for Mongolia’s boom in commodities;

Development Bank invests in overhaul of roads;

Boosting local construction of roads, bridges and homes;

UB government partners with German municipality for health;

Mongolia 13th on Digital Investment Attractiveness Index;

Mongolia looks to wipe out food-and-mouth disease from western region;

Mining truck to tire ratio to stabilize by 2015, says Caterpillar CEO;

With iron ore in short supply, China looks to Mongolia;

China's mines still deadly;

China surplus jumps on weak imports.

Politics

Parliament shows signs of settling on a Foreign Investment law;

Negative sentiment surrounds foreign investment bill;

MPs dilute proposed Foreign Investment draft law;

Mongolia seeks control over investment from foreign state-owned firms;

Enkhbayar hospitalized on hunger strike;

Spring session likely to be extended;

Parties submit election programs;

Parties begin candidate selection process;

Voters to grapple with new ballot system;

Election campaigns open in UB;

Mongolia's democracy reputation hinges on 2012 elections;

Government alters railway contracts;

Parliament rules against sacking minister of justice;

New head of Mineral Resources Agency appointed;

President greets Europe's new heads of state;

Austria looks for strategic mineral resource alliance with Mongolia;

Governors prepare for army draft;

U.S. Defense Department official visits Mongolia;

Senior Chinese military official visits for strong ties.

ECONOMIC INDICATORS:

MSE Top 20 Index by Market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central Bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

Asia Pacific Securities

BUSINESS

SOUTHGOBI SHARES DIVE ON FEARS OF CHALCO DEAL DERAILMENT

Canadian coal miner SouthGobi Resources Ltd.'s Hong Kong shares plunged on Tuesday on concerns

the Mongolian government may scupper a bid by top Chinese aluminum maker Chalco to buy a

controlling stake in it.

State-run Aluminum Corp. of China Ltd. (Chalco), offered USD 929 million for Ivanhoe Mines Ltd.'s

57.7 percent stake held in SouthGobi. The offer appears to have caught the Mongolian government

by surprise, as it announced plans to suspend certain exploration licenses that SouthGobi holds.

Analysts say there has been a historic mistrust between the two countries. Helen Lau, analysts with

UOB Kay Hian, said that in a worst-case scenario, the move by Mongolia's government signals that

the deal could collapse.

The Mongolian government's intervention appears like a political move rather than a commercial

decision. This will increase the political risk for Chinese state companies looking to acquire

Mongolian assets,‖ Lau said. SouthGobi's Hong Kong shares fell as much as 13.3 percent on Tuesday

to a one-month low, before cutting their losses to be down 11 percent by midday, heading for their

biggest one-day fall in just over a year. Its Canada shares fell 12.4 percent on Monday on the

Toronto Stock Exchange.

The coal miner said if it receives an official ruling from the Mongolian government, it may need to

suspend operations until an injunction is granted. It has requested Ivanhoe Mines and Chalco discuss

the proposed deal with the Mongolian government. It also has informed Rio Tinto PLC, which has a

51 percent stake in Ivanhoe Mines.

Shares of Ivanhoe Mines fell 5.6 percent to a more than two-year closing low of CAD 12.03 on

Monday on the Toronto bourse. SouthGobi—which owns four coal projects in Mongolia, three

developed projects and a mineral exploration license—said it has no reason to believe its licenses

are not in good standing.

Proven and probable surface coal reserves at Ovoot Tolgoi are estimated to be 175.7 million tons as

of 11 December, 2011.

Source: Yahoo Finance

CORRUPTION INVESTIGATION SINKS IVANHOE‟S STOCK PRICE

Ivanhoe Mines Ltd.'s shares fell sharply Tuesday after Mongolian anti-corruption authorities visited

the head office of the Canadian miner's coal operations.

SouthGobi Resources Ltd. said the Independent Authority Against Corruption (IAAC) ―formally

requested information‖ from the offices of subsidiary SouthGobi Sands LLC. Vancouver-based

Ivanhoe Mines owns 57.6 percent of SouthGobi Resources. Ivanhoe's shares were down 7 percent at

CAD 9.66 (USD 9.65) in early trading. SouthGobi Resources‘ shares fell by 13 percent in Hong Kong.

SouthGobi Resources said the decline was spurred by an attempt by the Mongolian government to

limit foreign ownership of Mongolian strategic assets to 49 percent and the visit of anti-corruption

officers to its offices.

―SouthGobi has previously been advised this is in connection with an investigation into a third-party

and has no reasons to believe SouthGobi Sands LLC is itself the subject of any investigation,‖ the

company said.

Last month the Mongolian government objected to a bid by China's state-owned Aluminum Corp. of

China Ltd. The Chinese company had agreed to buy a controlling stake in SouthGobi Resources in a

deal valued at as much as HKD 7.2 billion (USD 927 million).

Source: Wall Street Journal

DRAIG REPORTS THICKEST COAL INTERCEPTS YET AT TEEG

Latest drilling on Draig Resources‘ Teeg license has returned the thickest coal seam intercepts to

date.

The company reported apparent thickness of 86.28 meters in one hole, intercepted from a depth of

27 meters. Other thick seams intercepted include one of 66.75 meters and 30-meter-thick

intercepts in a twin angled core hole. Phase one drilling at Teeg, which is located in Uvurkhangai

Aimag, is now complete.

Samples and cores form the program are at the ALS laboratory in Ulaanbaatar for quality testing,

with further tests to be undertaken in Queensland. Planning for the Phase two drilling program is

underway, with further drilling required to connect the due diligence coal intersection achieved in

mid-2011 with the northern extent of the current strike. This work could expand the strike length of

mineralization at Teeg to more than 6.5 kilometers.

Phase two drilling will also include exploration on the neighboring Nariin Teeg license, where

geophysics have identified a number of potential coal bearing targets, and at the four Umnugobi

Aimag licenses.

Source: Proactive Investors

XANADU MINES MAKES HEADWAY IN OYUT ULAAN ACQUISITION

Australia-based metals explorer Xanadu Mines Ltd. has moved forward in its acquisition of the Oyut

Ulaan copper and gold project in the south Gobi region of Mongolian.

After its due diligence is complete and pending approval from Canada's Temujin Mining Corp., the

current owner of the licensed site, Xanadu Mines will renegotiate a final agreement for the

purchase of Oyut Ulaan. Xanadu Mines will make the purchase from Temujin Mining subsidiary

Vantage LLC.

The deal will initially grant Xanadu mines 25 percent interest in the project. Afterwards it will be

the decision of Xanadu Mine's shareholders for the purchase of the remaining 75 percent. Xanadu

plans to complete the deal by the end of the next quarter.

The deal includes the issuance of 3.95 million new shares in Xanadu Mines at AUD 4.25 a share. The

final number of shares issued will depend on Xanadu Mines' share price prior to the decision made

by shareholders on the remaining 75 percent interest in Oyut Ulaan.

An additional 15 million shares will also be issued to Temujin after JORC compliant resource data is

released if a minable area of at least 90 million tons at an average 1 percent copper is found as well

as a return of positive data from a pre-feasibility study.

The 120-square kilometer Oyut Ulaan copper-gold project is located 275 kilometers east of the Oyu

Tolgoi mine and 60 kilometers west of the planned Sainshand industrial complex and trans

Mongolian Railway. Extensive geophysical, trenching and drill data has been compiled by previous

owners, which Xanadu Mines will continue its analysis in the coming months.

Source: Xanadu Mines Ltd.

PROPHECY COAL TARGETS 2012 SALES OF 300,000 TONS

Coal miner and developer of the Chandgana power plant Prophecy Coal Corp. has announced a sales

target of 300,000 tons of coal in a recent sales update.

The company has contracts to deliver an additional 228,388 tons in 2012, the majority of which is to

be delivered to the Darkhan and Erdenet power plants. For the rest of 2012, the company expects

stabilized production cost and minimal capital expenditures at Ulaan Ovoo.

―The coal inventory levels at Mongolian power plants this past winter were down to only a few days,

which created a national emergency,‖ said John Lee, chief executive officer. ―We are committed to

delivering our quota to Mongolian power plants in 2012, while continuing to work with the

Mongolian government on the 600 megawatt Chandgana power purchase agreement to address the

long-term energy needs of this rapidly developing country and at the same time, provide a stable

return to our shareholders.‖

In the past months, Prophecy Coal has experienced a steady increase in both demand and realized

sale price for its coal. In 2012 it received commitment an interest for a substantial quantity of

Ulaan Ovoo coal from Russian buyers, however those sales are on hold until Russia opens the Zeltura

border crossing and a revised export royalty scheme from the Mongolia's General Department of

Taxation is drawn up.

Source: Prophecy Coal Corp.

ALTAN RIO TO BEGIN EXPLORATION THIS MONTH

With the global economy set to limp its way through 2012, gold prices continue to soar toward a

record high. Meanwhile Vancouver-based junior Altan Rio Minerals Ltd. forges ahead with a fast-

paced drill campaign set against the backdrop of mineral-rich Mongolia.

Mongolia is a great place for a Canadian junior like Altan Rio to go exploring. It's one of the world's

most prospective mineral regions, with most of the country having yet to be introduced to modern

exploration methods.

Altan Rio is posed to cash-in on Mongolia's offering with its two primary focus properties;

Chandman-Yol and Khavchuu. Chandman-Yol is situated about 10 kilometers west from Centerra

Gold's Boroo mine and similar makeup to that deposit.

―Our portfolio of projects and experienced management and first-rate Mongolian national team

really sets us apart from other juniors,‖ said Director of Exploration Kelly Cluer. He later added,

―Chandman-Yol isn't your typical junior company project. We really have an opportunity to discover

a large copper-gold porphyry system with huge tonnage potential.‖

As for Kavchuu, investors can expect assay results announced sometime next month. Additionally,

the company plans to begin drilling near-surface targets this month and then deeper targets later in

the season.

Source: Financial Press

XANADU MINES APPOINTS ULAANBAATAR-BASED EXECUTIVE DIRECTOR

Australia-based explorer Xanadu Mines Ltd. has appointed Hadyn Lynch as new executive director

based in Ulaanbaatar in a bid to strengthen its existing in-country management team.

Lynch is a senior financial executive within the Australian and international mining industries and

has worked in corporate advisory and project funding roles with global and domestic investment

banks during the last two decades.

―Mr. Lynch's appointment reflects a determination by the board to grow shareholder value and

advance the company's exploration portfolio in Mongolia,‖ said Chairman Brian Thornton.‖

In January Xanadu acquired two licenses in the highly prospective South Gobi porphyry belt in

southern Mongolia—the Amgalant and Argalant copper-gold projects—which are the target of a

current exploration and drilling program. The two licenses cover about 1,000 square kilometers in

relatively underexplored territory about 100 kilometers northeast of the Oyu Tolgoi copper mine.

Source: Xanadu Mines Ltd.

DENNISON: Q1 2012 REPORT

Denison Mines Corp. today reported a net loss of USD 52 million for the three months ended in

March. The company is currently engaged in uranium exploration in ventures in Mongolia, as well as

Canada, the United States and Zambia.

The total USD 52 million dollar loss represents a loss of USD 0.14 per share compared with a net loss

of USD 7.1 million, or USD 0.02 per share, in the same period a year ago.

For exploration in Mongolia, the company spent USD 306,000 in the first quarter. The company

currently has an 85 percent interest in the Gurvan Saikhan joint venture with the Mongolian

government through Mon-Atom LLC, a state-owned uranium firm. Mongolian law entitles the

government to a holding of 34 to 51 percent interest in the project, depending on its participation

in exploration and at no cost to the government.

Both Denison Mining and Mon-Atom are cooperating to meet the requirements of the Law on Nuclear

Energy.

Source: Denison Mining Corp.

KHAN RESOURCES SUFFERS USD 1.3 MILLION NET LOSS IN Q1 2012

Khan Resources Inc. disclosed a net loss of USD 1.3 million for the first quarter of 2011.

The loss is related to the company's inactivity and legal fees for international arbitration against the

government of Mongolia and Russian uranium miner Atomredmetzoloto JSC (ARMZ) for USD 200

million and USD 300 million respectively. The firm expects arbitration hearings against the

government to be held from 14 May to 16 May.

Khan Resources is also waiting to hear a decision for its appeal after an Ontario course denied its

request for a hearing last March.

Source: Khan Resources Inc.

SWEDISH FUND FMG TARGETS MONGOLIA CONSUMER STOCKS

Swedish fund manager FMG expects strong growth in Mongolian stocks even though the former faces

the uncertainty of parliamentary elections.

Rising demand for natural resources such as coal and oil is expected to fuel the Mongolian economy

and put more money in the pockets of consumers, FMG's principal fund manager Johan Kham told

Reuters in Singapore on Monday.

―Mongolia is a leveraged play on China... Any growth over 5 to percent is still going to be good for

the steel industry,‖ said Kham.

FMG launched a fund at the end of last year to invest in companies listed on the Mongolian Stock

Exchange (MSE). The fund currently has USD 1 million and hopes to grow about USD 25 million over

the next two years, he said. His top picks among Mongolian stocks includes beverage firm APU. The

Mongolian Stock Exchange was the world's second-best performing market after Venezuela last year.

―We'd rather own the consumer [stocks] than mining. The exposure to mining will see wide price

swings. But the domestic companies are growing very fast,‖ he said.

About 60 percent of its portfolio is invested in consumer-related stocks, while the rest are mining

firms, he added.

Source: Reuters

GOCONNECT OFFERS SHAREHOLDERS DISTRIBUTION OF FIRST MONGOLIAN SHARES

GoConnect Ltd. (GCN) confirmed that it would distribute 10 percent of First Mongolian Investment

Holdings Ltd., shares to its qualified shareholder ahead of plans for an offering on the Australian

Securities Exchange (ASX).

Only GoConnect shareholders with 250,000 shares or more who meet the deadline for the closing of

the deal will qualify for the distribution. Preparation of a prospectus First Mongolian's proposed ASX

listing is under way. Sino Investment services Pty. Ltd. is the lead manager for the proposed listing.

Additionally, GoConnect shareholders who qualify for the first Mongolian shares on 8 June will also

each be offered a right to subscribe to an additional USD 2,000 of First Mongolian.

Source: GoConnect Ltd.

RIO DEFENDS SPENDING ON IRON ORE AS HIGHER COSTS HIT AUSTRALIAN COAL

Oyu Tolgoi developer Rio Tinto PLC has defended plans to continue to spend heavily on its iron ore

operations in Australia, but cautioned that the country's attraction as an investment destination has

deteriorated and operations such as coal are being hit with sharply higher costs. Australia is also a

direct competitor with Mongolia for iron and coal sales.

Cost inflation coupled with global economic uncertainty have heightened the mining company's

caution before stepping up investment and capital returns, and as a result, some growth

opportunities may not be developed, Rio Tinto's board told shareholders at an annual meeting in

Brisbane.

―We are very careful in the evaluation of our projects and acquisitions,‖ said Guy Elliot, chief

financial officer of the Anglo-Australian company. ―We assess very carefully the risks they present

to us... I don't think we'll be able to do all the things we would like to do.‖

Share prices of Rio Tinto and other miners have been particularly volatile in recent weeks as

investors fret over the Europe's economy and slowed growth in China.

Chairman Jan Du Plessis also singled out Australia—Mongolia's number one competitor of coal

imports to China—as the location where new taxes on iron ore and coal profits, as well as carbon

emissions and other economic factors, has driven up the costs for raw materials and labor. Australia

is as a result less attractive for investment.

Source: The Australian

ECONOMY

THROWING OUT THE BABY WITH THE BATHWATER

News that state-owned Aluminum Corporation of China Ltd. had proposed to purchase 57 percent of

SouthGobi Sands LLC, letters from around the country swept into the capital demanding Parliament

put a stop to this deal. Now, however, it has gone too far and introduced too restrictive legislation.

Foreign investment is a powerful tool that can help stimulate development. Investors came to

Mongolia because they saw opportunity to profit, but will leave quickly if that is no longer true.

Balancing the interests of society and big business is an art form that takes great care, and Mongolia

is like a child who has only just begun its training.

Restrictions in the mining sector over foreign investment are necessary because it is all Mongolia

has to offer the international market. State-owned companies are neither efficient nor conducive

to fair competition, with their far vaster reserve of resources than private enterprises. Allowing a

foreign state-owned firm to get involved in Mongolia's coal industry will likely lead down the

same path as its oil industry, which is today controlled all the way down the line of the value chain

by foreign interests.

Rather than putting the proper regulations in place that are in the best interests of the nation,

Parliament has instead rushed to develop its law on the ‗Regulation of Foreign Investment in

Business Entities Operating in Sectors of Strategic Importance‘. Similarly, it only took Parliament a

weekend to pass the ‗Windfall Profits Tax‘, which resulted in gold miners packing up and leaving to

allow so-called enterprising ―ninja‖ miners to pick up where they left off.

Members propose restricting foreign investment to 49 percent or less in sectors of strategic

importance, such as minerals, banking and finance. Mongolia does not have the kind of leverage

needed to convince investors to put up with this sort of restriction. For that, it would need greater

competitiveness and more assets. Mongolia is not likely see either in the near future without

foreign investment as well.

A well developed law would provide greater clarity as to who will have the right to approve foreign

investments, who must monitor them, and how a deal can be approved. Australia, for example, has

its foreign investment review board (FIRB), which is responsible deciding on cases such as the

SouthGobi-Chalco deal. Australian law also clearly states its limitations on foreign ownership.

If Parliament allows this law to pass with even one sentence that somehow restricts ownership by

foreign state-owned firms, it would do Mongolia a great service. If policy makers fail, however, it is

up to the people to make sure they cannot make this sort of mistake again in the election booths.

________________________________

Jargalsaikhan “defacto” Dambadarjaa is an economist with specialization in banking and the stock

market.

Source: UB Post

GOVERNMENT OWNERSHIP STALLS DOMESTIC AND FOREIGN FIRMS, PER MNMA

Truly strategic and important business should be ones related solely to national interests, said

Executive Director of the Mongolian National Mining Association.

N. Algaa warned that it is not the country's advantage to allow the government to take control

whenever a business grows too large. He gave the example of raw materials that can substitute for

imports and the breakup of monopolies as times when government can intervene appropriately, but

warned that unchecked power is not in anyone's best interests.

―The present definition of strategically important deposits is too broad and subjective,‖ he said. ―It

means the government can own a big share of a business whenever it wants. The present draft law

is good for neither domestic nor foreign business.‖

He added that government should concentrate on regulating business and tax collection rather than

intervening in their operations.

Source: Udriin Sonin

LSE HOSTS RESOURCE INVESTORS PREPARING FOR MONGOLIA‟S BOOM IN COMMODITIES

The London Stock Exchange (LSE) last week played host to international resource investors

clamoring to grab a chunk of the commodity-fueled economic boom that is sweeping Mongolia.

Over the past four years, the country's mining companies have ramped up their output, and foreign

resources giants are increasingly invested in the region. But if Mongolia is to enjoy the spoils of its

natural wealth, the country's capital markets have to be reformed—starting with its fledgling

national bourse.

Founded in 1991, the Mongolian Stock Exchange (MSE) has 366 listings. Many names are inactive and

overall trading on the exchange is thin at just two hours a day. With a capitalization of USD 2 billion

(compared with the LSE's 3.7 trillion) the market is too illiquid for chunky home-grown listings.

―Because of the lack of sophisticated infrastructure, mining companies haven't been able to gain

exposure locally,‖ said Altai Khangai, the exchange's 30-year-old chief executive.

The Mongolian government intends to change this. Last year, the Ulaanbaatar-based partnered with

the LSE to overhaul the Mongolian market. As part of the deal, the MSE will implement the LSE's

technology platform MillenniumIT.

Parliament is reviewing a draft Securities Law which, among other things, incorporates elements of

the United Kingdom's Financial Services Act listing rules and increases transparency and disclosure

requirements. The exchange estimates that the MSE will notch up USD 45 billion in listings during

the next 10 years through the privatization of state-owned companies and other assets—and the LSE

hopes it will get a slice of the action.

Read more…

Khangai also hopes the reforms will result in several of the nearly 50 foreign-listed international

mining companies with assets and operators in Mongolia to seek a dual listing at home. Khangai

added the development of the local market is even more important for non-mining firms, since

domestic Mongolian companies that are not part of the commodities boom find it difficult to gain

international exposure.

Currently the exchange trades stocks and government bonds but it is exploring the introduction of

vanilla exchange-traded funds, which are growing popular among emerging market bourses.

Source: eFinancial News

DEVELOPMENT BANK INVESTS IN OVERHAUL OF ROADS

The Development Bank of Mongolia has committed to MNT 114 billion in investment for road work

this year.

Twenty-two companies have been selected for bids in road construction work. Some work has

already started in Ulaanbaatar's Sukhbaatar, Bayanzurkh and Chingeltei Districts. Plans consist of

constructing 144 kilometers of road work, of which 34 kilometers will be the construction of new

roads, and 107 kilometers of repairs and widening of roads.

Project coordinators have also planned for the repair of two intersections and the construction of

an underground road tunnel for pedestrians to cross, and the repair of 26,000 square meters of

road.

In total, road work will cover 60 locations by 2014.

Source: Zuunii Medee

BOOSTING LOCAL CONSTRUCTION OF ROADS, BRIDGES AND HOMES

Mongolia is rolling out an extensive program of development that includes the construction of

roads, bridges, and homes as it gears up for an anticipated natural resource boom that is expected

to transform the economy and pave the way for widespread urbanization.

The government is funding many of the projects through its mining sector and state budget is also

looking to attract investment from the private sector for development that includes the building of

satellites cities to reduce population density, road networks and infrastructure for power.

While the huge volume of work spells good news for Mongolia's builders, concern has been raised

that the country's construction sector will require and extensive overhaul before local firms can

meet increased demand for infrastructure. Some observers have also suggested that efforts to tap

foreign investment need to be stopped up if Mongolia is to attract companies with the necessary

expertise.

In April Mongolia's Cabinet identified several ―urgent‖ roads and bridges to be built, in addition to

5,572 kilometers of roads and 900 kilometers of highways to connect Ulaanbaatar with the rest of

the country. The Asian Development Bank plans to play a key role in driving forwards efforts to

modernize the capital public transport system and develop the ger districts, where 60 percent of

the city's population lives.

One of the capital largest ongoing construction projects, the ―Homes for 100,000 Household‖

program, is set to enter its next phase following Prime Minister S. Batbold's confirmation that the

green light had been given for the building of a second wave of apartments.

Read more…

But while the construction sector looks set to play a vital role in Mongolia‘s development, analysts

believe the industry could be held back by challenges in key areas, such as capacity and regulatory

constraints, shortages of materials and manpower, and transportation bottlenecks.

Although the government's initiatives are expected to fuel considerable growth in construction, the

call is growing for greater efforts to be made to attract more foreign investment and expertise that

would bolster the sector's prospects in the long term.

Source: Oxford Business Group

UB GOVERNMENT PARTNERS WITH GERMAN MUNICIPALITY FOR HEALTH

The mayors of Ulaanbaatar and the German town of Eseen Reinhard Pass have agreed to cooperate

in the health sector.

The agreement established on the ―Joint Declaration on a Partnership Cooperation between

Mongolia and Germany‖ issued on 5 September 2000 permits both sides to cooperate on projects for

treatment and first-aid services.

As he was about to ink the contract, Ulaanbaatar Mayor G. Monkbayar said Mongolian and Germany

had already cooperated in renewing the city's sewage plant and relocating beavers to protect the

Tuul River's ecosystem.

The group formed out of this deal has been conducting post-hemorrhage treatment first introduced

in the United States in 2006. Representatives from Essen have received training from Germany's

First and Second Polyclinics. They consider this an opportunity to introduce proper hygiene

routines, in addition to other areas for guidance.

Source: Montsame

MONGOLIA 13TH ON DIGITAL INVESTMENT ATTRACTIVENESS INDEX

Surprises are coming out of the 2012 Digital Investment Attractiveness Index, including Mongolia's

13th place ranking on the list marking countries for their investment draws.

The index is a ranking of 87 lower and middle-income countries by their potential markets for

digital products and services by firm Strategy Analytics.

―Some countries that have been receiving a lot international investment, like Pakistan and Nigeria,

look less attractive when factors like GDP growth, education, quality of government and access to

grid power are considered,‖ Tom Elliot, director of the emerging markets communications

strategies services (EMCS) and principal analyst of the index.

Strategy Analytics developed the attractiveness index to provide a single quantitative measure of

the relative attractiveness of developing countries as markets for digital products and services. This

tool aggregates 22 country-level measures of demographics, economics, business climate, and

information and communications technology drawn from public sources and Strategy Analytics

databases.

Source: Xinhuanet

MONGOLIA LOOKS TO WIPE OUT FOOD-AND-MOUTH DISEASE FROM WESTERN REGION

Mongolia and the World Animal Health Organization will cooperate to develop animal health

standards and amend veterinary laws in the hopes of eradicating foot-and-mouth diseases from the

western region.

Visiting OIE General Director Bernard Vallat, who met Mongolian President Ts. Elbegdorj, said

Mongolia is one of the 10 countries to which the Paris-based agency pays much attention because of

its nomadic livestock herding practices and high level of livestock per capital.

In order to gather ―health region" status, there should be amendments to Mongolia's veterinary

laws, Vallat said. Afterward the OIE could send analysts to Mongolia and prepare the necessary

documentation for declaring approval for the western region.

The OIE has also agreed to assist with Mongolia's projects to support its veterinary health sector,

while improving the health of its livestock and wildlife in general. Vallat said that the necessary

funds for the projects could be raised through organizations such as the World Bank.

Mongolia boasts of 37 million heads of livestock, including camels, sheep, goats, cattle, and horses.

But rural Mongolia is often plagued by animal diseases such as foot-and-mouth disease.

Source: News.mn

MINING TRUCK TO TIRE RATIO TO STABILIZE BY 2015, SAYS CATERPILLAR CEO

Mining truck and tire production should be on equal footing by 2014 to 2015 onwards, as both tire

and truck manufacturers are spending big money to ensure the increased availability of both, says

Caterpillar chief executive officer Doug Oberhelman.

―We have been playing catch-up with the mining industry for a decade or more,‖ he adds.

Current lead times on securing a mining truck could be anything from 18 months upwards.

Oberhelman said customers have already placed truck orders with Caterpillar for mines opening in

2014, in an attempt to circumvent lead times. He noted that specialized mining tire supply is very

much in the same boat as a mining truck availability with only the recent recession providing

somewhat ―of a breather.‖

However, Oberhelman said the major tire manufacturers have indicated that they are investing

heavily in the production of 32-inch tires and upwards and that the supply-demand situation should

be in balance by 2015 onwards. He warned, however, that a rapid increase in mining truck demand

could upset those dynamics.

Source: Mining Weekly

WITH IRON ORE IN SHORT SUPPLY, CHINA LOOKS TO MONGOLIA

Iron-ore shortages have Chinese steel makers looking north toward Mongolia and its 11 billion tons

of iron-ore resources.

Xijang, a natural-bounty province located in western China with proven mineral resources of around

1.19 billion tons, is seeking steelmaking activities impacted by ingredient shortage due to a lack of

large mining and beatification plants. The shortage will expand with more steel projects coming on

line.

Iron ore supply shortage is indisputable, Cheng Xiang, vice general manager of Xinjiang BaYi Steel

International trade said. He added both neighboring Central Asia and Mongolia have abundant iron-

ore resources. Fourteen major iron-ore zones in Mongolia have around 11 billion tons.

Most Chinese steel mills are planning new projects in Xinjiang. According to incomplete statistics,

there is over 60 million tons of steel capacity under construction or to be constructed in Xinjiang.

Compared to the quick growth in crude steel construction in place, iron ore output can hardly see

any real improvement in the short term because of iron-ore shortage and transportation

bottlenecks.

Many steel mills in the region suggest the flow-in of state-run businesses and social capital into iron

ore mining and logistics, and opening-up of Horgos Port.

Source: Steel Home

CHINA'S MINES STILL DEADLY

China is notorious for containing some of the world‘s deadliest mines—a reputation that has been

corroborated in recent months by a series of fatal accidents. The world's largest consumer and

producer of coal is beset by illegal operations, dangerous working conditions, local corruption, and

cover ups of fatalities. While Mongolia is trying to instill the proper regulations for safety, it may be

best to learn from its southern neighbor's mistakes.

Nine coal miners died and 16 were injured in an explosion in Inner Mongolia in the latest disaster on

23 April. Twenty-one people were detained for the alleged cover up of the deaths of miners. At

least 10 workers in an illegal coal mine in northern Shanxi province died in a flood, and separately

at least another five members died in a flood in central Henan province.

Safety conditions at China's mines have advanced considerably. But they continue to be counted as

among the world's most dangerous. Official figures from last year show 1,973 fatalities, down from

2,433 in 2010 and 7,000 in 2002. Activists, however, believe the real numbers are higher still, and

cover ups are still reported.

The government has taken measures to improve safety standards, including the mandate for

underground energy shelter systems built to specification. It also worked to close down illegal

mines. Its law to fire officials who flout safety rules, however, has opened the door for elaborate

attempts to conceal abused, however.

Pressure from the public in an increasingly vocal Internet age is crucial to pushing reforms. It has

become a platform for whistleblowers. For conditions to improve, the government must intensify

efforts for law enforcement and compensation should be provided to the families of victims to

prevent underhanded payoffs.

Source: Asia Times

CHINA SURPLUS JUMPS ON WEAK IMPORTS

China's trade surplus jumped in April as imports and exports both decelerated further, renewing

fears of a harder than expected ―landing‖ for Mongolia's chief consumer of metals and energy

products. Exports grew just 4.9 percent from a year ago, compared with 8.9 percent growth in

March. Imports rose 0.3 percent year-on-year, compared with March's 5.3 percent increase.

The lackluster import growth is raising alarm bells among economists, who are calling for more

monetary easing and growth-oriented policies from Beijing. One economist recommended that

policy makers should concentrate on promoting growth.

Part of the reason for weak imports, economists say, has to do with the continued gloomy outlook

for Chinese exports. The trade data offers signs that Chinese domestic demand is weakening as

well. Imports for domestic consumption grew just 2.1 percent.

However, Tin Lu, Bank of America Merrill Lynch economist, pointed out that there were a number

of distorting factors at work in the April trade figures. Commodity prices peaked last April, for

example, so while iron ore imports fell 5.6 percent in value terms, in volume terms there was

actually a 9.1 percent increase.

―The situation is not as bad as the numbers would indicate,‖ said Lu.

Source: Financial Times

POLITICS

PARLIAMENT SHOWS SIGNS OF SETTLING ON A FOREIGN INVESTMENT LAW

The latest draft of the Foreign Investment Law received a positive reception from a joint session of

Parliament before being sent back to the Security and Foreign Policy and Economic Standing

Committees for further development. The law could be decided upon next week.

Source: BCM

NEGATIVE SENTIMENT SURROUNDS FOREIGN INVESTMENT BILL

The news on Parliament's approval of the latest draft on the bill on ‗Regulation of Foreign

Investment in Business Entities Operating in Sectors of Strategic Importance‘ has analysts worried

Mongolia is showing foreign investors the door out. Parliament has already heard an initial reading

on the draft law, signaling a speedy passage may be imminent.

MPs have voted on some 30 different points with overall support. One change was made to Clause

6.1.1, changing the figure ―one third‖ to ―fifteen percent,‖ likely referring to the stake size

threshold of a strategic company before government approval is necessary.

―It is becoming more difficult for foreign investors to do business in sectors of strategic

significance, namely minerals, banking and finance, and media and telecommunications,‖ said Dale

Choi, Frontier Securities' chief investment strategist.

Choi posited that the bill has a high likelihood of being approved in haste. It won‘t be until the bill

is passed into law that private business will know the implications of its passage, he added.

Source: Frontier Securities

MPS DILUTE PROPOSED INVESTMENT LAW

Mongolian legislators have agreed to water down a draft law to restrict foreign investment amid

fears it could hurt the mineral-rich country's economic growth. However, mining, media, and

banking projects will still be subject to stringent restrictions, though some analysts expect the draft

will be further diluted before becoming law.

MPs agreed on Tuesday to reduce the number of strategic sectors that should be 51 percent state

controlled under the draft law, according to details of a committee meeting published on the

official parliamentary website.

The draft was initiated by nationalist backbenchers in the wake of Chinese aluminum giant

Aluminum Corp. of China's (Chinalco's) efforts to take a majority stake in the Canadian firm

SouthGobi Resources Ltd. A provision saying that projects worth more than MNT 100 billion should

be subject to majority ownership has also been removed.

―If the current (initial) draft Foreign Investment Law is ratified, the BCM believes that this will

undermine Mongolia's development trajectory, which has been on a steep upward path,‖ said the

Business Council of Mongolia (BCM) in a statement issued on Wednesday.

Critics said the definition of 16 ―strategically important‖ sectors, which included minerals, food,

agriculture, power, property, transportation and communications, was too wide. While the list will

now be cut back, the mining and banking sectors will be retained and investors will still need to be

wary, advised securities firm Frontier Securities.

Others included are those that directly or indirectly‖ affect the price of minerals or harm Mongolia's

environment and economic independence. This latter clause was designed specifically to restrict

state-owned Chinese firms like Chinalco.

The new foreign investment legislation was drafted in part by N. Batbayar, a Democratic Party

representative also responsible for drawing up a widely criticized windfall profit tax in 2007. The

tax, passed despite government opposition was eventually repealed in 2009 to pave the way for the

investment agreement on the Oyu Tolgoi copper-gold project, which granted 66 percent of the

project to Canada's Ivanhoe Mines Ltd. Batbayar also eventually led a movement to increase the

government's stake in that project as well.

Source: Reuters

MONGOLIA SEEKS CONTROL OVER INVESTMENT FROM FOREIGN STATE-OWNED FIRMS

Parliament is discussing a law that will control investment by foreign state-owned firms in strategic

assets said an unofficial source. This new law could potentially stop Chalco's bid to buy a controlling

stake in SouthGobi Resources Ltd.

The source said that in near time, Parliament plans to change the law to ensure that acquisitions by

foreign state-owned firms related to strategic resources, such as resource companies or mines, will

go through a government vetting process akin to that practiced in Canada and Australia.

Currently there is no shareholding limit for foreign state-owned firms looking to invest in Mongolia's

strategic firms.

Source: Business-Mongolia

ENKHBAYAR HOSPITALIZED ON HUNGER STRIKE

Jailed former Mongolian President N. Enkhbayar, who is planning to run in a parliamentary election

next month, was taken to the hospital this week after he began a hunger strike 4 May in protest

over his imprisonment.

Enkhbayar, who previously served as prime minister and then president, was taken to a hospital in

the capital Ulaanbaatar, according to his son Batshugar. The former leader's treatment may further

unsettle foreign investors who helped fuel 17.3 percent economic growth last year, said Oliver

Belfitt-Nash, head of research at Ulaanbaatar-based brokerage Monet Capital LLC. Political

infighting in recent months has hindered efforts by the government to sell off state-run coal mining

companies so it can raise cash for infrastructure projects in the country of 2.8 million people.

―The arrest is just highlighting political risk here,‖ Belfitt-Nash said in a phone interview. ―It's

adding a premium to Mongolia's risk and all the stocks are going down because of it.‖

Enkhbayar's son says the arrest is politically motivated and that the court decreed his father could

be held in detention until 27 June, a day before the elections take place.

Source: Business Week

SPRING SESSION LIKELY TO BE EXTENDED

The spring session of Parliament is likely to run past the planned date for commencement.

When Parliament began its current session, it announced it would run until 10 May. However

extensive debate regarding the Law on Elections has Parliament once again falling behind. Debate

over the dismissal of the minister of justice was also a cause for delay.

When asked about how long the spring session would run, S. Magnaisuren, secretary of the

Parliament Office, said there is currently 11 issues remaining for discussion. He added that

Parliament will have a better idea of when its current session will end on 15 May.

Source: Undesnii Shuudan

PARTIES SUBMIT ELECTION PROGRAMS

Just as election season is about to take full bloom, 11 parties and two coalitions have submitted

their actions plans for their upcoming campaigns.

According to Mongolian law, every party or coalition must send a request to participate in the

election to the General Election Committee at least 50 days prior to election day. It is up to the

committee to approve of that scheme before a party can move forward with campaign activity.

Parties are allowed three days to revise their program before resubmitting it to the Election

Committee.

Mongolian law also strictly forbids promises for employment and gifts.

Source: Zuunii Medee

PARTIES BEGIN CANDIDATE SELECTION PROCESS

Five of Mongolia's official political parties have registered for the 2012 parliamentary election.

Parties submitted their programs to the National Audit Office and General Election Commission for

review. Now the parties may name their candidates and attach them to the various election

districts.

The Democratic Party (DP) has selected six groups with a combined 48 candidates. The DP has not

named any female candidates for this year's election. Former advisor to the president Ts. Oyugerel

was not able to pay the MNT 50 million fee required by the party to campaign with the DP.

President Ts. Elbegdorj has proposed that his current advisor, M. Batchimeg, run but she may have

suffered from a lack of support because of her recent entrance to the party.

The DP will hold meetings on 14 and 15 May before making its final decision on 25 May who will

represent the party in the upcoming election on 28 June.

Source: Unuudur

VOTERS TO GRAPPLE WITH NEW BALLOT SYSTEM

For the first time, Mongolian voters will be casting two votes on a ballot with two sections. Some

Mongolian observers say, however, that Mongolian voters have not been educated sufficiently about

the new system.

That unfamiliarity, in addition to the shortage of voter identity cards and new election equipment

supplied by Dominion Election Systems of Canada, could produce some confusion and lead to

challenges of results. The two section ballot will first list the names and party affiliations of

candidates in the voter‘s constituency. The second part will list political parties in order of the year

each was founded. That would place the ruling Mongolian People‘s Party (MPP), organized in 1921,

at the top followed by the Democratic Party (DP)

Some observers speculate that Enkhbayar‘s Mongolian People‘s Revolutionary Party might petition

the courts to order the General Election Commission to use the year 1924 as the founding date of

the MPRP in order to improve their position on the ballot. The MPP was organized in 1921 but

changed its name by adding the word ―revolutionary‖ in 1924.

Source: NAMBC

ELECTION CAMPAIGNS OPEN IN UB

Ulaanbaatar has officially kicked off its city election campaigns.

Secretary of the Ulaanbaatar Parliament J. Batbayasgalan announced that candidates may begin

their campaign activities for the upcoming election on 28 June, the same day as state

parliamentary elections. Ulaanbaatar Parliament has 45 seats. A newly passed law mandates that 30

of those 45 seats will be filled by direct election with the remaining 15 to be decided by the party-

list system.

In total, 820,000 voters will participate in the Ulaanbaatar city elections.

Source: Udriin Sonin

MONGOLIA'S DEMOCRACY REPUTATION HINGES ON 2012 ELECTIONS

2012 could be a decisive moment for Mongolian democracy. Mongolia's successful democratization

compared to some of its post-socialist peers is the trustworthiness of the elections results has been

one strength, but this is increasingly being questioned.

This year officials hope to sidestep another occurrence of the anger that erupted on 1 July 2008

after suspicions of voter fraud led to riots that turned violent, leaving four dead and hundreds

injured.

While the rules of the election have been finally set up, there is a question mark on the

organization of election. There is uncertainty over the reliability of the electronic ballot counting

machine that will be used for the first time this election. There has also been some significant gap

in the estimation of the number of registered voters in Mongolia. In 2008, there were claims that

the MPP used its control of civil registration to put the number of voters in favor of itself. Voters

may check online to see their names on the official registration, but alleged voter fraud is said to

be common in rural provinces. The major parties have always dominated the composition of local,

and the central election committee has always dominated too.

There is a lot at stake in this year's election. The most important of which is how fair the elections

are going to be organized to support democratic legitimacy and stability.

Source: Mongolia Today

GOVERNMENT ALTERS RAILWAY CONTRACT

The Cabinet has proposed amendments to a concession contract to the Sainshand-Tavan Tolgoi-

Ukhaa Khudag Railway.

The amendments centered over the construction and eventual transfer of ownership of the railway

back to the state. The Cabinet sent its orders to ministers and agency heads responsible for the

contract for them to have it align with Mongolian law. The contracts will include clauses that

provide national investors with opportunities to cooperate, open trading of shares through the

Mongolian Stock Exchange (MSE), and use of a 51 percent stake during the time of construction,

which would pass then to the state without charge when the stipulations of the contract expire.

Additionally, the Cabinet is looking to make amendments to contracts with special license holder

for the construction of the base structure to the Ukhaa Khudag-Gashuunsukhait rail line.

Source: Montsame

PARLIAMENT RULES AGAINST SACKING MINISTER OF JUSTICE

A majority of MPs have ruled against the dismissal of the minister of justice and home affairs.

In a decision 40 to 31 against, members decided that Minister Ts. Nyamdorj should not be removed

from his position. Grounds for his dismissal included his order for the arrest of former President N.

Enkhbayar. Two members of the Civil Will Green Party abstained as they have opted to remain

neutral on the matter.

Members of the Democratic Party unanimously defended their position for Nyamdorj's dismissal, but

could not swing a majority vote. Some policy makers cited the officers' gross violations to human

rights and the running of illegitimate operations during Enkhbayar's arrest for the judge's dismissal.

―I will work to clear up my reputation. I will give up my seat as minister of justice and international

affairs peacefully after the upcoming parliamentary elections,‖ said Nyamdorj.

Prime Minister Batbold weighed in to say that the legislature's investigation concluded that

Nyamdorj did not break any laws when issuing the order for Enkhbayar‘s arrest. Others questioned

the judge's ethical scruples, however.

Other grounds for Nyamdorj's dismissal are the failure to release electronic identification cards on

schedule and delays to the trials of police officers who partook in the shootings at the 1 July riots.

Source: UB Post

NEW HEAD OF MINERAL RESOURCES AGENCY APPOINTED

G. Altansukh has been appointed as head of the Mineral Resources Agency.

Altansukh is a graduate of the Institute at the State Security Committee of the former Soviet Union

and the Management Academy of Mongolia, majoring in law and state administration management.

He has a Master degree on international relations, and has been working for 26 years in the public

service for the General Authority of State Security, the Central Intelligence Agency, and Mongolia's

Embassy in Washington D.C.

Source: Montsame

PRESIDENT GREETS EUROPE'S NEW HEADS OF STATE

President Ts. Elbegdorj has sent letters of congratulations to two of Europe‘s newly elected heads

of state. The president sent salutations and words of congratulations to both newly elected

President of France Francois Hollande and his Hungarian counterpart Janos Ader.

―On behalf of the Mongolian people, I personally and sincerely offer my congratulations to you on

being elected as the President of France and wish you great success,‖ wrote Elbegdorj to his letter

to Hollande.

In his letter, the president added his hope that the two could meet at an upcoming convening of

NATO nations in Chicago in the United States.

To the state head in Hungary, the president mentioned developing closer relations between

Mongolia and the new president‘s nation, and invited him to make an official visit to Mongolia.

Source: Montsame

AUSTRIA LOOKS FOR STRATEGIC MINERAL RESOURCE ALLIANCE WITH MONGOLIA

The Austrian Department of Trade and Industry is aiming for an ―inner-Austrian resource alliance‖

with Mongolia for access to its vast mineral resources.

The alliance is part of Austria's aim to secure a supply of natural resources. It would together

companies, stakeholders, and economic and political policy makers to enable easier access to

natural resource supplies abroad and to create greater resource efficiency at home, said a

statement. Parties involved plan to begin activities in autumn.

As part of the plan, the country's economic minister, Reinhold Mitterlehner, said it was necessary to

engage in ―resource diplomacy‖ with resource-rich countries such as Mongolia, which could provide

minerals such as molybdenum and tungsten to Austrian companies.

Mitterlehner said talks with Mongolian representatives have been underway, adding that he hoped a

bilateral partnership ―can be achieved in 2013.‖

Source: Strategy Analytics

GOVERNORS PREPARE FOR ARMY DRAFT

The first phase of this year's military draft began last week nationwide. The drafting period runs

from 4 to 13 May this year.

The governors of various municipalities of rank and size are obligated to draft young Mongolian men

between the ages of 18 to 25. Additionally, they are responsible for receiving decommissioned

soldiers and organizing farewell ceremonies.

According to Mongolia's constitution, serving in the Army and protecting his country is a basic duty

of every Mongolian male citizen. Citizens are given the choice of either serving in the army or

paying a one-time fee of MNT 3 million to MNT 4 million.

Source: Zuunii Medee

U.S. DEFENSE DEPARTMENT OFFICIAL VISITS MONGOLIA

Some top officials from Mongolia and the United States met last weekend in Ulaanbaatar to bolster

bilateral military ties.

At a press conference following a meeting with U.S. Acting Under Secretary of Defense James Miller

and Mongolian Defense Minister J. Enkhbayar, the military officials expressed satisfaction with

current Mongolian-U.S. Cooperation.

The officials said that both parties exchanged their views on international and regional security

issues of common concern, including the nuclear issue on the Korean Peninsula. They said the

governments of both countries should work together to solve this conflict through peaceful means.

Miller stayed in Mongolia for a two day visit to meet with officials.

Source: Xinhuanet

SENIOR CHINESE MILITARY OFFICIAL VISITS FOR STRONG TIES

A senior Chinese military official described the China-Mongolia border as a bridge of friendship at

the start of a visit to Mongolia Wednesday night to promote ties between the two militaries.

Vice Chairman of China's Central Military Commission Xu Caihou said on arrival at Chinggis Khan

International Airport that China and Mongolia were friendly neighbors that had friendly relations

between their armed services.

In recent years, the two sides had enjoyed cooperation and exchanges in all fields. The bilateral

strategic partnership established in 2011 marked a new stage of development for bilateral ties, Xu

said, adding the two countries' military ties had been growing continuously.

Xu said the purpose of his visit was to consolidate and further develop the traditional China-

Mongolia friendship and deepen friendly cooperation of the two armed forces. He said he would

exchange views with his Mongolian counterpart on common concerns and further promote mutual

understanding. Mongolia and China's military also stands to expand consensus to boost inter-military

cooperation.

Source: CRI English

NEW MONGOLIAN LAWS

The following laws and addenda to laws were published in the latest weekly Government bulletin.

Unless otherwise decided by Parliament, they will take effect ten (10) days after publication.

Date Laws

04.05.2012 Acceding to Convention against International Organized Crime, its addenda:

Protocol on prevention, stop, penalty of human, particularly women, children

traffic,

Protocol against illegal admittance of immigrants by land, sea and air,

Protocol against fire weapons, cell, parts, illegal transportation, manufacturing of

fire weapons.

Acceding to International Pact on Civil and Political Rights'; Additional Protocol II

directed to abolish death penalty.

Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM

members who wish to access complete versions of the laws and regulations in Mongolian language

are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS

FUTURE MONGOLIA, 16-19 MAY, UB SPORTS PALACE

Mongolia first-ever world-class exhibition, Future Mongolia, will open from 16 to 19 May at Buyant

Ukhaa Sports Palace in Ulaanbaatar. Future Mongolia is an international trade fair and conference

for sustainable development.

Future Mongolia is on the best track to become the leading trade fair in Mongolia for the

international capital goods industry. Industry giants, e.g. Caterpillar, Liebherr and the mining

equipment manufacturer TAKRAF already confirmed their participation. The organizer is confident

that the envisaged number of more than 100 exhibitors will be reached. BCM is a Supporting

Organization for the trade fair. For more information visit the website.

Those interested in the event can call +49 89 244 41 9370 or email info@future-mongolia.com.

___________________________________________

2nd COALTRANS MONGOLIA IN ULAANBAATAR ON 23-24 MAY

In less than two weeks traders, coal producers, contractors, consultants, technology providers,

financiers, lawyers, representatives from power plants and steel mills are meeting to take

advantage of this unique opportunity to see and understand at first hand one of the last remaining

coal frontiers.

With more and more people registering each day – can you afford to miss out? Here is a selection of

companies who have confirmed their attendance so far:

Adamant LLC

ADEN Services Mongolia LLC

Alfred H Knight Asia Analytical LLC

Alinos Enterprises Ltd

Alpha Natural Resources

ALS Coal Asia Pacific

Anglo American

Anglo American Exploration (Australia) Pty

Aquaterra East Asia

Argus Media

Asian Development Bank

Aspire Mining Limited

Ausenco Taggart

Banpu Public Company Limited

Berwin Leighton Paisner LLP

BHPBilliton

Bhutan Ferro Alloys Ltd

BLC Co Ltd.

Blue Energy

BM Mongolia Partner/Hazemag

Bukkehave Corporation Ltd

Bureau Veritas

Business Council of Mongolia

Central Geological Laboratory

Changsha Kaiyuan Instruments Ltd

Clyde & Co

Clyde & Co LLP

Coaltrans Conferences Ltd

Coeclerici Coal & Fuels SpA

Cougar Energy Pty Ltd

CRU China

Eclipse Computing Australia

Ecoal China

Ekh Goviin Chuluu LLC

Energy Resources LLC

EPSA

Erdenes Tavan Tolgoi JSC

ERINA

Euro Khan Co Ltd

Fenwei Energy Consulting

Foreign Invesment and Foreign Trade Agency

of Mongolia

Frontier Securities

Global Trade Information Services Inc

Golomt bank

Greta Industries Pte Ltd

Hancock Prospecting

Hazemag & EPR GmbH Hunnu Coal LTD

Idemitsu Kosan Co Ltd

IEEC Limited, Moscow

Incolab Services Latvia

ISSM

Itochu Corporation

Khan Bank

Mesco Steel Mongolia Ltd

Mideast Integrated Steels Ltd

Ministry of Mineral Resources and Energy

Mitsui & Co Ltd Repr. Office in UB

Monadelphous

Mongolia Stock Exchange

Mongolian Express Co. Ltd

Mongolian Railway State Owned Shareholding

Company

Mongolian Society of Economic Geologists

Oxford Business Group

Peabody Energy

Petrovis LLC

Prophecy Coal Corp

PT Pamapersada Nusantara Mongolia

PTT International Company Limited

Quintana Energy Partners

Railway Authority of Mongolia

Renaissance Capital

RPS Aquaterra

Salva Resources

Signum Industrial Corp.

Silk Road Management

Stewart Mongolia LLC

Suntrans Mongolia LLC

Sustainability

Taggart Global, L.L.C.

TATA South East Asia Ltd.

Techenomics International Pty Ltd

Teck Resources Limited Beijing Rep. Office

ThyssenKrupp AG Hong Kong Office

Transwest Mongolia LLC

Trinity Development LLC

UBS AG

VOLVO (China) Investment Co., Ltd.

Wagner Asia Equipment LLC

XacBank

Xanadu Mines Mongolia LLC

Xstract Group

Xstrata Coal

Join them on 23 & 24 May 2012 cement your position as leading player in the Mongolian market.

BCM is supporting this event. BCM members will receive special 15% discount.

___________________________________________

ALS THREE-DAY COAL QUALITY COURSE BEGINS 28 MAY

The ALS Coal Quality Course will begin run 28 until 30 May at the Blue Sky Tower Hotel. The early

bird registration discount for a cost of USD 1250 ends 7 May.

The course is a comprehensive introduction to the broad issues of coal quality, from mining and

preparation through the end user. It is delivered in bite-size modules to assist students in

understanding how to obtain the maximum benefits from a coal product.

Students will attend the three-day comprehensive course on broad issues of coal quality, from

exploration, to mining, testing and preparation through to delivery to the end user, delivered by

expert presenters.

For more information call 343882, 99092732, or email b.sainbileg@alsglobal.com for registration

and additional information about the course.

___________________________________________

ECOPRENEUR 18-22 JUNE, ULAANBAATAR

Ecopreneur 2012 will be held 18-22 June in Ulaanbaatar.

The event is the second international ―green‖ business plan competition for young entrepreneurs

aged 18-36. Its slogan is ―planet first,‖ appealing to the desire to save our beautiful planet through

responsible eco-friendly business. The mission is to promote young entrepreneurial initiatives and

creative ideas for green economic development, more socially and environmentally responsible

companies, and creating awareness for environmental preservation.

The event is Hosted by the Ministry of Nature and Tourism, the Mongolian government, and the

Mongolian National Chamber of Commerce and Industry (MNCCI), with the Mongolian Entrepreneur

Association leading its organization.

For more information, visit ecropreneur.mn. Those interested in attendance may call +976 7018

6353, +976 9999 0941, or +976 9990 6883; or email ecopreneur2012@gmail.com

___________________________________________

MINExpo INTERNATIONAL 2012, LAS VEGAS, 24-26 SEPTEMBER

The Business Council of Mongolia (BCM) and the Mongolian National Mining Association (MNMA) with

the support of the U.S. Embassy‘s Commercial Section in Ulaanbaatar are now registering a

Mongolian business delegation to participate in ―MinExpo International 2012‖ which will be

organized at the Las Vegas Convention Center on September 24-26, 2012.

MinExpo International 2012 is the world's largest and most comprehensive exposition dedicated to

mining equipment, products and services. More than 1,400 exhibitors in eleven exhibit halls will

display the latest technology, equipment, components, parts and services for exploration,

extraction, safety, environmental remediation and preparation and processing of metallic ores,

coal, industrial minerals and more!

Registration deadline is 5 p.m., 30 April. Please contact BCM at 70114442, tugi@bcmongolia.org or

MNMA at 314877, enkhbold@miningmongolia.mn for registration and additional information about

the event.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013

Mongolian Mining Directory-2013 which provides information database for Mining companies,

investors, suppliers, service companies, government and non government organizations will be

published for the fourth year to commemorate the 90th anniversary of the Mongolian mining

industry. The MMD is distributed free of charge to international and domestic mining companies,

international conferences and exhibition, embassy offices in Mongolia and foreign countries to

investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants

who are interested in advertising their products and services in Mongolian Mining Directory-2013.

For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call

+976-7011 5590.

___________________________________________

“MM TODAY” on MNB-TV, Fridays at 18:25 [TONIGHT]

BCM is pleased to announce Mongolian National Broadcasting continues its cooperation with BCM on

―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for

18:30 tonight! Tune in to watch this program that reports stories from today‘s BCM NewsWire.

___________________________________________

POSTINGS ON MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The new ‗Presentations‘ section on BCM‘s Mongolian website which can be reached via link to

bcm.mn/itgeluud. Several presentations already posted include 9 from Coal Mongolia in February

9-10, 2012.

As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s

―Open-Government.mn‖ site are regularly posted.

___________________________________________

POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND „MONGOLIAN

BUSINESS NEWS‟

On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations

from BCM‘s April 23 monthly meeting; 3 speeches from ―Corporate Governance Training for

Directors‖ on April 27-28; 12 presentations on Mongolian entities at Mines and Money Hong Kong

2012 on March 21-23; 11 presentations from Coal Mongolia 2012 on February 9-10; 7 speeches from

the Mongolian Investment Summit on December 8-9, 2011 in London; several speeches at the Risk

Management Forum on November 8 co-organized by BCM and Mandal Insurance; speeches at

Discover Mongolia 2011; and speeches from all BCM‘s monthly meetings in 2011-12.

Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit

Barometer, April 2012 by Sant Maral Foundation (Mongolian and English versions); ―Preliminary

estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant

to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire

survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive

Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; Mongolia –

World Bank Country Survey 2011; Welcoming remarks by Jim Dwyer, BCM at Mongolia Investment

Summit 2011 Hong Kong, Mining Journal Supplement for Mongolia, October 2011; and ―Mongolia‘s

Mining Services Cluster 2010‖, Professor Michael E. Porter, Harvard University, The Microeconomics

of Competitiveness.

We are now posting some news stories and analyses relevant to Mongolia to BCM website's

‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all

together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,

and will incorporate items that are already on the home page, so that it presents a consolidated

account of the week‘s events.

___________________________________________

SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Connect with BCM on LinkedIn to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

Of course for news information, interviews, and announcements regarding our organization, visit

the official BCM website at www.bcmongolia.org and www.bcm.mn.

ECONOMIC INDICATORS

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

April 30, 2012 *16.0% [source: NSOM]

*Year-over-year (y-o-y), nationwide

Note: 17.8% y-o-y, Ulaanbaatar city, April 30, 2012

CENTRAL BANK POLICY RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

CURRENCY RATES – May 10, 2012

Currency Name Currency Rate

U.S. dollar USD 1,316.21

Euro EUR 1,705.74

Japanese yen JPY 16.50

British pound GBP 2,121.14

Hong Kong dollar HKD 169.60

Chinese yuan CNY 208.46

South Korean won KRW ` 1.15

Russian ruble RUB 43.67

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.