BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 269 – April 12, 2013

NEWS HIGHLIGHTS:

Business

Mongolia debates the interests of Goldman Sachs;

Rio Tinto says talks with Mongolia ongoing, productive;

Aspire study highlights $200m savings from new Ovoot rail route;

Government demands that Petro China build roads;

Newera makes move for JV for Ulaan Tolgoi;

Haranga expects increased resource measure at Selenge;

Rio Tinto seeks to sell stake in Ivanhoe Australia;

MSE brings out remote trading;

EBRD supports IMC hospital;

SkyC&C Ltd deploys Minerva iTVFusion for pay TV;

Newcom Group to complete Salkhit in 2013;

Naadam Cashmere launches Kickstarter campaign;

Ariunaa Suri at Tokyo Fashion Week;

Maptek provides educational licenses of mining software to MUST;

MIG executive chairman resigns;

Runge merges with two mining technical firms;

Erdene year-end report;

Anglo American gets S&P downgrade.

Economy

Mongol Bank cuts interest rates for second time this year;

Monthly FDI reaches new low;

Bids total MNT 25 billion for Mongol Bank’s 12-week bills;

Belarus to establish technopark in Mongolia;

UB to install new traffic signs;

Turkish premier to unveil renovated street;

Mongolian auto dealers sell in Kazakhstan for higher rewards;

Mongolia scolds Rio on costs as mine riches replace gers;

NEMA on alert for heavy snowfall;

Mongolian officials look to western Montana wildlife crossings as model;

University of Queensland group to study mining impact on herders;

Save the Children finds worrying trends;

Renewed investment to drive gold price to over USD1,800/oz by year-end.

Politics

Presidential election scheduled on 26 July;

Swiss account had no bearing on OT agreement, says Bayartsogt;

Economic Development Deputy Minister pleads for consensus on return of FDI;

MPP protests shorten opening session of Parliament;

Economic Development Ministry rumored to be drafting bill to replace SEFIL;

Premier returns safely to UB after perilous hike;

Government bans swine and poultry imports following bird flu epidemic;

Xi calls for boosted cooperation;

China, Mongolia discuss cooperation in protecting cultural heritage;

Cabinet minister talks of Mongolian-U.S. cooperation in minerals sector;

Civil organization demands OT board resignations;

Mongolians hopeful for a less corrupt society;

Mysterious mail triggers global tax haven expose;

Mongolia's role in 2013 Community of Democracies ministerial meeting;

North Korea warns it is on brink of nuclear war with South.

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

Major Drilling

International SOS

Wagner Asia Automotive

Wagner Asia Equipment

Techenomics

Oxford Business Group

Breakthrough PR

Mongolian National Broadcasting

BUSINESS

MONGOLIA DEBATES THE INTERESTS OF GOLDMAN SACHS

Mongolia‘s parliament is deliberating on its past dealing with Goldman Sachs (Asia) LLC to decide

whether or not there was a conflict of interest.

Goldman Sachs acted as an advisor to the Mongolian government during the drafting of the Oyu

Tolgoi investment agreement, advising on financial aspects such as the development of a financial

model. The World Bank and other organizations, meanwhile, provided their own brand of financial

and legal advice, some without charge, while Goldman Sachs left a bill of USD 250,000, according to

Erdenes Oyu Tolgoi LLC at a session of Parliament.

Mining Minister Davaajav Gankhuyag concluded that session, remarking upon the need for a court‘s

opinion. However, what court the case should be introduced to has yet to be decided. One possibly

regulatory body is the U.S. Securities and Exchange Commission.

Source: Business-Mongolia.com

RIO TINTO SAYS TALKS WITH MONGOLIA ONGOING, PRODUCTIVE

Rio Tinto PLC is having productive talks with the Mongolian government over the investment

agreement for its Oyu Tolgoi project, the chief executive of the global miner‘s copper division said

on Tuesday.

Rio and Mongolia are at loggerheads over the future of one of the world‘s largest untapped copper

deposits just as the mine ramps up output and the Rio Tinto subsidiary that owns it tries to line up

USD 4 billion for the next stage of development. The mine is operating under a temporary budget

after the two sides failed to agree on a deal last month, having disagreed over taxes and rising costs

that Mongolia fears will erode prospective earnings.

―While there are complex issues that need to be resolved, constructive progress is being made,‖

said Jean-Sebastien Jacques, speaking as part of the CESCO/CRU copper conference in Santiago.

―We continue to have productive discussions with the government on a range of issues.‖

Source: Reuters

ASPIRE STUDY HIGHLIGHTS $200M SAVINGS FROM NEW OVOOT RAIL ROUTE

Aspire Mining has completed a rail pre-feasibility study revision confirming that it could save USD

200 million by taking a more direct route further to the south for its proposed Erdenet to Ovoot rail

extension in Mongolia. The plan reduces capital expenditure for the rail line to USD 1.3 billion.

Importantly, further capital expenditure cost savings are possible from a de-rating of haulage

capacity from 22 million tons annually to an initial starting capacity of between 10 million and 12

million tons per year. Optimization of the eastern half of the alignment could also result in

additional cost savings.

The costs savings translate to USD 50 million saved a year due to a redefined rail path, shorter total

kilometers along more agreeable terrain and the modeling of longer trains has resulted in a 30

percent reduction in the per kilometer rail operating costs.

A route farther to the south than identified in the July 2012 Caliber review was identified and

selected as it is cheaper in terms of capital and operating expenditure and has less risk from an

environmental, geotechnical and hydrological perspective. It also confirmed the seismic risk as

being tolerable and manageable under normal design standards. A further advantage of the new

southern alignment is that it crosses into Zavkhan Aimag to the south, potentially providing rail

access to this province.

Aspire will continue to work on advancing the Erdenet-Ovoot railway by providing more engineering

definition and progress towards a bankable feasibility study. When the definition is at a suitable

stage the company will start the process to seek a rail concession and the other supporting permits

and approvals required from the Mongolian government.

Source: Proactive Investors

GOVERNMENT DEMANDS THAT PETRO CHINA BUILD ROADS

Petro China Daqing Tamsag LLC has begun connecting oil wells with pipelines for delivery,

disregarding its agreement with Mongolia to build roads for transport.

Parliament Speaker Zandaakhuu Enkhbold said during a recent visit to Dornod Aimag that the

government would cancel Petro China's permits if it does not build the roads it is obligated to by

their agreement with the government.

Petro China, which pumps oil from the Tamtsag oil field at Matad Soum, Dornod Aimag has begun

extracting oil from 500 of the 521 oil wells it has drilled. That company expects to confirm an

additional 240,000 tons of resource this year, bringing it to a total of 650,000 tons. Petro China also

extracts oil in Khulunbuir, near to Tamsag, where it transports oil to processing plants via pipelines.

Petro China is the largest oil explorer in Mongolia, exporting 80 to 100 trucks full of oil to China a

day.

Source: News.mn

NEWERA MAKES MOVE FOR JV FOR ULAAN TOLGOI

Newera Resources Ltd. announced its entrance into a memorandum of understanding to work

towards completing a formal joint venture agreement covering a single large exploration license in

Umnugobi Aimag.

―Newera is excited to have secured, subject to regulatory due diligence and execution of a full

form joint venture agreement, what is seen to be a very prospective green field coal exploration

play in the South Gobi province of Mongolia,‖ said Executive Chairman Martin Blakeman.

The Ulaan Tolgoi project license covers 43,830 hectares with a prospective for coal in concealed

extensions of the late Permian coal-bearing Tavan Tolgoi group rocks of the South Gobi Basin.

Visible in satellite imagery, striking east to west through the south of the license in the Sonduult

thrust fault which is postulated to be a potential extension of the Naryn Sukhait thrust fault. Minor

coal outcrops along the Naryn Sukhait thrust fault to the west of Ulaan Tolgoi led to the discovery

of the largest Mongolyn Alt Group (MAK) and Ovoot Tolgoi coking/thermal coal deposits as well as

the Soumber, Bilutt, and Guildford Coal's South Gobi deposit.

Newera has a 60-day due diligence period to express satisfaction with the results of the due

diligence of the license and wish to continue. Continuance will be subject to a USD 64,500

reimbursement of past expenditure to the vendor to the joint venture. The first stage of the

agreement would have the vendor grant exclusive rights to attain 51 percent of the project, and

following that an additional 19 percent at a cost of USD 1.2 million.

Source: Newera Resources Ltd.

HARANGA EXPECTS INCREASED RESOURCE MEASURE AT SELENGE

Haranga Resources Ltd. reported an expected increase of its measured resource at the Selenge

project.

The announcement followed the completion of tests over 2,660 six-meter composite mineralized

samples from last year's 35,000-meter drill program. The results will be added to the company's

updated resource model, which is in the final stages of drafting and verification.

―A significant increase and enhanced JORC compliant resource for Selenge is expected in

approximately for weeks,‖ reads the source.

The company said shortly after the new resource measurement is complete it will submit its mining

license application. Later this year, the company expects to receive an updated independent

assessment of the project economics and the commencement of a feasibility study.

Source: Haranga Resources Ltd.

RIO TINTO SEEKS TO SELL STAKE IN IVANHOE AUSTRALIA

Rio Tinto is accelerating a plan to sell billions of dollars in noncore assets, even as a slowdown in

commodities could lower prices for the deals. Copper and gold producer Ivanhoe Australia Ltd. is

the latest operation to go on the block. Citigroup has been appointed to run the sale of the 57%

stake in Ivanhoe Australia, people familiar with the matter said. Ivanhoe Australia is controlled by

Rio Tinto's Turquoise Hill Resources Ltd. unit.

The sale would be one of several sought by Rio Tinto's new chief executive. Turquoise Hill also plans

to sell its roughly 58% stake in SouthGobi Resources Ltd., a Mongolian coal miner, the people said.

That process has been delayed, however.

Ivanhoe Australia's market value has dropped to 148.7 million Australian dollars (US$156.8 million)

from as much as A$1.5 billion in early 2011, punished by declining commodity prices. Ivanhoe

Australia said Thursday in a filing to the Australian Securities Exchange that Turquoise Hill has

begun a strategic review of its stake.

Ivanhoe Australia's main projects under development are the Mount Elliott and Merlin operations,

which contain gold and base metals, including copper. The stake sale could trigger a full takeover

of the company. Australian law generally requires that a buyer acquiring 20% of a company must bid

for a full takeover.

Rio Tinto inherited the Ivanhoe Australia and SouthGobi stakes last year when it took majority

control of Turquoise Hill. Its most prized asset is the Oyu Tolgoi mine in Mongolia, which holds some

of the world's biggest unexploited copper and gold deposits.

Rio Tinto CEO Sam Walsh, who took over in January, has made selling assets a priority. Deutsche

Bank estimated that Rio Tinto could raise as much as US$10 billion from its asset sales.

Source: Wall Street Journal

MSE BRINGS OUT REMOTE TRADING

Mongolian Stock Exchange (MSE) JSC introduced remote trading as part of its upgrading process

while implementing the Millennium IT trading platform.

The upgrade comes with the master services agreement, signed by the State Property Committee,

London Stock Exchange Group and MSE. The agreement is a collaborative effort to develop

Mongolia's capital markets with a series of targeted objectives.

Source: Mongolian Stock Exchange JSC

EBRD SUPPORTS IMC HOSPITAL

The European Bank for Reconstruction and Development (EBRD) will loan USD 13.1 million to

International Medical Center LLC to partially fund Mongolia's first private hospital that meets

international standards.

The loan will go towards construction and equipment costs for a new 90-bed hospital in

Ulaanbaatar. Due to Mongolia's aging health care infrastructure, many patients opt to travel abroad

to seek treatment, spending an estimated USD 100 million a year. Currently Ulaanbaatar is in great

need of a hospital with modern equipment and highly skilled staff.

―We are proud to support the creation of the first private hospital on this scale in Mongolia. As well

as providing medical services, the project will serve as a blueprint for more private sector

investment in health care in rapidly developing Mongolia,‖ said Aza Ulziitogtokh, the head of the

EBRD office in Mongolia.

IMC is a company operating in Mongolia that owns and manages hospitals. It has partnered with

Samsung C&T, a health sector management and consultancy subsidiary of Samsung Group, and

Korea University Medical Center, a university hospital in South Korea.

Source: Business Mongolia

SKYC&C LTD DEPLOYS MINERVA ITVFUSION FOR PAY TV

Minerva Networks, a provider of software solutions for the delivery of television services to

connected devices, today announced that broadband service provider SkyC&C Ltd. has deployed

Minerva iTVFusion to offer advanced television services within the region.

The Minerva platform will enable the Mongolian operator to offer pay-television services nationwide

over its broadband and mobile networks. Both live and on-demand content will be available to

SkyC&C subscribers via computers, Android, and IOS devices, as well as Internet protocol set-top

boxes.

―With the Minerva platform we are able to offer our customers all the latest features of a premium

pay-TV service,‖ said Bayarbat Ariunbold, chief executive officer of SkyC&C. ―We are looking

forward to delivering more services on more devices to our growing subscriber base.‖

Source: Business-Mongolia.com

NEWCOM GROUP TO COMPLETE SALKHIT IN 2013

Newcom Group said the Salkhit wind farm project is on track to complete this year.

Experts have speculated that Mongolia has enough wind energy to match seven nuclear power

plants. In light of the enormous renewable energy potential Newcom Group has partnered with

General Electric Co. the European Bank for Reconstruction and Development, and the Netherlands‘

Development Financial Co. to establish the company Clean Energy LLC. The company is now seeking

MNT 160.2 million as investment and long-term loans for its operations.

The Salkhit power station will save 1.6 million tons of water, 150,000 tons of coal and the

equivalent of 180,000 tons of greenhouse gases. Experts have likened the ability of the wind farm to

offset carbon to forestry: A single hectare of forest can reduce greenhouse gases by 10 tons, while

the Salkhit plant will match that of 18,000 hectares of forest.

The 31 wind turbines are 80 meters long and when fully propped will stand as tall as roughly a 30-

story building at 120 meters above the ground. At 125 tons each, holding them in place is 240 cubic

meters of concerts, enough concrete for the foundation of a nine-story building. Each turbine has a

capacity to generate 49.6 megawatts. The Salkhit region, itself, has average wind speeds of 7.8

meters per second.

Source: Montsame

NAADAM CASHMERE LAUNCHES KICKSTARTER CAMPAIGN

Naadam Cashmere has announced a sale offering its Mongolian garments at wholesale prices for the

duration of its recently launched Kickstarter campaign on the website kickstarter.com, which ends

15 May.

―It‘s about more than sales,‖ said Naadam chief executive and co-founder Matthew Scanlan. ―We‘re

getting the word out about Naadam, but also telling the story of the Mongolian herders who carry

this worldwide, multimillion-dollar industry yet find themselves struggling at the mercy of

worsening local economic conditions. They benefit from every dollar we make. We make sure of it.‖

Designed in New York City and manufactured locally in Mongolia using 100 percent cashmere,

Naadam supports Mongolia‘s nomadic goat herders—the source of the majority of the world‘s finest

cashmere—by investing a portion of profits in a World Bank-sponsored program that insures the

herder‘ livestock as climate change and worsening economic conditions make it increasingly

difficult for them to support themselves.

Source: Naadam Cashmere

ARIUNAA SURI AT TOKYO FASHION WEEK

Fashion designer Ariunaa Suri made her debut at Tokyo Fashion Week, displaying her 2013

collection.

Suri showed an interesting mash up of textures and colors, the collection is a mix of street wear and

sleek urban. Tokyo is known for its unique sense of fashion and its one-step-ahead modern look is

reflected here. The range is filled with amazing drapery and the designer has done a great thing

with a lot of the looks.

Source: 2threads

MAPTEK PROVIDES EDUCATIONAL LICENSES OF MINING SOFTWARE TO MUST

Mining technology developer Maptek has provided educational licenses of Vulcan geological

modeling and mine planning software to the Mongolian University of Science and Technology (MUST)

Maptek is a reseller for the region, while Information Technology Experts LLC will conduct the

training of staff and ongoing research of fourth-year students in the School of Mining Engineering.

About 2,400 students study mine engineering at MUST, with nine different specializations offered.

Addressing guests at the launch ceremony of the Maptek Vulcan laboratory on Friday, 5 April,

manager of IT Experts Batchuluun Bayanmunk said the software would help prepare students for job

opportunities in the private sector as well as with state agencies. Maptek will provide 15 networked

Vulcan licenses, giving students access to open-cut and underground mine design, pit optimization

and geological applications.

Source: Maptek

MIG EXECUTIVE CHAIRMAN RESIGNS

Mongolia Investment Group Ltd. (MIG) announced the resignation of Leung Chung Tak Barry as an

executive director and as director at all MIG subsidiaries.

Leung confirmed that he had no disagreement with the board and there was no matter relating to

his resignation that needed attention brought to shareholders.

Source: Mongolia Investment Group

RUNGE MERGES WITH TWO MINING TECHNICAL FIRMS

Runge LLC has officially changed its name to RungePincockMinarco LLC.

The name change sees Runge, a mining software technology solutions firm; Pincock Allen & Holt, a

U.S. mining advisory firm; and Minarco-MineConsult, an Asian capital markets advisory firm unifying

under a single global name.

―As three of the best known leaders in our respective fields, our unification makes us the largest

independent group of mining technical experts in the world,‖ says the source.

Source: RungePincockMinarco LLC

ERDENE YEAR-END REPORT

Erdene Resource Development Corp. released its 2012 financial results and project review.

The company reported a high-grade, near-surface gold discovery at the Altan Nar project (29

meters of 4.3 grams per ton of gold) and commenced production at the Granite Hill Quarry for the

first quarter. A finalized sale of Granite Hill for USD 3.35 million was made in the second quarter,

while in the third Erdene secured a second mining license for the Zuun Mod-Khuvyn Khar project.

Also during the third quarter, Erdene completed regional metals and coal exploration. The fourth

quarter events included the sale of operating Kaolin assets for USD 923,000, an intersection of 47

meters of 1.3 grams per ton of gold on 1.3 kilometers at a step-out drill hole at Altan Nar, and the

completions of a USD 1 million placement at USD 0.17 a share.

Exploration work at the Altan Nar Gold project in 2013 expanded the discovery zone to 400 meters

in strike length with near-surface holds in the northern portion returning 27 meters of 1.79 grams

per ton of gold. Reconnaissance drilling outside the discovery zone identified multiple new targets

over a three-kilometer strike length including a substantial new gold-polymetallic zone intersected

within 50 meters of surface. Erdene is anticipating work at Altan Nar to commence in the second

quarter to additional drilling in 2013.

At the Khuvyn Khar-Zuun Mod copper-molybdenum project work was completed on a pit

optimization study that included high-level production scheduling, a review of operating and capital

costs and economic modeling. The study will be used to determine the parameters of additional

pre-feasibility level studies. Early stage surface exploration at the Altan Arrow gold project, a new

prospect, has returned significant gold and silver mineralization. Results include an average grade

from rock-chip samples over a 1 kilometer strike length of 3.5 grams per ton of gold and 60 grams

per ton of silver.

Source: Erdene Resource Development Corp.

ANGLO AMERICAN GETS S&P DOWNGRADE

Standard & Poor's (S&P) Rating Services this week downgraded its long-term corporate credit rating

on Anglo American to ―BBB‖ from ―BBB+‖ as continued high capital expenditure and volatile

conditions in the commodity sector were expected to weigh on the group's debts. Anglo American

recently opened an office in Mongolia, under the name Anglo American Development.

The ratings agency said in a statement that the diversified miner's operating cash flow would fall

further into the red during the 2013-2014 period than was initially forecast, on a sustained USD 7

billion expenditure.

―We consequently forecast that Anglo American's adjusted funds from operations to debt will

decline to 35 percent to 45 percent in 2013 and to 25 percent to 35 percent in 2014, under our

pricing assumptions, compared with a range of 45 percent to 50 percent that we consider

commensurate with a 'BBB+' rating,‖ S&P added

The agency rated the mining giant as stable, with no expectations of a further downgrade owing to

its strong liquidity and diversified commodity portfolio. S&P commented that the global miner may

turnaround in 2015 if management actions and higher commodity prices enabled the company to

contain debt increases during the next two years, pushing the ration of funds from operations above

45 percent.

Source: Mining Weekly

ECONOMY

MONTHLY FDI REACHES NEW LOW

The Balance of Payments statement from the Bank of Mongolia in February revealed a 51 percent

fall in foreign direct investment (FDI) year on-year.

The fall follows last January becoming the lowest income of FDI since 2010. February's USD 81

million drop, however, is the clearest indication seen so far of falling FDI.

―We don‘t know whether FDI will continue to fall or rise back again,‖ said the source. ―The recent

declines in FDI seem to have been caused mainly by political developments—last year‘s foreign

investment law, new draft Minerals Law, debate over OT—and politics, as we have said, is hard to

predict.

Source: Mongolia International Capital Corp.

BIDS TOTAL MNT 25 BILLION FOR MONGOL BANK‟S 12-WEEK BILLS

The Bank of Mongolia received MNT 25 billion in bids for 12-week government bills on behalf of the

Ministry of Finance on 10 April.

Two domestic banks submitted four bids in the auction. The Ministry of Finance accepted MNT 20

billion in bids, with winning bids ranged from 10 percent to 10.5 percent. The auction will settle on

Monday, 15 April. Bills will be held in the names of the purchasers at the Securities Clearing House

and Central Depository.

A previous auction by the Central Bank for 12-week bills on 27 March had the winning bids ranging

from 9.89 percent to 10.2 percent.

Source: Ministry of Finance

BELARUS TO ESTABLISH TECHNOPARK IN MONGOLIA

Industry and Agriculture Minister Khaltmaa Battulga met with Belarusian Industry Minister Dmitry

Katerinich to discuss the possibility of establishing a technopark for Belarusian mechanical

engineering products in Mongolia.

The two ministers met on 10 April in Minsk, where they discussed the possibility of opening a park

to enable service and maintenance of the Belarusian agricultural machines sold to Mongolia. They

said they intend to sign an investment contract on the matter. Belarus‘s Minsk Tractor Works,

Gomselmash, Bobruiskagromash, and Lidselmash have expressed interest in the project, while

Mongolia is prepared to begin proposing the idea to Mongolian firms.

Battulga said Belarus tractors are well known to Mongolia, as they were used in the 1950s to

develop their lands. Currently Mongolia buys tractors from several foreign companies, including

some from China, but Mongolian customers have expressed dissatisfaction with the quality of

machines in Mongolia. Mongolia would be interested in purchasing small-capacity tractors for its

agriculture, said Battulga.

OAO BelAZ is currently Mongolia‘s largest supplier of tractors, shipping 34 mine dump trucks to

Mongolia last year. Belarus shipped USD 24 million worth of merchandise to Mongolia in 2012. In

January and February this year, shipments reached 15.3 million, 25 percent up from the year-ago

period. BelAZ plans to set up a sales center for its dump tricks with a Mongolian partner in

September 2013. The Mongolian delegation also invited MAZ to participate in tender bids as its

buses were well suited to Mongolia‘s climate.

Source: Belarusian Telegraph Agency

UB TO INSTALL NEW TRAFFIC SIGNS

The Ulaanbaatar Auto Road Office has allotted MNT 1 billion to post new traffic signs on the streets

of Ulaanbaatar.

The Ministry of Roads and Traffic, General Agency for Specialized Inspection, and Korea‘s KCC

Group and BSMG jointly organized a seminar about proper sign placement and design. At the

seminar experts explained the importance of using the right standards for color and type, and how

the signs can affect a city‘s appearance.

Source: Unuudur

TURKISH PREMIER TO UNVEIL RENOVATED STREET

Turkish Prime Minister Tayyip Erdogan will attend an opening ceremony for the newly renovated

Ankara Street on 12 April.

Ulaanbaatar used Turkish financing for the street that runs from State Bank to the University of

Culture in Triangulate. Renovation took place on some 2.8 hectares of roads, costing a sum of USD

700,000. Other construction includes green spaces, pedestrian walk paths, a fountain, and street

lights.

Source: Undesnii Shuudan

MONGOLIAN AUTO DEALERS SELL IN KAZAKHSTAN FOR HIGHER REWARDS

Black market auto traders have begun selling old cars to Kazakhstan where they are more valuable

than the market here.

The traders from the Da Khuree market have reportedly started traveling to Astana, Kazakhstan via

Bayan-Ulgii Aimag to sell their cars. They say they earn more for their cars there because cars are

more expensive there in general.

According to a website at Kolesa.kz, a used 1997 Toyota Carina can sell for MNT 13.4 million in

Astana compared with MNT 5 million in Mongolia. A used 2008 Toyota Corolla sells for about MNT 30

million compared with MNT 18 million to MNT 20 million.

Source: Unuudur

MONGOLIA SCOLDS RIO ON COSTS AS MINE RICHES REPLACE GERS

Few things matter more today in the political and economic life of Mongolia than foreign

investment to develop its mineral wealth. Mining money has spawned gleaming office towers, pricey

gated communities and luxury-car dealerships in the capital. And yet, half of all Mongolians still live

like their nomadic ancestors in gers.

About 30 percent of the population lived in poverty in Mongolia in 2011, although that was an

improvement from 40 percent in 2010, before the start of payouts funded by mine proceeds.

Mongolia‘s gross domestic product expanded 12.3 percent last year to USD 10 billion. Economists

expect 15 percent growth this year. Oyu Tolgoi will be the largest contributor to the economy once

it is fully operational. With fees, royalties and the government stake, as much as 71 percent of

profits will go to Mongolians, the International Monetary Fund estimates.

―There is scope for Mongolia to vastly develop if it gets everything right,‖ said Vidur Jain, a

strategist at Monet Capital.

Instead of basking in new mineral riches, Elbegdorj is sparring with Rio Tinto. He complains that the

Oyu Tolgoi project is over budget, it should have paid taxes last year and needs greater financial

transparency. Rio Tinto PLC, through its Oyu Tolgoi unit, said it has pre-paid taxes and was not

obligated to make payments in 2012. The company said phase one construction costs are on budget,

at 6.2 billion, and in line with estimates it gave the government in December 2010. ―We have

always been fully transparent with all our shareholders regarding our project finances, costs and

operations,‖ Oyu Tolgoi chief executive Cameron McRae said in a 7 February statement.

Mongolia may already be paying a price for its toughening stand. After jumping 139 percent in 2010

and 47 percent in 2011, the tiny Mongolian Stock Exchange‘s Top 20 Index tumbled 19 percent last

year. It has fallen 15 percent this year, shrinking its market capitalization to MNT 768 billion as of 8

April.

For now, though, Elbegdorj is consumed by a presidential election in June, and he‘s betting that

playing hardball with mining companies will be a vote winner. He may be right.

Source: Bloomberg

MONGOL BANK CUTS INTEREST RATES FOR SECOND TIME THIS YEAR

Mongolia's Central Bank cut interest rates for a second time this year to bolster economic growth as

inflation eases and foreign investment falls.

The Bank of Mongolia reduced its policy rate to 11.5 percent from the previous 12.5 percent

effective 8 April, according to a statement posted to its website today. The cut is aimed at

increasing domestic credit and investments and simulating business activities, it said.

Mongolia in January cut interest rates for the first time since 2009 after economic expansion

moderated to 12.3 percent last year from a record 17.3 percent in 2011 and foreign investment fell

17 percent. Growth slowed as the price of coal, Mongolia's biggest export, declined and the

government introduced more controls of foreign ownership of mining assets.

A deceleration in the face of inflation over the last four months and the monetary authority's

estimate for further slowing was the main reason for the cut, Sandagdorj Bold, the Central Bank's

chief economist, said in an interview in Ulaanbaatar today. Mongolian trade and foreign investment

were also factors in the decision, he said.

―We are concerned about the FDI [foreign direct investment] and foreign trade environment.‖

Inflation eased to 11.3 percent at the end of February from 14 percent at the end of December,

Bold said. The Central Bank expects the pace to fall further this month, he said.

―In upcoming months we think we will see downward inflation,‖ Bold said. ―So it's consistent with

our target of 8 percent inflation by the end of the year.

Source: Bloomberg

NEMA ON ALERT FOR HEAVY SNOWFALL

The National Emergency Management Agency (NEMA) said that residents in seven counties in four

different provinces reported harsh spring weather conditions and heavy snowfall.

NEMA said reports came from Selenge, Dornod, Zavkhan, and Tuv Aimags. Snow depth was

reportedly between 20 and 33 centimeters in some places, with snow piling as high as 60

centimeters in some remote areas. NEMA said these areas were being given emergency attention.

NEMA also named a number of towns in Selenge and Tuv Aimags where snow depths reached

between 10 and 19 centimeters of snow cover.

Source: News.mn

MONGOLIAN OFFICIALS LOOK TO WESTERN MONTANA WILDLIFE CROSSINGS AS MODEL

A Mongolian delegation toured a wildlife crossing in Montana, United States with the Wildlife

Conservation Society (WCS).

The tour comes as Mongolia prepares to build an expansive transportation network to serve the Oyu

Tolgoi copper-gold mine, modeling it after the wildlife crossing in Montana, along a highway and a

railroad cutting Abo Canyon in New Mexico. The activity was funded by the U.S. Agency for

International Development (USAID) and the Trust for Mutual Understanding,

―We're trying to minimize the impact of mining and other development, said Buya Tulga,

representing the Ministry of Environment and Green Development. ―It's why we're studying here. We

chose Montana because these are good examples of how to [enhance] the wildlife movement

alongside the road.‖

Tulga expressed concern that as development races forward in Mongolia, habitat will be fragmented

and the region's endangered species could be lost. Much of the development is taking place south in

the Gobi Desert and Mongolia's eastern steppe. The new Ulaanbaatar-Beijing railway may further

bisect the region's prized habitat, jeopardizing the migration of several threatened species.

But Mongolia is rich in both resources as well as wildlife, with animals found nowhere else on the

planet. That includes the Bactrian camel, the Gobi bear, the Goitered gazelle, the Saiga antelope

and Asiatic ass, among others. Many of the species are considered threatened or critically

endangered. If development takes place with no mind to habitat, some fear the species could be

lost forever.

Kina Murphy, program director in Mongolia for the WCS, believes the nations competing interests

have a rare opportunity to come together and mitigate the impacts of development before they

arise, noting that the government officials were accompanied by representatives of the Oyu Tolgoi

copper mine.

Source: The Missoulian

UNIVERSITY OF QUEENSLAND GROUP TO STUDY MINING IMPACT ON HERDERS

The University of Queensland‘s Sustainable Minerals Institute (SMI) has received the Australian

Development Research Award Scheme grant to conduct research into building the capacity of the

Mongolian government and civil society to react and engage with responsible mining practices and

promote sustainable livelihoods of herder societies.

Mongolia‘s mining boom is threatening the sustainability of herder livelihoods through social

changes stimulated directly and indirectly by ecological impacts. The research examines both the

social and ecological impacts of mining from a gender perspective to understand how mining affects

both herder livelihoods and their dependent natural resources. This project aims to establish the

changing role of herder households due to the impacts of mining and draft safeguards for

government to promote sustainable development in mine-affected areas.

A collaborative engagement between social scientists at the University of Queensland's Centre for

Social Responsibility in Mining and Australian National University with scientists from the Centre for

Mined Land and Rehabilitation and the Centre for Water in the Minerals Industry will measure both

the ecological and social impacts of mining to provide comprehensive data to inform the

development policy. This continues SMI‘s enhanced focus on providing effective multi-disciplinary

solutions to the sustainability problems facing the global mining industry.

―Frequently social and ecological impacts of mining are researched exclusively, when the two are

often interlinked and overlap,‖ said project manager Isabel Cane. ―Approaching the problems faced

by herders from a cross-disciplinary method allows us to examine and explain the impacts more

conclusively and hopefully produce succinct safeguards for improved outcomes for women and men

in Mongolia.‖

The research will be conducted with partnered non-government organizations and academic

institutions in Mongolia.

Source: University of Queensland

SAVE THE CHILDREN FINDS WORRYING TRENDS

Save the Children released three assessment reports on Reliefweb last week highlighting a variety

of chronic issues for marginal herder households and their children in Mongolia.

The documents report that a substantial portion of herder households are becoming increasingly

vulnerable to recurrent natural disasters and are facing a progressive deterioration of their

livelihoods. While one of the main drivers of rising vulnerability are natural phenomena such as

drought or harsh winters, the agency points out that other systematic issues within the livestock

sector are also contributing to reduced livestock holdings for the poorest households.

The first report gives a detailed picture of who in Mongolia is most vulnerable to a dzud—a

particularly harsh winter season characterized by extreme low temperatures and heavy

precipitation. The second report assesses findings on protection issues children face at home,

school, and communities during a dzud. It also provides recommendations for both short-term and

long-term measures to strengthen the child protection services in the context of a dzud in rural

Mongolia.

The last report provides new analysis of issues surrounding rural-to-urban migration from the point

of view of pastoralist drop-outs as well as details to their level of food security and livelihoods in

their households.

Source: Reliefweb

RENEWED INVESTMENT TO DRIVE GOLD PRICE TO OVER USD1,800/OZ BY YEAR-END

The price of gold will rise to over USD1,800 an ounce by the end of the year on the back of

economic developments in the United States and a recovering global market, the Thomson Reuters

GFMS Gold Survey 2013 showed. Gold in a major mineral commodity produced in Mongolia.

Head of the consultancy previous metals research and forecast vision Neil Meader doubted that the

ongoing debate in the U.S. relating to budget cuts and the further raising of the debt ceiling would

be resolved in the near term, which would underpin the gold price this year.

―Gold is likely to remain very sensitive to U.S. monetary policy and, even though we've had some

hawkish noise from some within the Fed, it is difficult to see a material unwinding of the

quantitative easing program until well into 2014, which should bolster the gold price in 2013,‖ he

commented.

The report indicated that events in Europe would further augment the price of the yellow metal,

citing a significant potential for gold-friendly shocks as evidenced by the price uplift seen in mid-

March on the back of the economic volatility in Cyprus. Additional positive factors included the

maintenance of a low interest-rate environment and some investor's fears over the potential for the

resurgence of inflation.

Factors contributing to the slightly restrained investment environment in 2012 included the

relatively strong U.S. dollar and the loss of upward momentum in the gold price. However, support

continued from many investors remaining wary of conventional assets and through the persistence

of negative real short-term interesting rates in many countries. Investors were also encouraged by

the continuing vigor of demand from the official sector, which reached a 48-year high in 2012 as a

broad base of central banks, including Mongolia, expanded gold holdings against a backdrop of near

absence by Central Bank Gold Agreement signatories.

Source: Mining Weekly

POLITICS

PRESIDENTIAL ELECTION SCHEDULED ON 26 JULY

The General Election Committee (GEC) has scheduled the presidential election for 26 June.

The Standing Committee on State Structure held a meeting to discuss the issue on 9 April. It was

then that the GEC chairman proposed the date June 26.

One MP, R. Burmaa, criticized the budget allotment, saying it was increased without any basis.

According to the Standing Committee, total election expenditure is set at MNT 17.2 billion, of

which, MNT 392 million will be spent for the parliamentary re-election and MNT 91 million for

media observation.

Source: News.mn, Undesnii Shuudan

SWISS ACCOUNT HAD NO BEARING ON OT AGREEMENT, SAYS BAYARTSOGT

Parliament Deputy Speaker S. Bayartsogt said a Swiss bank account he hid from government

authorities created no conflict of interest when drafting the Oyu Tolgoi investment agreement,

saying that it had ―nothing to do with it‖.

Bayartsogt gave a formal apology for having an undisclosed bank account that U.K. newspaper The

Guardian reported held as much as USD 1 million at one point. He said it was attached to a

company called Legend Plus Capital Ltd. that he established before he was confirmed as minister of

finance.

―You noticed that the time when the company was established, it was unclear that I would be

appointed as minister of finance. It means it was before the OT agreement process. I was appointed

as minister in October 2008. Afterwards, I began to participate in the agreement process beginning

from July 2009.

Bayartsogt spoke in favor of the so-called ―Government of Reform's‖ anti-corruption agenda. He

admitted he was just as responsible for reporting his assets as any other official.

―[I] made a mistake. I should have registered my company in my income report. He added,

―However, I think I should be charged ethically.‖

Source: Undesnii Shuudan

ECONOMIC DEVELOPMENT DEPUTY MINISTER PLEADS FOR CONSENSUS ON RETURN OF FDI

Economic Development Deputy Minister Ochirbat Chuluunbat pointed to Mongolia's flagging

reputation among investors as a key trigger to the fall in foreign direct investment in Mongolia.

Chuluunbat cited the Strategic Entities Foreign Investment Law (SEFIL) as well as disputes with Oyu

Tolgoi and Chalco as key issues that have raised concerns among investors in Mongolia. He noted

that investors such as Rio Tinto PLC are free to move their operation to locations such as Myanmar,

Mozambique, Mexico, and Bolivia. To encourage an investor to open up operations and maintain

them for five or more years, they would need stable legal and tax conditions.

―It is high time to revise our FDI conditions and its legal environment. It does not mean spending

extravagantly as happened in 1997. Today we are discussing the fact that the entities that have

special permissions to use our wealth have to pay the country, to transfer the licenses to those who

have money, and for professionals.‖

Chuluunbat said amending SEFIL was a step in the right direction, explaining it was important that

the law does not look to be charged against foreign investors. As for the Oyu Tolgoi investment

agreement, he said the operations should be allowed to run for two to three years before any quick

judgments be made.

―The managers who lead OT are also clever and understand that they have to share the country's

wealth with its citizens as they utilize the wealth.‖

He took the Boroo Gold project, owned by the Centerra Gold, as an example: Following the logic of

many politicians, he said, the investment agreement there was terrible because the foreign investor

owned the project 100 percent. Yet, in the 10 years of operation there, Boroo has exploited MNT 1

trillion worth of gold, of which 60 percent was direct to the Mongolian government. He noted that

MIAT Mongolian Airlines, Erdenes Tavan Tolgoi and Erdenet Mining Co. had suffered from poor

management and corruption, all the while under complete government control.

Source: Business-Mongolia.com

MPP PROTESTS SHORTEN OPENING SESSION OF PARLIAMENT

The opening day of Parliament's spring session was cut short due to a protest held by the Mongolian

People's Party (MPP).

The first issue open for discussion was the presidential election to be held this year, followed by

the Strategic Entities Foreign Investment Law (SEFIL). However, the morning session was canceled

when MPP took up picket signs in protest rather than appear for roll call, with 79.9 percent

attendance in the session. MPP members said they were dissatisfied with Government Action Plan

and said that freedoms of the press and democracy had suffered since the entrance of the so-called

Government of Reform, led by the Democratic Party (DP).

―The Democratic Party Parliament is proof that national security is in chaos,‖ said a statement from

MPP members.

Protesters also voiced criticism of President Tsakhia Elbegdorj, who cut his opening speech short

after MPP members left the meeting hall. Ts. Elbegdorj also criticized Foreign Minister G

Zandanshatar, demanding his resignation.

Source: Info Mongolia

ECONOMIC DEVELOPMENT MINISTRY RUMORED TO BE DRAFTING BILL TO REPLACE SEFIL

While investors await a decision from Parliament on the announced revisions to the Strategic

Entities Foreign Investment Law (SEFIL), the Ministry of Economic Development is reportedly

already in development of a new law to replace it.

The source reported that knowledgeable informants said that the ministry is preparing new

legislation that will govern all investment into the country. Although the bill had not yet been

revealed to the source, it said it was told the legislation ―strongly embraces free-market principles‖

and would allow greater access for foreign investment than previous laws passed.

Source: Mongolia Investment Banking Group

PREMIER RETURNS SAFELY TO UB AFTER PERILOUS HIKE

Prime Minister N. Altankhuyag returned safely to Ulaanbaatar on Monday after he became lost in a

snowstorm while hiking last weekend.

The prime minister made the journey up Mount Bukhan Khaldun in Khentii Aimag on Sunday, 7 April

along with 70 others. The prime minister was scheduled to return to camp on Sunday, but was

prevented by a snow storm that day. Those at camp called in emergency officials when Altankhuyag

and his companions did not show up and communication was lost. Also lost in the storm was Cabinet

Minister Ch. Saikhanbileg.

President Ts. Elbegdorj called in a rescue team from the National Emergency Management Agency

(NEMA). The premier and a second group of hikers were located at two separate locations later that

day. By Monday morning a helicopter began transporting members in groups, with Altankhuyag

leading one of the two groups. Afterwards the prime minister received treatment at the Second

General Hospital of Ulaanbaatar.

Source: Info Mongolia

GOVERNMENT BANS SWINE AND POULTRY IMPORTS FOLLOWING BIRD FLU EPIDEMIC

The State Specialized Inspection Agency (SSIA) has put a ban on the import of chicken and swine

products following a warning from the World Health Organization about a deadly outbreak of a new

kind of bird flu.

This variant of the bird flu, called H7N9, has already infected 16 people and killed six in China. The

SSIA has cautioned the Ulaanbaatar Specialized Inspection Office and provincial officials to be

aware of a possible outbreak and to prepare for any possibility that they may have to contain one.

The ban on imports has officials inspecting all vehicles crossing Mongolia's borders, starting from 5

April.

Source: News.mn

XI CALLS FOR BOOSTED COOPERATION

China and Mongolia should take the chance to beef up cooperation as well as strategic mutual trust,

President Xi Jinping told visiting Parliament Speaker Zandaakhuu Enkhbold on Sunday.

The bilateral relationship is an important direction for China's diplomacy with its neighbors, Xi said

on the sidelines of the Boao Forum for Asian Annual Conference 2013. Xi told Enkhbold that both

sides should ―show respect on major issues including sovereignty, security and territorial integrity,

and they should take care of ―each other's concerns.‖ He suggested the each support one another's

infrastructure development and cooperate financially. He also said China would aid Mongolia in

mineral processing, the development of energy sources, and agriculture.

The speaker said he expected bilateral cooperation to expand in trade as well as the energy and

minerals sectors. He added that Parliament was ―willing to provide legal support.‖ Enkhbold also

said in an interview with China Daily that the economy was a driving force in the China-Mongolia

relationship.

―It is the highest level of cooperation Mongolia has so far reached with a foreign country,‖ said

Enkhbold.

Statistics shows that bilateral trade in 2012 reached USD 6.6 billion and Mongolian exports to China

amounted to around 3.9 billion, about 70 percent of Mongolia's total exports, according to the

Chinese embassy in Mongolia. Ulaanbaatar stresses the importance of infrastructure as well as

provided added value to its mineral products.

―Given the geographic proximity of the two countries, each and every sector is full of opportunities

to explore,‖ he said; adding that tourism is among those areas in which greater bilateral

cooperation is expected to occur.

Source: China Daily

CHINA, MONGOLIA DISCUSS COOPERATION IN PROTECTING CULTURAL HERITAGE

Chinese and Mongolian representatives concluded on Tuesday a meeting aimed at strengthening

bilateral cooperation in protecting intangible cultural heritage.

During the meeting, which opened Monday, the two sides reviewed the achievements made so far in

this regard and discussed future cooperation programs. The two neighboring countries share a rich

diversity of intangible cultural heritages and have maintained good long-term cooperation in

protecting them.

China and Mongolia are both state parties to the Convention for the Safeguarding of the Intangible

Cultural Heritage, a treaty adopted in 2003 at a general conference of the U.N. Education,

Scientific and Cultural Organization (UNESCO).

Source: Xinhuanet

CABINET MINISTER TALKS OF MONGOLIAN-U.S. COOPERATION IN MINERALS SECTOR

Cabinet Minister Chimed Saikhanbileg spoke in favor of having Peabody Energy Corp. collaborate in

the Tavan Tolgoi West Tsankhi coal field during a meeting with Francisco Sanchez of the U.S.

Department of Commerce.

Saikhanbileg received Sanchez, the Under Secretary of Commerce for International Trade, to

discuss mutual cooperation for trade and their countries' respective economies. The cabinet

minister noted that the United States has been an important trade partner to Mongolia since its

transition to a market economy and democracy, and proposed strengthened bilateral ties in these

areas. This included proposals for cooperation in shale exploration and exploitation for shale oil and

an interest in having Peabody Energy cooperate in the development of West Tsankhi.

Sanchez said he was pleased to learn that Parliament was moving to ease restrictions laid out by

the Strategic Entities Foreign Investment Law and that he hoped this would help broaden their

economic partnerships.

Source: Info Mongolia

CIVIL ORGANIZATION DEMANDS OT BOARD RESIGNATIONS

A civil organization is demanding the resignation of the Mongolian board members at Oyu Tolgoi

LLC. The board of directors are N. Bagabandi, a former president of Mongolia, Puntsag Tsagaan, a

former minister of finance, Ch. Ganbold, a singer, and G. Batsukh, a former ambassador to Canada.

B. Tserendorj, head of the Center for Preventing Citizens from Social Violence, and B. Amarsanaa,

director of the Chingunjav Center Fund, and L. Lkhagvasuren, a resident of Sukhbaatar district,

made an official statement demanding their resignation, saying they had failed to represent

Mongolian society.

―Authorities signed the agreement without having asked the people,‖ said L. Lkhagvasuren, resident

in Sukhbaatar district. ―However, now it has become clear that the agreement is not a good one.

They have even admitted to this mistake.‖

Source: Undesnii Shuudan

MONGOLIANS HOPEFUL FOR A LESS CORRUPT SOCIETY

Despite Mongolia's display of commitment to combat corruption, it remains an area of great

concern, and, according to a new survey released on 3 April by the Source, a significant threat to

the quality of governance.

The ―Survey on the Perceptions and Knowledge of Corruption‖ (SPEAK), conducted in partnership

with the Sant Maral Foundation, surveyed 1,360 households in seven districts of Ulaanbaatar and 21

counties of six provinces, representing four regions of Mongolia. The survey measured corruption

levels in Mongolia by capturing data on public perceptions and grand corruption, institutional

behaviors, as well as people's actual experience with corruption at the household level.

Importantly, the survey for the first time included questions on grand corruption, and builds on

earlier benchmarking studies started by the foundation in 2006 and conducted 11 times since then.

According to the survey findings, while 89 percent of the respondents say corruption is a common

occurrence in the country, corruption has clearly declined as a matter of concern among

respondents. Back in 2006, 29 percent of respondents ranked corruption as one of the top concerns,

making it the second most important issue, while in 2012 just 8 percent did, making it the fifth

most important concern after unemployment, poverty, ecological degeneration, and inflation. The

majority of respondents said that using official positions to collect gifts or money and help friends

or relatives are the most common types of corruption, yet 28 percent of respondents said these acts

did not constitute corruption, despite the practice being prohibited by the new law on elections.

Respondents said ―land and property‖ and ―mining‖ were the two most corrupt sectors. Findings

showed citizens have more confidence in the Independent Agency Against Corruption (IAAC), with

60 percent saying they would report a corruption case if their identities were kept anonymous while

17 percent would do so regardless. But only 29 percent of respondents were aware of the IAAC's

anti-corruption telephone barrier.

Based on the respondents' reported experience, it seems that fewer people are now paying bribes.

However, the average size of a bribe has increased from MNT 136,000 in 2006 to MNT 391,000 in

2012.

Source: Asia Foundation

MYSTERIOUS MAIL TRIGGERS GLOBAL TAX HAVEN EXPOSE

It all began when Australian journalist Gerard Ryle received a mysterious package in the post that

the leak revealing a trove of names identified with offshore accounts, including Deputy Speaker

Sangajav Bayartsogt, reached the public,

The former Fairfax Media investigative reporter was busy trying to unravel the details of a large

financial fraud in Australia when a hard drive—with the details of 2.5 million digital files—appeared.

The drive was a treasure trove of Wikileaks-style proportions that shed light on the often murky

world of offshore tax havens—where millions of dollars are stashed in secret accounts—and would

yield information on 120,000 offshore companies and nearly 130,000 individuals.

But Ryle who later moved to head the International Consortium of Investigative Journalists (ICIJ) did

not know that yet.

―My instinct told me it was big, but you do not know,‖ Ryle said. Technical impediments also

frustrated the early attempts to pore over the information he received.

The ICIJ coordinated a 15-month long probe that involved 86 investigative journalists in 46 countries

to compile a series of reports it began releasing around the world this week, using a strategy similar

to that used by WikiLeaks when it released hundreds of thousands of diplomatic cables in 2010. So

far, the revelations have made waves in several countries, causing embarrassment to French

President Francois Hollande's former campaign treasurer Jean-Jacques Augier as well as the family

of the former president of Azerbaijan. One of Mongolia's most senior politicians, former finance

minister Bayartsogt, told the ICIJ he was considering resigning after the study claimed he had set up

an offshore entity and a secret Swiss bank account which at one point contained more than USD 1

million.

―I shouldn't have opened that account. I should have included the company in my declarations,‖ he

said. ―I should probably consider resigning from my position.‖

Source: Sydney Morning Herald

MONGOLIA'S ROLE IN 2013 COMMUNITY OF DEMOCRACIES MINISTERIAL MEETING

Later this month, Mongolia will host the seventh ministerial conference of the Community of

Democracies, an intergovernmental forum of democracies. The April 2013 conference in

Ulaanbaatar will be an occasion for the group to further reinvigorate its agenda.

Mongolia, which currently holds the presidency of the Community of Democracies, offers a number

of lessons to offer that could contribute to the organization's re-commitment to its objectives,

especially emphasis on the interdependence between poverty, development and democracy. The

case of Mongolia on poverty and democracy is instructive. The country started transitioning to

democracy over twenty years ago and, for almost as long, the rate of poverty has stood at 30

percent and above. Corruption, on the other had has continued to increase. The implications were

grave: most reforms stalled, vote buying became a serious concern, and public trust in the

institutions of democracy was shaken.

The lesson to be drawn from this experience is that, early on in the transition process, new

democracies should put economic liberty and transparency on a par with other democratic values

such as regular elections, rule of law, human rights, freedom of association and freedom of speech.

Early on, the Community of Democracies realized that democracy cannot be sustained without

persistent efforts to eliminate extreme poverty and, vice versa, that the strengthening of

democratic governance was ―an essential component‖ of the efforts to alleviate poverty. Poverty is

as much a threat to a democracy as poor institutions in that it deprives people of their political

voice preventing them from holding their government accountable and eroding public trust in those

institutions.

After years of stalled reformed it appears that Mongolia's government is now more willing to tackle

its governance issues. It has laid out its plans to reform the civil service, judiciary and police, the

institutions most frequently cited as corrupt. Wider policy deliberation and citizen participation are

encouraged. If sustained, reform should improve government effectiveness and create an enabling

governance environment for focusing on poverty eradication. The country's significant extractive

wealth will also need exemplary management so that its benefits go to the entire population in an

equitable way.

Source: Brookings Institute

NORTH KOREA WARNS IT IS ON BRINK OF NUCLEAR WAR WITH SOUTH

As North Korea warned foreigners on Tuesday that they might want to leave South Korea because

the peninsula was on the brink of nuclear war—a statement that analysts dismissed as hyperbole—

the American commander in the Pacific expressed worries that the North's young leader, Kim Jong-

un, might not have left himself an easy exist to reduce tensions. South Korea has the largest

population of immigrant Mongolians in the world.

―His father and his grandfather, as far as I can see, always figured into their provocation cycle an

'off ramp,'‖ the commander Adm. Samuel Locklear, said during testimony before the Senate Armed

Services Committee. ―And it's not clear to me that he has thought how to get out of it. And so that's

what makes this scenario, I think, particularly challenging.‖

At the core of the concern within the administration and intelligence agencies is that they do not

understand Kim's motivations. His father and grandfather suggested, at times, they might be willing

to negotiate to end their nuclear program. But Kim arrived in power with a small nuclear arsenal,

and he may be calculating that with those potential weapons in hand, he is less vulnerable to

attack.

Experts saw the new threat as part of what they have begun referring to as ―psychological

warfare,‖ meant to force concessions from Washington and Seoul. In recent days, analysts say,

those threats have appeared designed specifically to cause jitters among businesses and investors in

South Korea, perhaps reflecting a calculation that South Korean President Park Geun-hye might be

unable to stand as firm if her country's already weakened economy is seriously threatened.

The North's warning followed a similar advisory last week in which it told foreign embassies in the

North Korean capital, Pyongyang, to devise evacuation plans. And it came a day after the North said

it was temporarily suspending operations at a joint North and South Korean industrial park; the

South had previously assuaged investors' fears about possible hostilities by saying the operations at

the factories were continuing despite the North's belligerent stance.

Source: New York Times

ANNOUNCEMENT

MONGOLIA INVESTMENT SUMMIT 2013, APRIL 16-18, LONDON

Business Council of Mongolia members are invited to attend the Mongolia Investment Summit

London 2013 and receive a 15 percent discount on their registration fee. This is your last chance to

register and meet investors, Mongolian businesses and government officials.

The Mongolian investment climate has received some positive news in recent weeks. The draft

minerals law has been deferred and the foreign investment law is up for amendment.

A boom is thought to be on the horizon with the potential for huge growth in sectors like mining,

real estate and capital markets. The Mongolia Investment Summit London is attracting nearly 300

registered delegates involved in this fast growing market.

The event provides an excellent opportunity to meet with major investors, mining groups,

government officials and real estate specialists to identify new business partners. At the event, the

views on the country will be discussed by investors from companies such as Barclays Natural

Resource Investments, HSBC Global Asset Management, Collabrium Capital and more. The event

provides an opportunity not to be missed.

Enter the discount code ―Business-Council-Mongolia-Special‖ when you register to receive the early

bird discount plus an additional 15 percent off.

___________________________________________

FOREIGN INVESTMENT IN MONGOLIA CONFERENCE, APRIL 19, UB

BCM and UB Risk Management Consulting (headed by Dr. Khashchuluun, former Chair of NDIC) are

organizing a "Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference on April

19, 2013 at the Kempinski Hotel.

As we know, Mongolian economy has been rapidly growing with 17.5% in 2012 and 12.3% growth in

2013. During 2010-2012, foreign investment in Mongolia increased at a rapid speed, contributing

significantly to economic growth, creating more jobs and financing various projects in the country.

However, the OT copper gold project, long a cornerstone of Mongolia‘s increased FDI, is almost

completed. The timing of other potentially large FDI projects such as PPP power stations and the TT

project are not clear. The result could be that inflows into Mongolia may not grow as much as in

previous years.

Speakers include:

- I. Ser-Od, Vice Director, Business Council of Mongolia

- S. Bold, Chief Economist, Central Bank

- S. Javkhlanbaatar, Foreign Investment Regulations and Registration Department Head, Ministry of

Economic –

Development of Mongolia

- B. Amarsanaa, Academic Secretary of National Legal Institute

- D. Gan-Ochir, Head of Financial Stability Council, Advisor to President of Central Bank

- D. Achit-Erdene, CEO, MICC

- Dr. Ch. Khashchuluun, Director of UBRM Consulting, professor of the Economic School of the

Mongolian National University

Attached is the Agenda of the event. FREE registration, please contact tugi@bcmongolia.org,

317027.

___________________________________________

3RD RISK MANAGEMENT FORUM, 1 MAY, ULAANBAATAR

The 3rd Risk Management Forum of Mongolia will be held on 1 May 2013 in Ulaanbaatar at the Blue

Sky Tower.

This is the largest risk event in Mongolia, co-organized by the Business Council of Mongolia and

Mandal General Insurance. The Risk Forum will provide the most comprehensive overview of risks

that Mongolia faces today and the status of risk management all under one roof. Risk management

techniques and tools will be shared and best practices promoted across industries.

Last year, the event had attracted over 250 representatives of Mongolia's top corporations and

government agencies and resulted in the formation of Risk Institute of Mongolia. This year, the

expert speakers will be address topics concerning Macro Risks, Business Risks, and Community Risks.

For more information, visit RiskForum.mn.

___________________________________________

2nd MONGOLIA TRADE & COMMODITY FINANCE CONFERENCE, 14 MAY, ULAANBAATAR

Exporta's second Mongolia Trade & Commodity Finance Conference will be held at the Chinggis Khan

Hotel in Ulaanbaatar on 14 May. The Business Council of Mongolia (BCM) is acting as an institutional

partner for the event and has negotiated a 15 percent discount for its members to attend.

The Mongolia Trade & Commodity Finance Conference is the only specifically organized event for

the Mongolian trade and commodity finance community. It provides an unrivaled platform for

discussion and networking for leading local businesses and institutions, as well as those

international practitioners looking to tap into the huge potential of this rapidly developing market.

Speakers include Chuluunbat Orchirbat, vice minister of the Ministry of Economic Development,

Battsengel Gotov, chief executive of Mongolian Mining Corp., and Jim Dwyer, executive director of

BCM.

To receive the discount quote BCM15 when booking. Click here for more information and booking.

___________________________________________

COAL PROCESSING & MINING TECHNOLOGY EXPO, 4-5 JUNE, ULAANBAATAR

The Coal Processing & Mining Technology Expo will be held in Ulaanbaatar from 4 to 5 June 2013.

The expo is co-located with the Transportation & Logistics Expo, and because of this co-location you

will be able to meet with a more diverse and broader group of attendees. With many international

as well as local Mongolian companies already signed up to exhibit, you will be a part of what is

becoming the premier event for the mining and transportation industries serving Mongolia.

BCM members will receive a special 10 percent discount. To register and receive your discount

email Saruul at saruul@bcmongolia.org. For more information about the exhibition, contact Glenn

Scott atgscott@uexpos.com or visit the website coalexpomongolia.com.

___________________________________________

FUTURE MONGOLIA, 19-22 JUNE, ULAANBAATAR

The Future Mongolia international trade fair will be held at the Buyant Ukhaa Sport Palace in

Ulaanbaatar, near the Chinggis Khaan International Airport, from 19 to 22 June, 2013.

After the successful premier with nearly 100 exhibitors from 14 nations and some 4,200 visitors, we

cordially invite you to the second Future Mongolia. This international trade fair offers the

opportunity on an enlarged exhibition space to present modern and sustainable solutions and

responses to the present needs of Mongolia and its population.

BCM members will get 5% discount on raw space. Please contact Saruul at

saruul@bcmongolia.org to get a special discount code. For more information, visit Future-

Mongolia.com.

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COALTRANS MONGOLIA, BLUE SKY, 25-26 JUNE, ULAANBAATAR

The Coaltrans Mongolia conference will be held at the Blue Sky Tower from 25 to 26 June. BCM

members will receive a 15% discount to attend the event, please use the discount code BCM.

Coaltrans Mongolia will explore the development of coal projects in the country and offer an insight

into what level of influence Mongolia will have over future international coal prices. Join us on the

25th and 26th of June 2013, as we return to this exciting market for the third year, to have an

impact on how this new coal frontier evolves and cement your position as a leading player in the

market.

Speakers will include Batsuuri Yaichil, Chief Executive Officer of Erdenes Tavan Tolgoi LLC, Graeme

Hancock, President and Chief Representative of Anglo American Development, and Bayanjargal

Byambasaikhan, Chairman of the Business Council of Mongolia.

For more information, email coaltrans@euromoneyplc.com.

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“MM TODAY” on MNB-TV, Friday, 18:50-19:00

BCM is pleased to announce that 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 from 18:50 to 19:00 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

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BCM‟S MINING SUPPLY CHAIN DATABASE

The new version of BCM‘s Mining Supply Chain Database is in use. Following the initiative of Oyu

Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. It is an

honor to introduce you to the new version of the database which is totally upgraded as to its

content and use of information technology opportunities.

As of December 31, suppliers registered on the database totaled 1,405. During 2012, 251 new

supplier entities joined the Database and 236 prior supplier registrants updated their company

profiles. In addition, 22 buyers were also registered and 82 tender announcements were posted.

We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain

Database. Please visit here for registration—FREE!

If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org

or 317027

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.

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

government website Open-Government.mn are regularly updated.

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ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „MONGOLIAN BUSINESS NEWS‟,

„PHOTO GALLERY‟

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available. Recently

added from BCM‘s monthly meeting on March 25:

•Ruth Pulaski, Director Marketing & Development, American University of Mongolia – ―American

University of Mongolia: Integrating a Liberal Education Approach to Learning‖ at the BCM monthly

meeting, March 25, 2013

•B. Bayar, Managing Director, ELC LLC – ―Update on Legal Developments Regarding Foreign

Investment‖ at the BCM monthly meeting, March 25, 2013

•Tony Burchill, Australian Consul-General & Trade Commissioner, Austrade – ―The Business of Being

a Third Neighbour‖ at the BCM monthly meeting, March 25, 2013

Other recently added presentations:

•Dr. .Brian Fisher, Managing Director, BAEconomics, "Economic Impact of draft Minerals Law" at the

Kempinski Hotel, March 18, 2013, Ulaanbaatar

•Dr. Ch. Khashchuluun, CEO of UBRM Consulting, Mongolia and Mining, The policy evolution: What's

the next? at the Kempinski Hotel, March 18, 2013, Ulaanbaatar

•Martin Pow, Partner, Enterprise Risk Services and Learning Leader, Deloitte Onch LLC, Black

Swans: Fact or Fiction, A different risk management philosophy at the BCM Risk Management

Working Group meeting, March 14, 2013

The following 3 presentations were added from Coal Mongolia, 21-22 February:

―Current state of coal sector of Mongolia and future trends‖ by Minister of Mining D. Gankhuyag at

the Coal Mongolia 2013, Feb 21, SS Convention Center, Ulaanbaatar;

―Economic Reform Objectives‖ by Vice Minister, Economic Development, H.E. Mr. O. Chuluunbat at

the Coal Mongolia 2013, Feb 21, SS Convention center, Ulaanbaatar;

―Presentation for Coal Mongolia 2013‖, Norihiko Kato, CEO of Khan Bank, Feb 21 at the SS

Convention Center, Ulaanbaatar, Mongolia.

Presentation by Bold Baatar, CEO of Altan Dornod Mongol, ―Mongolian Mining Investment

Environment‖ at the Mining Industry Open Discussion, February 1, 2013, at Kempinski Khan Palace

Hotel.

Please note the presentations from each of the BCM monthly meetings. Please also note 25

presentations from the Mongolian Investment Summit 2012 on 30-31 October in Hong Kong; and 9

presentations from Discover Mongolia 2012.

The ―Mongolia Reports‖ section includes ―Highlights of 2012, Mongolia‖ by European Bank for

Reconstruction and Development (EBRD); the ―Official statement of Oyu Tolgoi LLC in relation to

information, data and facts related to Oyu Tolgoi discussed during open session of the State Great

Khural, dated 1 February, 2013‖; ―2013 Mongolia Investment Climate Statement‖ by the Economic

and Commercial Section of the U.S. Embassy; ―Mongolia Foreign Labor Force Ratio for 2013‖ by

Hogan Lovells International LLP; ―How Mongolia will perform in 2013?‖ by Mandal Asset

Management; ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC; ―The fiscal regime

for mining - a way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a supplement to Mining

Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September, 2012 by EPCRC; ―Taxes

for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to

Parliament and Government is available for download.

BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business

News‖ before they are all put together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.

The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home

page for a consolidated account of the week‘s events.

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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 Linked-in 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.

We have now 1,036 fans on our Facebook fans page, 1,182 connections on LinkedIn network, and

648 followers on Twitter.

Of course for news information, interviews, event photos, and announcements regarding our

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

BCM WORKING GROUP MEETINGS

The BCM Capital Markets Working Group met on Thursday, April 11, with 12 members attending.

Howard Lambert,/ING Bank/ moderated the session.

New Member: Chris MacDougall, MIBG, was welcomed.

Guest Participants: Zheng Wei, Zhou Xiaozhou from Bank of China.

Speakers and topics:

- Update on the Government Debt Auction: Daniel Patrick O’Connell/Ministry of Finance/

- Mongolia Quarterly Update-2013: Chris MacDougall/Mongolian Investment Banking Group/

Next meeting: 12th of June 2013 at BPI meeting room 12th floor Express Tower.

Please contact erka@bcmongolia.org.

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]

March 31, 2013 *9.8% [source: NSOM]

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

Note: 9.4% y-o-y, Ulaanbaatar city, March 31, 2013

CENTRAL BANK POLICY LOAN 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]

January 25, 2013 12.50% [source: Mongol Bank]

April 8, 2013 11.50% [source: Mongol Bank]

CURRENCY RATES – APRIL 11, 2013

Currency Name Currency Rate

US dollar USD 1,409.80

Euro EUR 1,843.52

Japanese yen JPY 14.21

British pound GBP 2,164.82

Hong Kong dollar HKD 181.85

Chinese Yuan CNY 227.52

Russian Ruble RUB 45.63

South Korean won KRW 1.24

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.