BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 226 – June 15, 2012

NEWS HIGHLIGHTS:

Business:

Ivanhoe Mines rights offering trading began on 14 June;

Ivanhoe files final prospectus for USD 1.8 billion rights offering;

Singapore’s wealth fund buys 5.5 percent of Ivanhoe;

Altan Rio intersects high grades of gold;

Officials to inspect Areva's Dulaan Uul project;

Khan Bank obtains USD 94 million from international financial institutions;

New fund targets Mongolia to outperform correlated returns;

Boroo Gold continues reclamation activity;

Wagner Asia demonstrates Powerscreen capabilities for road construction;

Chinese, Mongolian firms congregate;

Vale and Cliffs look to capitalize on China's steel industry;

Areva closes stake sale in Canadian mining project.

Economy:

Peace Bridge to be expanded;

Government to audit licensed areas within protected boundaries;

Crime on the rise;

Mongolia ranks ninth among developing countries for retail expansion;

Ulaanbaatar among region’s least expensive cities;

Mongolia looms further on Australia's share of Asian coal market;

Mongolia may be a model to others;

Will investors stay the course?;

Agencies train with GIS for disasters;

Commodity prices in “no man's land,” says Barclays;

BHP cuts outlook for commodity prices;

Copper hits six-month low amid China concerns;

Miners set to return to hedging;

Selling abroad, China eases slump at home;

IMF forecasts 4 percent growth for Russia in 2012, 2013.

Politics:

President urges global support of anti-corruption efforts;

President defends actions against Enkhbayar;

Enkhbayar's trial postponed to 21 June;

Government releases full list of candidates;

Justice Coalition reveals party platform;

Mongolians living abroad cast their votes for first time;

Tyrannosaur is truly Mongolian, experts declare;

Hu and Elbegdorj exchange courtesies;

India looks to tap into Central Asian markets;

Nuclear Energy Agency revokes 21 illegally issued licenses;

Ministry provides update on protected land;

Court sentences police officers for deaths in July 2008 riots;

Officers learn to respect human rights in public disorders;

Environmental activists to stand trial;

Partnership of convenience.

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

BUSINESS

IVANHOE MINES RIGHTS OFFERING TRADING BEGAN ON 14 JUNE

Trading of Ivanhoe Mines Ltd.‘s rights offering began on 14 June.

Each of Ivanhoe Mines‘ shareholders will receive one transferable right for each share of common

stock owned as of 19 June. Every 20 rights will entitle the holder to purchase seven common shares

of Ivanhoe Mines. Each holder may choose a subscription price of USD 7 a share, a 32 percent

discount. Approximately 260 million common shares are expected to be issued under the rights

offering, which would represent approximately 35 percent of Ivanhoe Mines' current outstanding

shares.

The rights-offering will be open for exercise for 21 days from the date of mailing to shareholders

and will expire on 19 July. Shareholders who do not exercise all of their rights will have their

present ownership interests in Ivanhoe Mines reduced, as a percentage of the total outstanding

shares, as a result of the rights offering.

Source: Ivanhoe Mines Ltd.

IVANHOE FILES FINAL PROSPECTUS FOR USD 1.8 BILLION RIGHTS OFFERING

New York and Toronto-listed Ivanhoe Mines Ltd. filed its final prospectus for a USD 1.8 billion rights

offering last week to complete development of its Oyu Tolgoi copper-gold project in Mongolia. The

company said the offering was open to all existing shareholders on an equal and proportional basis

to buy additional common shares.

The rights offering is part of the comprehensive financing plan to continue the development of the

Oyu Tolgoi project, and was the subject of a memorandum of agreement with majority shareholder

Rio Tinto PLC on 18 April.

"The final prospectus has been filed with securities regulators in Canada and the U.S. and the rights

had been admitted for trading on the TSX, the NYSE and the NASDAQ stock markets, which would

list the shares issued when the rights are exercised.‖

Rio Tinto has committed to take up its full basic subscription privilege under the rights offering with

respect to its 51 percent shareholding in Ivanhoe, subject to certain conditions. Rio Tinto will also

provide a standby commitment for the full USD 1.8 billion rights offering, subject to certain

conditions including the price of Ivanhoe's common shares on the NYSE not falling down the

subscription price at any time on or after the fifth business day before the expiry of the rights. Rio

Tinto is required by the standby commitment to buy shares not taken up under the rights offering.

Source: Mining Weekly

SINGAPORE‟S WEALTH FUND BUYS 5.5 PERCENT OF IVANHOE

Singapore state investor Temasek Holdings has taken a 5.5 percent stake in Canada's Ivanhoe Mines

Ltd., valued at USD 426 million, according to a regulatory filing.

Temasek bought 40.86 million shares of the Vancouver-based firm, the Singapore investor said in a

filing of the U.S. Securities and Exchange Commission on 8 June. Ivanhoe Mines is an affiliate of

mining giant Rio Tinto PLC, and owns 66 percent of Oyu Tolgoi LLC.

Temasek, which has about 36 percent of its assets in financials, has been slowly increasing its

investments in resource firms. In April it bought shares of Petro China's Kunlun Energy.

Source: Mine Web

ALTAN RIO INTERSECTS HIGH GRADES OF GOLD

Altan Rio Minerals Ltd. intersected high grades of gold at its Khavchuu gold exploration project.

Altan Rio's exploration team uncovered 11.49 grams per ton of over a meter rat Hole KH-05. The

high grade is of particulate importance as it represents a single mineralized hole in area of high

promise, reported the company. The new gold discovery zone has the added benefit of its strategic

location near Centerra Gold Inc.'s Boroo mill complex, warranting follow-up drilling.

Future drilling will target further test zone of known mineralization and the most promising

geophysical anomalies.

Source: Altan Rio Minerals Ltd.

OFFICIALS TO INSPECT AREVA'S DULAAN UUL PROJECT

Officials will investigate the exploration operations of Areva SA's Mongolia subsidiary, Kojegobi Co.,

for the effect uranium extraction operations is having in the surrounding area.

The governor of Ulaanbadrakh Soum requested an investigation into the Dulaan Uul mine for its

environmental impact. The Central Nature Laboratory and the Department of Water and

Meteorology will carry out the investigation. Officials warned that if the investigation results show a

negative impact to the environment, it would have to suspend operations.

Kojegobi plans to build a uranium processing factory from 2015 to 2017. Until then, it plans to send

up to 2,500 tons of uranium for concentration to Kazakhstan and France.

Areva has explored for uranium in Mongolian since 1997.

Source: Undesnii Shuudan

KHAN BANK OBTAINS USD 94 MILLION FROM INTERNATIONAL FINANCIAL INSTITUTIONS

Khan Bank has added USD 94 million of syndicated loans to its funding and capital base. FMO (the

Netherlands Development Finance Company) has arranged the financing, which is being provided by

FMO and three other European development finance institutions.

The syndication includes USD 62 million in senior five-year debt to support its small-medium

enterprises and corporate lending, and USD 32 million in five-year subordinated debt, which will be

added to the bank's second tier capital.

"FMO is proud to have arranged this groundbreaking loan facility for Khan Bank. This long-term

commitment is a boost for the Mongolian economy and a clear vote of confidence for the Mongolian

financial sector in general," said FMO Chief Investment Officer Jurgen Rigterink.

Khan Bank has a long term standing relationship with FMO and the European Bank of Reconstruction

and Development, which is providing USD 25 million under a parallel loan agreement.

Source: Khan Bank

NEW FUND TARGETS MONGOLIA TO OUTPERFORM CORRELATED RETURNS

The Cube Asia Frontier Fund (CAFF), a closed-end fund, aims at investing "opportunistically" in

"inefficient" frontier markets' real estate, starting with Mongolia, Vietnam, and Myanmar. The fund

has a reported capacity of USD 150 million.

"Our philosophy is to seek uncrowded investment opportunities, and we are confident that

exploiting these still insufficiently explored markets will generate attractive returns," said Thomas

Holland of the firm.

The uncrowded aspect is the chief allure: Relatively untrodden markets should produce less

correlated returns versus tightly linked global stocks in Europe, East Asia, and the United States. It

would seem that the method can sometimes disappoint, however. The most popular frontier-

markets ETF, the USD 135 million Guggenheim Frontier Markets ETF, is up 5.4 percent year-to-day,

or half a percentage point ahead of the S&P 500. Last year, its uncorrelated returns plunged 24

percent.

Indeed, FRN may highlight some of the arguments in favor of highly specialized frontier-market

exposures like Cube's latest offering. FRN has had a 96 percent correlation over the last three years

to the iShares MSCI Singapore Free Index Fund and the iShares MSCI Chile Investable Market Index

Fund, two countries with deep ties to the global economy. It would seem that one risk in frontier

markets is that they sometimes behave like emerging markets on steroids.

Source: Barron‘s

BOROO GOLD CONTINUES RECLAMATION ACTIVITY

Boroo Gold Inc. aims to rehabilitate 44.7 hectares of land this year.

The company began its restoration efforts on 15 April and plans to conclude them on 11 July, at the

start of the annual Naadam festival. Additional work, however, will continue up until fall.

As per tradition, local residents participated in the efforts, with 40 to 60 men from the nearby

communities of Bayangol Baruunkharaa, Zuunkharaa, and Mandal Soums in Selenge Aimag, where

the Boroo gold mine is located, lending a helping hand.

Boroo Gold has plans to complete its reclamation in 2016 with the closing of the mine. In total, the

miner has spent MNT 40 billion on rehabilitation.

Source: Undesnii Shuudan

WAGNER ASIA DEMONSTRATES POWERSCREEN CAPABILITIES FOR ROAD CONSTRUCTION

The Powerscreen dealer for Mongolia, Wagner Asia Equipment LLC, held an official launch event in

Ulaanbaatar showcasing solutions for the Mongolian Road and Construction Industry in May 2012.

The two-day event included seminars, discussion groups and a working demonstration of its

Powerscreen equipment as well as other product lines the company offers.

―2012 is a crucial time for Mongolia as the country now needs to build large tunnels, bridges and

construct more than 6,000 kilometers of highways and road network nationally,‖ said Allen Smith,

Powerscreen mining development manager.

At the event, Smith presented a seminar entitled ―Mobile Crushing and Screening Solutions,‖ which

was attended by government ministers, construction experts and professionals from across

Mongolia. Smith demonstrated the importance of selecting high-quality crushing and screening

equipment for road construction and having reliable customer support from a strong local dealer.

Day two of the event provided an opportunity for invited guests to see a demonstration of how the

Powerscreen XA400s, 1000 Maxtrak and Chieftain 1700, in combination with equipment from other

manufacturers could be used to create 100 meters of road in 40 minutes.

Source: Materials Handling World Magazine

CHINESE, MONGOLIAN FIRMS CONGREGATE

A China-Mongolia economic and trade conference opened on Friday to promote bilateral economic

cooperation.

The event, organized jointly by the Mongolian National Chamber of Commerce and Industry (MNCCI)

and China's Inner Mongolia International Trade Promotion Association (MITPA), aimed to provide a

platform for cooperation between Chinese and Mongolian enterprises.

Present at the gathering were representatives from dozens of large state-owned companies from

Inner Mongolia, including Baotou Iron and Steel Group Co. and Inner Mongolia Electric Power Group.

Both companies introduced their development plans and the programs they intended to implement

in cooperation with Mongolian enterprises.

Trade between the two neighbors totaled USD 6.3 billion in 2011, accounting for 56 percent of

Mongolia's total foreign trade.

Source: China Daily

VALE AND CLIFFS LOOK TO CAPITALIZE ON CHINA'S STEEL INDUSTRY

Iron-ore producers have struggled as a slowdown in the Chinese economy was expected to dampen

demand for the commodity, but neither Cliffs Natural Resources Inc. nor Vale SA have shown signs

of scaling down operations, according to the Paragon Report.

According to analysts' estimates, the commodity in the second half of 2012 will rise to USD 152 a

metric ton, Prices earlier this week fell to USD 130.60, close to the year's low seen on 23 May

numbers from the Steel Index Ltd. showed. New plants for Baosteel Group Corp. and Wuhan Iron &

Steel Group were among the projects approved by China's main planning agency.

"Commodity prices are already close to the bottom and are set to rebound," Henry Liu, analyst at

Mirae Assets Securities Co., said. "Prices will get a boost in the short term on speculation China will

stimulate the economy. Real demand for steel depends on what incentives the government gives to

drive investments."

Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry

through a focus on serving the world's largest and fastest growing steel markets. First-quarter Asia

Pacific iron-ore sales volume increased 25 percent to a record 2.8 million tons from 2.2 million in

2011's comparable quarter. Vale recently announced plans to sell its thermal coal operation in

Colombia.

Source: Paragon Financial Limited

AREVA CLOSES STAKE STALE IN CANADIAN MINING PROJECT

Areva SA closed the sale of its 27.9 percent state in the Millennium mining project to Cameco Corp.

for about EUR 115 million (USD 143.4 million), the French state-controlled nuclear group said in a

statement on Monday. Both firms have exploration activities in Mongolia.

The stake sale to Cameco, which will subsequently own a stake of nearly 70 percent in the

Millennium project, will help cut Areva's net debt and finance its strategic and safety investment

program. Areva said it would, however, benefit from royalties if new uranium resources were

discovered for the mine, which is located north of the Canadian province of Saskatchewan.

Source: Reuters

ECONOMY

PEACE BRIDGE TO BE EXPANDED

The government is planning for a three-phase project that would expand Peace Bridge to reduce

automobile traffic coming into the city center.

Due to the growing population and car ownership, traffic into the city center has grown worse with

each passing year. Using financing from the Asian Development Bank, the government plans to

employ this project to reduce traffic and create the environment for a safe railroad system.

An economic study for the expansion to the bridge will be ready by August, with construction to

begin in spring 2013. The project includes plans for a special lane designated for buses on the 42.5

kilometers of road to be built. The project is a part of the larger Investment for Ulaanbaatar's

Public Transportation initiative.

Source: Undesnii Shuudan

GOVERNMENT TO AUDIT LICENSED AREAS WITHIN PROTECTED BOUNDARIES

The finance and mineral resources ministries will lead audits over the special-licensed areas within

the bounds set by the law banning mining activity at environmentally protected areas.

At a cabinet meeting it was decided that Minister of Finance D. Khayankhyarvaa and Minister of

Mineral Resources and Energy D. Zorigt would be handed the responsibility for conducting arbitrary

audits over the select areas. The areas comprise 124 special licenses owners for the exploitation of

gold deposits. The government expects to obtain MNT 102.3 billion from special license holders for

the environmental damage inflicted by mining operations.

Source: Montsame

CRIME ON THE RISE

Crime has increased 12.1 percent from a year ago. Mongolia experienced 9,613 crimes nationwide

from January to May, an increase of 1,066 reported crimes.

The increase is comprised of growth in crimes related to ownership rights, traffic and motor

vehicle, violence, and the environment. This year 3,539 people were injured and 456 died from

crimes. The number of injured people increased by 226 people, or 6.8 percent, while the number of

deaths fell by 80 people, or 14.9 percent.

Source: Montsame

MONGOLIA RANKS NINTH AMONG DEVELOPING COUNTRIES FOR RETAIL EXPANSION

Mongolia ranked ninth on A.T. Kearney's Global Consumer Institute, a ranking of the top 30

developing countries for global retail expansion.

Brazil placed first for the second year in a row, driven by a growing middle class economy, high

consumption rates, a large, urban population, and reduced political and financial risk. The index

analyzes 25 macroeconomic and retail-specific variables to help retailers devise successful global

strategies and to identify emerging market investment opportunities.

"Given the accelerated growth rates of developing countries compared to the anemic growth in

European and North American markets, global retailers must have a strategy for expansion into

developing markets," said Michael Moriarty, A.T. Kearney partner and study co-leader, said.

While the world's largest developing markets—particularly the BRIC nations of Brazil, Russia, India,

and China—still tempt the largest global retailers, and show no signs of slowing down as a source of

growth, many smaller untapped markets are providing new growth opportunities. New countries in

the 2012 index include "small gems," such as Georgia (sixth), Oman (eighth), Mongolia (ninth), and

Azerbaijan (17th) that are showing progress as attractive destinations for global retailers,

particularly specialty and luxury players. These markets, though small in total retail-market size,

have strong fundamentals that appeal to retailers targeting a concentration of wealth and seeking

to be the first movers in fast-growing markets.

One of the key lessons learned over the 11 years of analyzing international retail expansion is the

importance of finding and developing local talent to make global expansion a success. New markets

are only as effective as their workforces, and harnessing the local talent pool is critical for reaching

customers.

Source: A.T. Kearney

ULAANBAATAR AMONG REGION‟S LEAST EXPENSIVE CITIES

Ulaanbaatar ranks 39th on an index of 210 cities that measure their living expense levels.

Tokyo tops the ranking, regionally and globally. The Japanese yen has remained strong and Tokyo

remains the most expensive location in the region. Singapore, which has moved rapidly up the

global ranking to 31st place in recent years, has firmly secured its position among Asia‘s top ten,

moving from eighth to sixth place. The most expensive locations in Mainland China are Beijing, at

35th place, and Shanghai, at 41st.

Locations in Pakistan come at the bottom of the regional ranking, with Karachi ranked 237th

globally.

Source: News.mn

MONGOLIA LOOMS FURTHER ON AUSTRALIA'S SHARE OF ASIAN COAL MARKET

Mongolia is looming as a serious competitor to Australian mineral exports to northern Asia. Already

it supplies 44 percent of the coking coal imported by China, compared with Australia's 22 percent

market share.

But there is also the looming threat that a new railway could mean Mongolian coal can be supplied

more cheaply and quickly to Australia's large markets in Japan and South Korea. It takes a built

carrier up to 17 days to haul coal from Newcastle to a South Korean port. Once a proposed new

Mongolian rail line is built, it will take just three days to transport coal to ports in Siberia and just a

few days sailing across the Sea of Japan.

The biggest of all the projects in the plan to built a 1,100-kilometer railway from the Tavan Tolgoi

deposit to the Siberian coast to access the Japanese and South Korean markets. Meanwhile,

Australia's Aspire Mining Ltd., which claims to have the third largest coking coal resource in

Mongolia, is to benefit from a new 406-kilometer Erdenet-Moron railway.

The top 10 deposits in Mongolia are said have a combined minerals value of USD 2.75 trillion. But

even smaller projects have been of interest in the big foreign players. The Japanese, for example,

have been very active in trying to nail down rare-earths projects in the country.

Source: The Australian

MONGOLIA MAY BE A MODEL TO OTHERS

As the newly anointed "über-optimist" cited by David Pilling in his article "Whoa there: Mongolia is

not yet the new Qatar,‖ (31 May) may I first amplify the rationale underpinning the validity of my

comparison of the pace and nature of the respective economic development of both counties: an

analysis he refutes in somewhat caustic fashion.

In the past five years, notwithstanding the global financial crisis, Mongolia's gross domestic product

has grown by 128 percent rising in dollar terms from USD 4.03 billion to USD 7.88 billion, an

achievement worthy of some recognition. Second, in addressing your Asia editor's pervasive theme

of underlying negativity, Mongolia is indeed a young democracy still striving to emerge from relative

poverty, which faces many of the development challenges he identifies. These are currently

exacerbated by the slowdown in the (perhaps misnamed?) advanced economies. Nonetheless, prior

negative experiences elsewhere should be viewed merely as prologue not destiny.

Mongolia's political leaders (both in government and on both sides of the political spectrum engaged

in this month's parliamentary elections) remain cognizant of those combined elements of challenge

and opportunity. They and others tangentially involved in supporting their endeavor are, for the

most part, guided by an unstinting commitment to do their best to achieve material progress as a

model of regional development while eliminating poverty, improving welfare and striving to

eradicate rent-seeking and corruption.

Our leaders are sublimated neither by fear against which your writer cautions nor the apparent

hubris he propounds from his initial transitory exposure to our nation and its governance. Should

Mongolia successfully achieve the positive social and economic transformation that its citizens

merit, then, rather than striving for other contemporary national comparatives, future assessments

of the country's progress may perhaps echo Pericles' encomium to Athens (in somewhat more

propitious times) 2,600 years ago in declaring: "We shall be as a model to others and a follower of

none.

John P. Finigan is chief executive of Golomt Bank of Mongolia. He is responding to the Financial

Times article "Whoa There: Mongolia is not yet the new Qatar.‖

Source: Financial Times

WILL INVESTORS STAY THE COURSE?

Recent headlines from Mongolia have reminded investors that the country is still a young

democracy, barely 20 years old, and discovering what it means to have global investors and media

watching its every move.

At the beginning of the year, the Economic Intelligence Unit forecast Mongolia to be the second

fastest growing economy in the world in 2012 with a 14.8 percent gross domestic product (GDP)

growth rate. Growth in the first quarter outperformed that forecast with real GDP expanding 16.7

percent year-on-year (nominal expansion over 30 percent),

On 28 June, Mongolia will undergo its sixth national election since the withdrawal of Soviet rule.

The ferocious competition among political counterparties could not be more intense. The stakes are

high for politicians seeking to participate in Mongolia's next four years of growth with the country

forecasted to be the fastest growing economy globally. And while turbulence facing investors in the

pre-election lead up has tested even the strongest of nerves, the conviction to stay the "investment

course" despite continued electioneering over the next 18 days may well prove to be a very wise

investment decision for the next 18 months (and 18 years) in a highly promising investment

destination.

Source: Resource Investment Capital

AGENCIES TRAIN WITH GIS FOR DISASTERS

Whether it be quickly rising waters, freezing temperatures, or earthquakes, the intensity and

frequency of disasters in the world, and Mongolia is no exception. With all this uncertainty, disaster

officials and scientists are taking advantage of new technology that will help decision makers

embed quick and effective response mechanisms.

The Geographic Information System (GIS) is a computer-based application that utilizes location

information. Its use before, during, and after an emergency can greatly enhance the government's

ability to respond more effectively during and after and emergency.

The U.S. Army Corps of Engineers (USACE) brought three GIS specialists to Ulaanbaatar in May to

share their knowledge and skills with Mongolian government agencies. Representatives from the

Mongolian Armed Forces, Border Forces, the National Emergency Management Agency (NEMA), the

Ulaanbaatar city government, and the Weather Forecast Institute worked side-by-side to train with

the equipment and enhance their response to a variety of hazards Mongolians face. The training

focused on deriving quick and accurate results that can be visualized on a map.

―Having an opportunity to learn the skills featured in this workshop will help me in my everyday

job,‖ said S. Tumurchudur from the Mongolian Water Authority. ―GIS can assist in so many ways,

and I am thankful for the opportunity to learn more about the technology and its use in emergency

management.‖

Over the course of three days, participants in the GIS workshop got the opportunity to practice

their skills with the software and analyze various types of remotely-sensed data, and employ

disaster models. The workshop also featured the use of the Global Positioning System (GPS) and

how it can be used in real time with GIS.

Source: News.mn

COMMODITY PRICES IN “NO MAN'S LAND,” SAYS BARCLAYS

Commodity prices are currently situated in ―no man's land‖ with the prices not yet low enough to

reflect near recessionary conditions, while being too low for producers to continue growth, said

Barclays PLC researcher MD Kevin Norrish.

Much volatility was being seen in the commodities market, with a fast and hard fall in prices—

possibly the fastest since the 2008 global financial crisis—as markets price commodities with a

pessimistic outlook for the global economy. Speaking at a commodities outlook media briefing in

Sandton, he noted that the copper price had fallen about USD 1,500 a ton over the past few

months, while oil fell USD 25 a barrel and gold dropped USD 200 an ounce.

Norrish believed that the price action was impacted as many industry players were anticipating a

bleak economic outlook on the back of nervousness surrounding the euro zone, a possible dip back

into recession and Chinese data reigniting fears of a ―hard landing.‖ However, he suggested it was

difficult to see any signs that the fundamentals of the commodity industry were as bad as the price

action suggested.

Norrish stated that the current prices were ―just not sustainable‖ and would start a slow rise during

the third quarter of 2012, with base and precious metals showing the largest gains.

Source: Mining Weekly

BHP CUTS OUTLOOK FOR COMMODITY PRICES

In its latest review of the international forecasts, BHP Billiton Ltd. reduced its medium-term

outlook for commodities prices, according to people familiar with the matter, who added the cuts

were small and did not affect the longer-term view of the market.

The London Metal Exchange index, a basket of six metals, has dropped nearly 30 percent from its

most recent peak reached in April 2011. The price of copper, aluminum, lead and nickel is down

year-to-date. Tin and zinc prices are up.

Investors look to raw materials for clues about oil, mining, agribusiness and trading companies'

internal outlooks, to anticipate changes in the cycle. The downgrade by BHP Billiton is likely to

cement the view that the decade-long commodities supercycle on the back of China's

industrialization has peaked. Internal commodities forecasts are important because natural

resource companies use them to assess the profitability of their pipeline to investment projects.

The mining industry is unlikely to step back from any big project entirely, but developments could

be reduced in scope or proceed more slowly, executives said.

Rio Tinto PLC, which together with BHP Billiton accounts for about a third of the industry's capital

investment, has also said it is reevaluating spending plans. Glencore International PLC and Xtstrata

Ltd. have indicated they will focus on expanding current mines rather than build new ones.

Source: Financial Times

COPPER HITS SIX-MONTH LOW AMID CHINA CONCERNS

Copper tumbled to its lowest since December on Friday after China's surprise rate cut stoked fears

of a slowdown in the world's second largest economy, and as the United States appeared to rule out

any imminent stimulus measures. The metal, seen as a barometer of global economic health and a

major export to Mongolia, is on track to extend its losing streak to a sixth week, it‘s longest in two

years.

"China eased yesterday, which has set off more of a panic that the data coming out at the weekend

could be pretty grim. Markets would like a coordinated round of policy and cuts, but so far it is only

China and it's more of a token offering that anything else," analyst Robin Bhar of Societe General

said.

China surprised investors on Thursday with its first interest rate cut since late 2008 that initially

buoyed financial markets, until worries emerged that the move may be aimed at preempting a slew

of gloomy economic data for May. Reuters polls published earlier in the week suggest the world's

second-largest economy probably showed signs of stabilizing last month from a surprisingly weak

April, but now those expectations are in doubt.

China accounts for around 40 percent of refined copper consumption, although as much as 80

percent of imports are not used immediately by industry, but by investors as collateral to secure

cheaper loans.

Source: Mining Weekly

MINERS SET TO RETURN TO HEDGING

As the mining industry looks to debt markets from equity funding to meet its financing needs, it is

likely to return to commodity hedging.

Small and medium-sized mining companies are turning to the debt markets for funds, as volatile

equity markets stem traditional sources of funding for the industry. The interests of equity holders

and bondholders differ strongly: shareholders prefer unobstructed exposure to the commodities

cycle, while investors in bonds want secure cash flows to guarantee repayments.

Over the last decade, shareholders have held the upper hand, convincing mining executives to

abandon or, at the very least, minimize hedging. Only a handful of miners have continued the

practice, and mostly of by-products—for example, gold in a copper-gold mine, as is Oyu Tolgoi LLC's

strategy for its own mine. The pressure from equity investors has been so intense since 2005 that

even the gold miners all but stopped the practice in recent years.

The shift is likely to affect the big five—BHP Billiton Ltd., Vale SA, Rio Tinto PLC, Anglo American

PLC, and Xstrata Ltd.—which have multiple options to tap liquidity. These five miners have sold

more debt recently but mostly to lock in low interest rates, rather than because of a lack of access

to other sources of liquidity.

But medium-and small-sized miners listed in London, Toronto, Johannesburg and Sydney could soon

feel the pressure from bondholders to lock in prices to secure cash flows—particularly in

commodities whose prices are still well above marginal costs, such as two of Mongolia's major

export commodities, copper and iron ore.

Source: Financial Times

SELLING ABROAD, CHINA EASES SLUMP AT HOME

China's General Administration of Customs announced on Sunday that exports had surged 15.3

percent in May from a year earlier, twice as fast as economists had expected and vaulting May past

last December as the biggest month ever for Chinese exports. The news comes amid concerns that

the country, whose consumption is largely responsible for Mongolia's growth, is edging towards a

"hard landing."

China's renewed success relies heavily on the American market, with Chinese exports to the United

States soaring 23 percent in May from a year earlier, the data on Sunday showed. Chinese exports to

the European Union rose only 3.2 percent.

Underpinning China's export success is a combination of long-term investments in automation and

short-term depreciation of the currency. Rising Chinese labor costs have no yet meant relief for

China's rivals in other developing countries, Japan and the West, partly because automation is

offsetting an erosion in Chinese competitiveness.

As the domestic Chinese economy slows, the government is also counteracting some of the pain by

taking currency actions to help exporters, allowing the renminbi to fall nearly 1 percent against the

dollar last month. Tightly controlled by the government, that fall was the largest drop since Beijing

officials unpegged the currency from the dollar in July 2005. The weaker renminbi makes Chinese

goods cheaper abroad and imports less affordable in China. The fundamental shift in inflation has

given a competitive advantage, as producer price increases fall to below that of the United States.

The biggest question mark is the extent to which manufacturers can continue to offset rising labor

costs with investments in automation and the reorganization of often-inefficient work practices.

China's current Five-Year Plan calls for industrial wages to rise 13 percent a year through 2015, and

some cities have been raising their minimum wages even faster. By contrast, productivity per

worker is rising only half as fast as wages. Many mainland Chinese and Hong Kong companies have

started diversifying production by opening factories in Southeast Asia, where wages are now lower

than China. But many others compare the infrastructure and bureaucracies there unfavorably to

China's.

Source: New York Times

IMF FORECASTS 4 PERCENT GROWTH FOR RUSSIA IN 2012, 2013

The International Monetary Fund has forecasted for continued economic growth in Russia, along

with underlying inflation. Russia has traditionally been Mongolia's favored trading partner, although

the majority of trade is now with China, as well as an important political ally.

―The outlook is for continued moderate growth and a rebound in inflation,‖ reported the IMF.

―Under unchanged policies, we project growth of about 4 percent both in 2012 and 2013.‖ It added

that underlying inflation would remain above 6 percent.

Since its recovery from the 2008-09 crisis, Russia is now running close to its potential. High oil

prices, strong wage growth, and robust consumption have supported demand. However, continued

turbulence in the global markets is affection Russia mostly through oil prices. Its reliance on oil

exports exposes Russia to declining oil prices.

Russia is advised to promptly reinstate a ―fiscal anchor‖ that would guide medium-term fiscal

policy, decoupling the fiscal stance from short term variations in oil prices and ensuring

intergenerational equity. Monetary policy should aim to secure low and stable inflation and a

stronger supervisory framework is key to facilitating sound financial intermediation.

Source: International Monetary Fund

POLITICS

PRESIDENT URGES GLOBAL SUPPORT OF ANTI-CORRUPTION EFFORTS

President Ts. Elbegdorj has made a call to the United Nations, European Union, United States, and

other global allies to support Mongolia's efforts to clamp down on public corruption.

Earlier this spring, following widespread public reports of misdeeds, the Independent Authority

Against Corruption (IAAC) called for the arrest of Enkhbayar after he refused to receive subpoenas,

which detailed numerous corruption-related violations of the Mongolian Criminal Code. Since the

IAAC's first subpoenas were issued to Enkhbayar over one year ago, in May 2011, the IAAC initiated

27 separate investigations, ranging from embezzlement to extortion and bribery.

Since his 13 April arrest, Enkhbayar has had unfettered access to legal counsel as well as both

domestic and international news media. He has been treated with respect and accorded his full

human rights and protections afforded to any criminal defendant under Mongolia's Constitution.

Now out on bail, Enkhbayar's trial was to begin on 12 June.

The independent General Election Commission (GEC) ruled on 6 June, after an eight to one vote,

that Enkhbayar was ineligible to run for a seat in Parliament due to the pending criminal allegations

against him. The GEC is an autonomous body with a head appointed and members approved by

Parliament. In the meantime, much of the international coverage of this case has been wildly

inaccurate, distorted by a sophisticated public relations campaign on Enkhbayar's behalf.

"Mongolia's growth into a mature democracy requires continued work to eliminate the scourge of

corruption that otherwise will hinder the progress of our democratic system," said President Ts.

Elbegdorj. "Mr. Enkhbayar's case is one of nearly 20 high profile corruption cases. Freedom and

corruption cannot co-exist together."

The IAAC was established in 2006, during the presidency of Enkhbayar, and is headed by a former

police officer. Today, the IAAC stands to ensure transparency and accountability in government,

and advance the goals of the U.N. Convention against Corruption (UNCAC). The authority has a

chairman and deputy appointed by Parliament, which is controlled by the Mongolian People's Party,

which Enkhbayar previously lead.

Source: The Office of the President of Mongolia

PRESIDENT DEFENDS ACTIONS AGAINST ENKHBAYAR

President Ts. Elbegdorj said efforts to prosecute his predecessor for alleged graft are not politically

motivated and instead are part of a ―hard fight‖ against corruption.

In a telephone interview, Elbegdorj said Mongolia would remain a ―beacon of freedom in our

region‖ that welcomes foreign investment. The comments follow a law passed last month capping

future foreign participation in some industries, as well as international criticism of the case against

his predecessor and rival on the eve of a crucial parliamentary election.

Analysts say corruption is a threat for Mongolia, especially as they see policy-making grow

increasingly nationalistic. A law passed last month, for instance, is designed to limit foreign

investment by requiring special approvals for majority stakes in sectors including resources,

finance, telecommunications and media. Elbegdorj suggested the investment cap in the law would

be felt mostly by government-backed companies, such as those based in China, and that the policy

has broad support.

―If they come to Mongolia, if they would like to buy some shares, there are some limits,‖ he said.

―For other foreign investments or other sectors, there is a big open door,‖ he said.

The president said he worries the corruption case against his predecessor is beginning to damage

Mongolia's ―high image‖ as a nation that shares values with the United States. He said international

opinion on the Enkhbayar case has been shaped too much by Enkhbayar's media-savvy family and

the accused‘s ―sideshow in order to avoid justice.‖

Enkhbayar, who remains a popular figure, denies allegations he profited in office and says his arrest

in April and the relatively limited scope of charges against him suggest prosecutors found little

problematic from his years as president, prime minister and speaker of Parliament. Outsiders say

whatever the facts are about Enkhbayar's actions, they are critical of the process.

―You can't build an anti-corruption process on a bunch of politically driven and flawed steps,‖ said

Mark Minton, who served as U.S. Ambassador to Mongolia from 2006 to 2009. ―The way they handle

this case is important. It's an indicator of how they will proceed.‖

Source: Wall Street Journal

ENKHBAYAR'S TRIAL POSTPONED TO 21 JUNE

Mongolia's former leader N. Enkhbayar said Tuesday the decision barring him from running upcoming

elections was ―illegal,‖ as his corruption trial was postponed for the third time.

Enkhbayar—who had planned to run in parliamentary polls on 28 June before being barred from

doing so last week—faces five counts of graft dating back to his time as prime minister and

president of the impoverished country. But on Tuesday his hearing was postponed for the third time

after he complained of not having enough time to go over the case files, and because his lawyer had

left the city

―The election committee denied my application to be a candidate. That was illegal so I gave a

letter to the Constitutional Court to reconsider my candidacy for the election,‖ said Enkhbayar.

The country's election committee last week denied Enkhbayar's application to run in the polls on the

grounds that he did not meet the necessary qualifications to become a candidate. The former

president—who is the head of the Mongolian People's Revolutionary Party—was rejected based on an

election law that states that a candidate must display proper experience, education and

commitment to the country.

Enkhbayar had been attempting a political comeback but was arrested in April at the order of the

Independent Authority Against Corruption. His trial has already been postponed twice, and on

Tuesday the head judge said it would be rescheduled again to 21 June.

Enkhbayar argued that his lawyer was a candidate for the upcoming election and would be in the

Gobi then. The judge, however, said the trial would go ahead with or without his lawyer.

Source: Michael Kohn

GOVERNMENT RELEASES A FULL LIST OF CANDIDATES

A total of 544 candidates from 11 political parties and two coalitions will run in the 28 June

parliamentary election. A full list of the candidates was released on 14 June.

The majoritarian method will be used for 354 of the candidates running in 26 election

constituencies, while 190 candidates will be subject to the proportional method by lists suggested

by the political parties. Additionally, 26 independent candidates will run via the majoritarian

constituencies.

This year's election includes 174 female candidates. The oldest candidate is 70 years old, while the

youngest is 26.

Source: News.mn

JUSTICE COALITION REVEALS PARTY PLATFORM

The Justice Coalition unveiled its political platform to reform the nation and cast out oligarchies

this week in a press conference. The coalition is a political pact between the Mongolian People's

Revolutionary Party (MPRP) and the Republican Party.

The party focused on the failings of the current constitution, calling for a new fifth constitution

that would address promises left unfulfilled and the so-called oligarchy regime that it says hinders

human development and serves only the few. The coalition representatives promised to distribute

even more of the wealth gained from the Tavan Tolgoi coal mine. They proposed to distribute to

the population 100 percent of shares of Erdenes-Tavan Tolgoi JSC, the state-owned firm operating

the mine's eastern block, rather than the 20 percent already distributed. It also vowed for changes

to the Oyu Tolgoi agreement that would be more favorable to Mongolia and its citizens.

MPRP Secretary Ch. Ulaan said that denying Enkhbayar his candidacy on the account that he does

not meet the requirements outlined by the election law was unconstitutional. Enkhbayar has called

his arrest and upcoming trial ploys to keep him from returning to power. At the press conference he

implied that his recent arrest following his decision to release information on the July 2008 riots

was no coincidence.

―I have not much information about the police officers whose cases were recently finalized in

court,‖ said Enkhbayar. ―I wasn't called as a witness. This is a political farce trying to cover up the

mess from the last election.‖

Enkhbayar held current president Ts. Elbegdorj and MPP member S. Bayar as directly responsible for

the 2008 tragedy that left five dead after riots broke out following news that the election had been

fixed.

In addition to additional stocks in Erdenes-TT, Enkhbayar promised, on behalf of the MPRP, to open

savings accounts for every citizen, and to establish a 400-member governing board to the company

that would be comprised of representatives of Mongolia's 330 residential districts. He also criticized

Elbegdorj for the current government's failure to fulfill its promise of distributing MNT 2.5 million to

each citizen.

Source: Zuunii Medee

MONGOLIANS LIVING ABROAD CAST THEIR VOTES FOR FIRST TIME

Mongolian citizens living abroad have voted for this year's election this week. This is the first time

Mongolians living outside the country have been given the opportunity to participate in elections.

According to unofficial figures from the Ministry of Foreign Relations, of the 33,000 Mongolian

citizens living abroad eligible to vote, 2,777 voted in the election. Citizens were able to vote at the

39 diplomatic missions in 19 different countries from 7 a.m. To 8 p.m. on 10 June.

The greatest participation in the election from abroad came from Russia. Representatives from the

Mongolian People's Party (MPP) and the Democratic Party (DP) traveled as observers to Irkutsk,

Seoul, Beijing, and London. Ballots arrived in Mongolia in specially sealed containers that were sent

directly to the General Election Committee. The votes will be counted on election day, 28 June,

along with all other ballots from around the country.

Source: Undesnii Shuudan

TYRANNOSAUR IS TRULY MONGOLIAN, EXPERTS DECLARE

The dinosaur skeleton auctioned in May but then protested by President Ts. Elbegdorj has been

confirmed to have been taken out of Mongolia, most likely within the past 10 years.

"We have pulled a lot of them out of the ground and seen a lot of others come out of the ground,

and in our professional opinion it is from Mongolia," said Mark Norell, a paleontologist at the

American Museum of Natural History, who began working in Mongolia in 1990.

Norell and fellow investigator Philip Currie, a paleontologist at the University of Alberta, first

announced their findings to reporters last Wednesday, 6 June. Two Mongolian paleontologists also

assessed the fossils and came to the same conclusion.

It is not yet clear how this conclusion will affect the sale of the specimen. The 75 percent complete

skeleton of the Tarbosaurus, or the Tyrannosaur baatar, was sold on 20 May to an anonymous bidder

for USD 1.1 million on condition that the sale receives court approval. Heritage Auctions, which

handled the sale, has cooperated with the Mongolian investigation into its origins. It allowed

paleontologists and representatives of the Mongolian government access to its facility, where it

found 12 specific characteristics of the bones that indicate it belonged to a Mongolian Tarbosaurus.

Remains of this species have only been found in the Nemegt Formation in Mongolia's portion of the

Gobi Desert.

"I have no doubt that the Tarbosaurus baatar will be returned to Mongolia," said P. Tsagaan, senior

adviser to President Ts. Elbegdorj.

The conclusion did not come as a surprise as the poaching of fossils in Mongolia has intensified over

the years, according to paleontologists. Unskilled poachers often will take the teeth and claws off a

specimen, leaving or destroying the rest, said Currie. This Tarbosaurus is missing most of its claws

and teeth. The rest of the specimen was removed by excavators with more skill, but even so the job

was not well done, he added.

Source: Fox News

HU AND ELBEGDORJ EXCHANGE COURTESIES

President Ts. Elbegdorj met with Chinese President Hu Jintao at the Shanghai Cooperation

Organization (SCO). Both state heads expressed gratitude towards one another for their continued

partnerships in this event and in general. Each agreed they had a desire to strengthen ties,

economically and politically, between their respective nations.

―Developing long-term, sustainable friendly relations and cooperation with the PRC is one of the

priorities of Mongolia's foreign policy,‖ said Elbegdorj. ―I am confident that a new cabinet to be

formed after parliamentary elections will continue and keep this policy.‖

The Mongolian president in his comments emphasized the importance of bilateral relations, and

that his nation was keen on maintaining high-level visits from both sides while deepening

collaborations between their legislative bodies and political parties in the interest of political

relations and mutual trust.

Hu thanked Elbegdorj and his nation for imparting great importance on their ties. He said China

would like to have a role in Mongolia's development, and hopefully the two nations could develop

side by side.

Source: Montsame

INDIA LOOKS TO TAP INTO CENTRAL ASIAN MARKETS

After finally managing to give some teeth to its Look East Policy, India has now embarked on a

Connect Central Asia Policy to tap the energy-rich region which is dominated by China and Russia.

India has shown interest in Mongolia for its uranium and coking coal deposits.

India is still struggling to become a member of the Shanghai Cooperation Organization, a forum to

which Mongolia is an observer, but it is looking at increasing its engagement with the region through

this policy based on pro-active political, economic and people-to-people engagement with Central

Asian countries, both individually and collectively.

India is struggling to build economic links that match its political and cultural interaction with its

trade with the whole region, which is at a relatively low level of around USD 500 million.

―We face some natural obstacles like limited land connectivity and the limited size of the Central

Asian markets. India has thus not seen the sort of commercial interaction in Central Asia which we

saw in Southeast Asia, East Asia, and West Asia,‖ said Minister of State for Foreign Affairs E. Ahmed.

Source: Times of India

NUCLEAR ENERGY AGENCY REVOKES 21 ILLEGALLY ISSUED LICENSES

The Nuclear Energy Agency has canceled 21 licenses issued on 13 January that it claims were

illegally approved.

The agency claims former head of the agency S. Enkhbat illegally issued 21 licenses to eight

companies on 13 January between 4 and 6 p.m., just before his dismissal. The agency calls the

alleged act a serious breach of the President's decision and Mongolian law which prohibit the

issuance of any new special mining licenses.

The companies that had received those licenses have filed their grievances with the court.

Meanwhile, the Ulaanbaatar City Office ruled last week that the special licenses given to Prime

Energy Nadar Resource, National Uranium Resources, Monnuclear, Mongol 3000, and Tom Zam were

illegally issued.

Source: Zuunii Medee

MINISTRY PROVIDES UPDATE ON PROTECTED LAND

The Ministry of Energy and Minerals reported to government its enforcement of the law banning

mining operations at select areas for environmental protection.

The law, which prohibits mining activity at areas nearby forestry and bodies of water, has resulted

in the cancellation of 242 mining licenses, reported Minister D. Zorigt. Sixty-nine of those licenses

have been completely terminated, while 36 have been only partially so. The law establishes borders

to the 1,400 licensed areas with exception for gold deposits. Licenses have been issued for 14

percent of Mongolia's territory, with some 20 percent of that now being preserved. Protected land

will undergo geological study, with 40 percent of that land classified as state reserve.

Zorigt has stated that he believes that the ban on the issuance of new licenses will likely be upheld

for at least the next five years.

Source: Zuunii Medee

COURT SENTENCES POLICE OFFICERS FOR DEATHS IN JULY 2008 RIOTS

Former authorities from the General Police Department have been sentenced for their involvement

in the deaths during the July 2008 riots.

Last Thursday was the end of the long trial of the officers accused of firing live ammunition into a

crowd after a protest became violent. The protest erupted on 1 July following news that the 2008

election was fixed to favor the Mongolian People's Party. The riot resulted in the death of five

individuals, four of which were related to gunshot wounds, and many injuries.

Major-General Ch. Amarbold, a former acting head of the General Police Department (GDP), and

Colonel Sh. Batsukh, a former head of the Patrol and Security Department, were sentenced to six

and a half years for the incident. The court sentenced Lieutenant-Colonel G. Ganbaatar, a former

head of the Order Section, to two years and Colonel O. Zorigt, a former head of the city's police

department, to five and a half years.

After the sentencing was announced, J. Yarinpil, Amarbold's lawyer, said he would appeal the

decision.

Source: Montsame

OFFICERS LEARN TO RESPECT HUMAN RIGHTS IN PUBLIC DISORDERS

The General Police Department and the Human Rights Council held a training on human rights for

law enforcement.

The training included participation from directors and vice directors of local police departments as

well as the director of criminal offenses and representatives from police units for the training,

entitled ―Public Order and Human Rights.‖ The training instructed officers how to respect human

rights during cases of public disorder.

Source: Udriin Sonin

ENVIRONMENTAL ACTIVISTS TO STAND TRIAL

A trial for environmental activists for violent acts committed against mining firms began this week.

Head of the United Moved for Rivers and Lakes, Ts. Munkhbayar, and members of the associated

organization stood trial this week for allegedly shooting at equipment belonging to Puraam and

Centerra Gold Inc., which both operate near Tunkhel Soum in Selenge Aimag, on 2 September. If

found guilty, those charged could be sentenced between 5 to 10 years in prison, forced to perform

public services, or pay a fine.

Source: News.mn

PARTNERSHIP OF CONVENIENCE

President Vladimir Putin's latest visit to Beijing comes at a time when relations between Russia and

China appear to have reached new heights.

Russian and China differ fundamentally in their views of the world and what they want from each

other. For Moscow, partnership with China serves as a counterbalance to dominance by the United

States, it sets a "success by association" that helps legitimize Putin's regime, and gives added

leverage to Moscow with the West. With China by its side, Russia feels able to promote itself as a

global great power, one of the "winners" in a post-America century.

China's Russia agenda is preventative. It was to ensure a good neighbor and avoid a spoiling and

destabilizing presence in Northeast Asia. It seeks a like-minded state that won't oppose its economic

and security interests in Central Asia. Yet, it has no interest in revolutionizing an international

system from which it has benefited greatly, or of supplanting U.S. global leadership.

Although the Sino-Russian partnership functions on mutual convenience for now, this

accommodation will come under real pressure over the next decade. The biggest weakness is the

widening gap between a dynamic China and a non-modernizing, politically sclerotic Russia. For all

the talk in Moscow about the decline of the West, it is Russia that could be the greatest casualty of

the "global shift in power to the East" as it fails to adapt to the demands of a post-industrial age.

The time will come when the differences between Russia and China cannot be so easily fudged.

Within the next 10 to 15 years, China will be the world's largest economy, a much more confident

international player, and almost certainly the leading power in Northeast Asia and Central Asia. Will

Russia, in reaction, become a niche provider of natural resources or finally abandon the constraints

of anachronistic strategic culture and gravitate toward the West again?

Bobo Lo is an independent analyst and author of "Axis of Convenience: Moscow, Beijing, and the

New Geopolitics."

Source: New York Times

NEW MONGOLIAN LAWS

The following laws and amendments, addenda and annulments of/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

12.06.2012 Amendments to Law on Environmental Protection

Law on Fee for Natural Reserves Use /revised version/

Addendum to Law on Fee for State Sign

Annulment of Law on Fee for Natural Plant Use

Annulment of Law on Fee for Consumable Tree, Firewood Made from the Forest

Annulment of Law on Percentage of Capital Spent on Environmental Protection

and Rehabilitation of Natural Reserve from Natural Reserve Use Fee Income

Annulment of Law on Fee for Hunting Reserve Use, Fee for Permit for Animal

Hunting, Catching

Annulment of Law on Fee for Water, Spring Water Reserve Use

Law on Assessment of Environmental Impact

Amendments to Law on Mineral Resources

Amendments to Law on Land

Law on Soil Protection, Prevention from Desertification

Law on Waste

Annulment of Law on Domestic and Industrial Waste

Annulment of Law on Prohibition on Dangerous Waste Import, Transportation,

Export

Annulment of Law on Prohibition on Use of Some Plastic Bags

Law on Forest /revised version/

Annulment of Law on Protection of Forest, Land from Fire

Annulment of Law on Forest

Amendments to Law on Fire Safety

Amendments to Law on Protection from Disaster

Law on Air /revised version/

Annulment of Law on Air

Annulment of Law on Decreasing Capital City's Air Pollution

Amendments to Law on Air Pollution Fee

Law on Animals

Annulment of Law on Hunting

Annulment of Law on Animal Species

Amendments to Law on Special Permits for Business Activity

Law on Water /revised version/

Annulment of Law on Spring Water

Annulment of Law on Water

Addendum to Law on Corporate Income Tax

Addendum to Law on Government's Special Fund

Law on Water Pollution Fee

Addendum to Law on Budget

Amendments to Law on General Taxation

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

MINExpo INTERNATIONAL 2012, LAS VEGAS, 24-26 SEPTEMBER

The Business Council of Mongolia (BCM) with the support of the U.S. Embassy‘s Commercial Section

in Ulaanbaatar is 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 pm, 15 July. Please contact BCM at 70114442, tugi@bcmongolia.org 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.

___________________________________________

REGISTER FOR BCM‟S MINING SUPPLY CHAIN DATABASE AT NO COST

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

Oyu Tolgoi LLC, the BCM has maintained the Mining supply chain database since March 2009. It is

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.

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

Database. Please visit here for registration.

If you have any questions regarding the database, please contact Undral

at undral@bcmongolia.org or 317027.

___________________________________________

“MM TODAY” on MNB-TV, Fridays at 18:30 [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 can be reached via link to

bcm.mn/itgeluud. Several presentations already posted include 11 from the 2nd Coaltrans on May

23-24 in UB.

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 12 presentations

from the 2nd Coaltrans on May 23-24 in UB; 5 presentations from BCM‘s May 28 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; 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; and

Executive Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions.

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 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.

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]

May 31, 2012 *15.4% [source: NSOM]

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

Note: 16.6% y-o-y, Ulaanbaatar city, May 31, 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 – June 14, 2012

Currency Name Currency Rate

U.S. dollar USD 1,320.03

Euro EUR 1,653.87

Japanese yen JPY 16.59

British pound GBP 2,055.55

Hong Kong dollar HKD 170.16

Chinese yuan CNY 207.19

South Korean won KRW 1.13

Russian ruble RUB 40.43

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.