BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 246 – November 2, 2012

NEWS HIGHLIGHTS:

Business

Peabody targets Mongolia coal to expand China exposure;

Erdenes-TT puts off triple listing again;

Oyu Tolgoi grapples with water scarcity while facing its detractors;

MIAT couldn't operate as a private entity, says CEO;

Kincora to raise up to USD 7.8 million;

Erdene confirms gold mineralization at Altan Nar;

Government looks for return of license from Russian-Mongolian silver miner;

Modun signs offtake agreement for Nuurst coal project in Mongolia;

Entrée shares suffers fallout from uncertainty over OT;

MGG profits off mining boom while shielded from political uncertainty;

New maternity hospital to open before year's end;

Centerra sponsors kindergarten library project.

Economy

Mongolia announces USD1.5 billion sovereign bond offering;

S&P lowers Mongolian sovereign rating;

Consortium selected for fifth power plant;

Development Bank approves financing for road projects;

Officials and fuel importers agree to maintain consistent petroleum prices;

Mongol Bank equips itself to battle inflation in 2013;

Two freight trains set to travel to Chinese border daily;

Fraish Air Fund to spend up to MNT 90 billion on clean fuels for ger districts;

NGO organizes artisanal miners union;

Topography map project to aid urban development;

Coal market in recovery;

Deputy Minister sees mine supply to China to normalize in 5 to 10 months;

Mongolia growth rate may sink by one-third, central bank governor says;

Economy to maintain good growth but faces threats, says World Bank;

Domestic agriculture meets nation's demand for potatoes and wheat;

Eyeing economic horizons;

Governance weak at Development Bank;

The Mongolian Tango;

Mongolia among top five countries experiencing desertification;

Mongolia ranks 59th on prosperity index;

CAREC nations agree to direct USD 23 billion for regional transportation;

Free Mongolian language resources available.

Politics

China ready to deliver energy to OT, says ambassador;

Parliament ready for sovereign bond sale;

Premier’s coal distribution plan under fire;

DP details 2013 budget;

Deputy minister investigated for allegedly interfering with Interpol investigation;

Premier faces questions from diplomatic council;

New law to ban smoking in public areas;

More help on the way from Australia for SouthGobi lawyer;

Tyrannosaurus case reveals fossils vulnerable to black market.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Supermarket Price Comparison – October 2012

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

BCM MONTHLY MEETING NOTICE

BCM‘s next monthly meeting for members will be Monday, November 5, 2012 at 5PM at the

CHINGGIS KHAAN HOTEL, 3rd floor, Conference room.

The bilingual meeting will feature the following presentations:

- Call to Order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM

- BCM Report: Jim Dwyer, Executive Director, BCM

- O. Chuluunbat, Deputy Minister, Ministry of Economic Development - "Foreign Direct Investment in

Today's Mongolia"

- Arshad Sayed, President for Mongolia and India, Peabody Energy - "Mongolia‘s Development Path

Requires Adopting Global Best Practices"

- Randolph Koppa, President, Trade & Development Bank - "Update on Banking Sector and Recent

TDB Developments"

- Houston Spencer, Vice President Communications & Media Relations, Oyu Tolgoi - "Oyu Tolgoi

Project Update"

At 7 PM, those 200 of you with reservations for BCM‘s Membership Renewal Dinner should proceed

to the ―Temuujin Restaurant‖ on the 5th floor, Chinggis Khaan Hotel.

BUSINESS

PEABODY TARGETS MONGOLIA COAL TO EXPAND CHINA EXPOSURE

Coal miner Peabody Energy Corp., eager to tap Mongolia's massive coal resources, said on Friday it

expects to resume talks with the government in early 2013 over acquiring a stake in the

undeveloped western block of the Tavan Tolgoi deposit.

Since the National Security Council blocked the consortium selected for Tavan Tolgoi's Western

Tsankhi, state-owned Erdenes Tavan Tolgoi JSC has invited Peabody Energy to discuss infrastructure

ideas to develop Tavan Tolgoi efficiently and provide management services, which Chief Executive

Gregory Boyce said boded well for its prospects in Mongolia.

―There's no guarantee in these discussions, but we view it positively that they recognize our skill

sets,‖ Boyce said. He added, ―Our preference would be to have a role in mining and have an equity

component in the project. We think that's the best way to align the interests of ourselves, our

partners, and the government, and that's still the structure that we're working towards,‖ he said.

Peabody is targeting Mongolia to increase its exposure to its giant neighbor China, where the

company sees coal imports doubling to around 425 million metric tons between 2011 and 2016.

Boyce shrugged off Mongolia's sensitivity about Chinese control over its resources, as reflected in

stiff political opposition to state-controlled Aluminum Corp. of China Ltd.'s (Chalco's) recently

scrapped plan to buy a majority stake in SouthGobi Resources Ltd. He views Shenhua Energy Co.'s

participation in the consortium as an advantage rather than a hindrance to the consortium's bid.

―Mongolia recognizes that the natural market for their products is China, so they seem very

comfortable, as they did [in] the last go around with the consortium that we've put together. So we

don't see that as an issue,‖ Boyce said.

Source: Reuters

ERDENES-TT PUTS OFF TRIPLE LISTING AGAIN

Poor prices and demand for its steel-making commodity means Erdenes-Tavan Tolgoi JSC will have

to wait a year before trying to raise USD 3 billion.

Erdenes-TT has been forced again to delay its three-city initial public offering (IPO) that aimed to

raise some USD 3 billion due to poor coal demand and prices, according to a senior executive.

The global shares offering and planned Mongolia-Hong Kong-London listing of the developer of a

mine that aims to supply a quarter of Asia‘s coking coal is unlikely to happen before September

next year, said Erdenes-TT Chief Operating Officer Graeme Hancock at the sidelines of the Mongolia

Investment Summit.

―The feedback from the [newly elected] government is the IPO timetable is now driven by

commercial rather than political consideration],‖ he said. But this will depend on the market, and

it will unlikely go ahead until we see a strengthening of coal demand in China, which is unlikely

until next September.‖

The IPO was originally slated for June this year. With its repeated delays, Erdenes-TT will seek to

raise at least USD 600 million potentially via loans and bonds to fund mining infrastructure

construction, he added. Other issues that will affect attractiveness of Erdenes-TT‘s shares offer

include how soon Parliament will pass the new securities law.

Under the outdated law, regulation and corporate governance standards over listed firms are

considered too lax to meet requirements by Hong Kong Exchanges and Clearing for companies to be

dual-listed in Hong Kong and Mongolia.

In addition, investment sentiment will also be affected by whether Ulaanbaatar will amend recent

unpopular legal restrictions on foreign investment in mining that resulted in a decline in

investment, and whether politicians‘ call for renegotiations of mining investment agreements with

foreigners will be silenced, he added.

Source: South China Morning Post

OYU TOLGOI GRAPPLES WITH WATER SCARCITY WHILE FACING ITS DETRACTORS

Oyu Tolgoi LLC says it has made good use of few water resources during construction, but there is

no shortage of skeptics around.

The Gobi Desert is home to 120,000 camels, 260,000 horses, 100,000 cows, and 3.4 million sheep

and goats—all who need water. All combined they drink about 31,600 cubic meters of waters a day.

The already sparse water resources are being strained further with a number of mining projects

heading toward or already in operation.

―Herders, for example, use a few liters per day, per person. Most of their water use goes to the

animals,‖said Sara Jackson, a PhD candidate for geography at York University in Toronto. She said,

―People say, 'well, mining is okay. We understand that we need development and mining is a way to

do that, but don't take our water.'‖

In August 2012, Oyu Tolgoi completed construction of its saline water pipeline, which it says will

not interfere with the freshwater reserves in the area. According to Mark Newby, Oyu Tolgoi's

principle advisor on water resources, the mining company has been permitted to use just 20

percent of the underground water resources available and aims to meet that limit.

Still, Oyu Tolgoi has been called out for risking the fragile Gobi ecosystem with its water

consumption. Press releases from OT Watch, a non-government organization monitoring the

activities at the mine, questions the water usage during construction and claims that water usage

agreement is only valid through to the phase of construction. In response, Newby says the company

has records of all its activities and permissions and has been in no violation.

―Frankly speaking, the mine site itself has very poor water supplies but it was a good time period to

make impressive use of water recycling because... the water supplies would have become a hold up

or a limit on what construction could be done,‖ said Newby. He later added, ―The Gobi has a lot

more potential on water than is currently known and if that potential was really understood then it

would take away a lot of the stresses that we are seeing.‖

Source: UB Post

MIAT COULDN'T OPERATE AS A PRIVATE ENTITY, SAYS CEO

MIAT Mongolian Airline's chief executive has spoken in favor of maintaining state-control over the

airline if the airline service is to continue.

Members of the Standing Committee on the Economy said issues regarding fuel costs and not enough

passengers remain as huge hurdles to the airline industry in Mongolia. It pointed out that fuel costs

40 percent more in Mongolian than on the international market. It also noted that MIAT only carries

30 percent of its capacity for passenger transport annually, resulting in MNT 20 billion in losses.

Given these challenges, the airline cannot find anyway to reduce its costs. According to MIAT Chief

Executive Officer Ts. Orkhon, the airline should remain a nationalized asset to maintain the service.

―If we cut prices we will see great loss,‖ said Ts. Orkhon, MIAT's chief executive officer. ―It is not

easy to cover the deficit. Tough state and private carriers can operate in the sector and passengers

can benefit from lower prices and good services.‖

He added however, allowing many foreign carriers could put flight safety at risk with so many

airplanes in the air. He recommended that only a handful of companies in the market with five or

six aircrafts each would be the best situation.

Source: News.mn

KINCORA TO RAISE UP TO USD 7.8 MILLION

Vancouver-based Kincora Copper Ltd. is raising up to CAD 6 million (USD 7.763 million) via a private

placing.

The funds will be used to continue drilling and exploration at the firm's flagship Bronze Fox project

in the emerging Oyu Tolgoi south Gobi porphyry copper belt as well as for working capital. Kincora

is issuing around 57 million shares at CAD 0.105 a share. Each unit will consist of one share and one

purchase warrant, with each whole warrant entitling the holder to acquire one share for three years

from the closing date for CAD 0.19 a share.

The firm has also conditionally secured non-brokered subscription commitments for CAD 4 million of

its proposed private placement with its largest shareholder—Origo Partners PLC—after providing a

subscription commitment in total of CAD 2 million subject to certain terms.

―The directors of Kincora Copper recognize the ongoing support that we continue to receive from

our largest shareholder, Origo, and we are pleased to welcome a new institutional shareholder who

has recently completed a site visit and detailed due diligence,‖ said President and Chief Executive

John Ricku.

He added that continued exploration at Bronze Fox reaffirmed his company's belief that the project

is highly prospective for both bulk lower-grade and deeper higher-grade copper mineralization,

further emphasized by two large-scale greenfield copper construction projects ongoing in the

immediate region.

Source: Proactive Investors.

ERDENE CONFIRMS GOLD MINERALIZATION AT ALTAN NAR

Initial drill results confirm new gold mineralized zones at Erdene Resource Development Corp.'s

Altan Nar gold and silver project in southwest Mongolia. The company released assay results for the

first two holes of a 17-hole reconnaissance drill program that began 7 October.

―This drilling has succeeded in extending the known gold mineralized trend more than a kilometer

from our initial discovery, increasing our confidence that Altan Nar represents a very significant

new gold discovery within the prolific Tien Shan gold belt of Central Asia,‖ said Peter Akerley,

president and chief executive officer. ―With Erdene's corporate restructuring in its final stages, we

look forward to being in a position to focus all our efforts on this exciting new discovery.‖

Exploration will include drilling at holes TND-45 and 46 of 5 by 1.5 kilometer areas located one and

1.3 kilometers, respectively, from the ―Discovery Zone.‖

Source: Erdene Resource Development Corp.

GOVERNMENT LOOKS FOR RETURN OF LICENSE FROM RUSSIAN-MONGOLIAN SILVER MINER

Parliament has established a new working group responsible for directing the transfer of the Asgat

silver deposit mining license from mining firm Monrostsvetmet back to the government.

An official document for the transfer has already been received by Minister of Mining D. Gankhuyag,

said MP A. Tleikhan, and the newly formed working group will be responsible for following his

direction. Mongolian-Russian joint venture Monrostsvetmet holds four mining licenses for the site.

The government could nationalize the mine, said Tleikhan, if it could match the amount invested by

the private firm, but territorial geopolitics could play a factor.

―I have information that Monrostsvetment has investment USD 2.5 million in the last 20 years.

Probably, if we pay that amount, they will sell back the license. However, there would be a

problem because getting to the mine means passing through Russian ground.‖

He added that the government is prepared to allot MNT 3.7 billion into the construction of a direct

road to the Asgat mine.

Source: Undesnii Shuudan

MODUN SIGNS OFFTAKE AGREEMENT FOR NUURST COAL PROJECT IN MONGOLIA

Australia-listed Modun Resources said Thursday it had signed a heads of agreement with Australian

trader Tennant Metals Pty. Ltd. for thermal coal sales from its Nuurst coal project in central

Mongolia.

Under the terms of the agreement, Tennant Metals will have exclusive rights for 15 years to

purchase all the thermal coal produced at Nuurst for export and a minimum 50 percent of the

thermal coal produced for sale in the domestic market. All sales will be at prevailing market rates,

Modun said.

Nuurst has an estimated coal resource of 489 million metric tons, of which 417 million metric tons is

indicated and 72 million is inferred, the company said. The project is located six kilometers from

existing rail infrastructure that connects directly to the Chinese border, it added.

Tennant Metals will begin to market Nuurst coal after an updated estimate of its resource is

completed in early November. This will clarify and re-state coal quality parameters. Modun said

bulk samples will be supplied to prospective customers to determine final pricing and demand, and

that further work is also being undertaken on various upgrade methods to determine the optimal

product mix for export and domestic markets.

Modun said Nuurst coal was suitable for power production and likely to fall within similar quality

parameters as Indonesian sub-bituminous thermal coal. The company said it has a plan to mine 90

million metric tons at a rate of 3 million metric tons a year.

Source: Platts

ENTRÉE SHARES SUFFERS FALLOUT FROM UNCERTAINTY OVER OT

A recent drop in the share price for Entrée Gold Inc., supposedly brought on by political uncertainty

in Mongolia, has been labeled ―disappointing,‖ but the Canadian mining exploration company said it

does not feel that decline reflects underlying value of either of its two main projects.

Commenting on the recent market activity, Greg Crowe, president and chief executive officer, said,

―We are very disappointed in the recent decline in Entrée's share price, and feel this does not

reflect the underlying value of either of our two main projects. We are not aware of any material

disclosed information that may be contributing to the market activity, and are attributing it largely

to the current political uncertainty in Mongolia.‖

Despite recent assurances from the Mongolian foreign minister that the government would not seek

to re-open the Oyu Tolgoi investment agreement on 15 October, Turquoise Hill Resources Ltd.

advised that the Mongolian minister of mines had requested the parties renegotiate the agreement,

according to an Entrée Gold press release. Rio Tinto PLC, Turquoise Hill and Oyu Tolgoi LLC have

rejected the request stating the investment agreement provides a stable legal framework and is a

legally binding document, reads a recent press release.

―Rio Tinto and Turquoise Hill Resources have committed over USD 6 billion in developing the Oyu

Tolgoi project, which is transforming the Mongolian economy, along with creating thousands of

skilled jobs for Mongolians,‖ said Crowe. ―Turquoise Hill still anticipates underground production of

Oyu Tolgoi to commence in 2016.‖

Source: RGJ

MGG PROFITS OFF MINING BOOM WHILE SHIELDED FROM POLITICAL UNCERTAINTY

Mongolia Growth Group (MGG) has been recognized as a way for investors to gain exposure to

Mongolia's mining booms while protecting itself from nationalist tendencies in the minerals sector.

Having found stable support MGG has managed to improve its price to book ratio, while its share

price has remained stagnant. The company's strategy emphasizes real estate it the Ulaanbaatar city

center where there is limited available property.

Interviews with members of the real estate sector show that real estate valuation in central

Ulaanbaatar held steady in 2009, following the 2008 economic crisis. It seems in troubled times the

right real estate has proven a resilient sector in Mongolia. At the same time, real estate is a

leveraged play on Mongolia's growth. With two other Mongolian real estate companies planning

public offerings in Canada and Hong Kong in the coming year, it is still a sector developing off to

the side, away from the politicized mining development.

Real estate will inherently depend on the mining sector's success. But investing in the right mining

company can be a tricky feat, even without government shenanigans. Trying to capitalize on the

mining sector's success via real estate will likely not match the returns of the best-preforming

mining stock, but will not be one of the most under-performing either. Real estate may be the safer

buy to play the Mongolian growth story.

Source: Seeking Alpha

NEW MATERNITY HOSPITAL TO OPEN BEFORE YEAR'S END

An annex to Maternity Hospital No. 1 built under the lead of Boroo Gold Co. will soon open.

Population growth has made the need for a greater capacity for maternity care great. Indeed, there

are only three maternity hospitals for the 1.3 million people living in Ulaanbaatar. Facilities

currently lack enough beds and modern equipment.

Boroo Gold provided the USD 10 billion used for construction of the six-story hospital building.

Construction began two years ago by Tsaast Construction LLC. The maternity wing will house 150

beds, 50 of which will hold infants on the third and fourth floors. A operation room will be on the

fifth floor and will be equipped with modern medical tools.

The annex building will have an oxygen ventilation system to control airflow and prevent

contamination. Construction is expected to be completed in late November or early December.

Source: Niislel

CENTERRA SPONSORS KINDERGARTEN LIBRARY PROJECT

Centerra Gold Inc. has sponsored a project to create libraries for kindergartens throughout the

country.

Chryslar Gold, a non-government organization focused on providing reading materials for classrooms

throughout the country has introduced its Mini Libraries to five kindergartens in Mandal and

Bayangol Soums in Selenge Aimag. According to one of its surveys, a single library for a class costs

MNT 600,000. With 1,380 classes in Ulaanbaatar and 3,304 in the rest of the country MNT 2.185

billion would be needed to establish libraries to all kindergarten classes in Mongolia.

Centerra Gold hos sponsored the project as a mining firm operating at the Boroo gold mine in the

nearby region.

Source: ASSA.mn

ECONOMY

MONGOLIA ANNOUNCES USD 1.5 BILLION SOVEREIGN BOND OFFERING

Mongolia plans to raise USD 1.5 billion by selling a government bonds to finance the development of

the landlocked country's infrastructure, its Central Bank governor said Thursday at the Mongolia

Investment Summit in Hong Kong.

The move comes as resource-rich Mongolia is trying to attract more foreign investment to help it

exploit huge coal and other mineral reserves, but some projects have run into problems because of

government policy shifts and a lack of key legislation governing investment rules, such as the

Foreign Investment Law passed last May.

Foreign funds have been treading cautiously since the law was enacted. Firebird Management LLC, a

private-equity fund with investments in Mongolia, said it has halted all new ―strategic sector‖

investments in the country since the law was introduced, including mining, banking and finance and

media, according to James Passin, Manager of several Firebird Mongolia funds.

―We don't have an agenda to start working on the FI [foreign investment] Law,‖ said R. Amarjargal,

former prime minister and now a member of Parliament. ―We are working on the Mining Law, trying

to make it more manageable and transparent for foreign investors.‖

Government officials said they would meet potential foreign bond investors as early as November on

a roadshow and aim to issue USD 1.5 billion sovereign bonds, which will be denominated in U.S.

dollars, at the end of this year or early next year.

Source: Wall Street Journal

S&P LOWERS MONGOLIAN SOVEREIGN RATING

Standard and Poor's (S&P) Rating Services has given Mongolia a sovereign rating of ―BB-/Stable/B‖.

The rating compares with ―BB-/B BB-/B‖ for 2007 and 2006 ―B+/B B+/B. Parliament has plans to

release USD 5 billion worth of bonds through the Development Bank of Mongolia in the next four

years.

The government's attempt to renegotiate the Oyu Tolgoi agreement and uncertain demand and

outlook for prices for minerals were just some of the reasons for the lower rating. However, the

agency still believes the country has strong growth potential and that nominal gross domestic

product (GDP) growth would exceed growth in debt.

Source: Standard & Poor's Rating Services, Business Mongolia

CONSORTIUM SELECTED FOR FIFTH POWER PLANT

A consortium has been selected for the construction of Thermal Power Plant No. 5 in Ulaanbaatar.

The consortium includes GDF SUEZ Energy International, Posco Energy Co., Sojitz Corp. and

Newcom LLC. The bidding process included a first round in 2009 where 36 contenders offered bids

for the tender, which left Mitsui & Co. Ltd. and Samsung C& T Corp. among others in addition to the

members of the final consortium.

According to plans, the power plant will generate 450 megawatts of electricity and 587 calories per

hour of heat during peak winter days. The first phase of construction will include the installation of

a 150-megawatt generator by October 2015, with the second and third phases slated for 2016.

Analysis indicates the project will cost USD 1.3 billion, with financing expected to be completed by

June 2013.

Source: News.mn

DEVELOPMENT BANK APPROVES FINANCING FOR ROAD PROJECTS

The Development Bank of Mongolia has released a list of road projects it has approved for

financing.

Paved roads include routes between Arvaikheer and Bayankhongor Soums, Bayankhongor and Altai

Soum, Ulaanbaatar and Madalgobi Soum, Mandalgobi and Dalanzadgad Soum, Unudrkhaan and

Choibalsan Soums, and Mandakh and Darvi Soums.

The Ministry of Economic Development and the Development Bank will each be responsible for

ensuring that the projects are on schedule.

Source: Undesnii Shuudan

OFFICIALS AND FUEL IMPORTERS AGREE TO MAINTAIN CONSISTENT PETROLEUM PRICES

The Ministry of Mining and Bank of Mongolia have both committed to cooperate to stabilize the

price of petroleum this year.

Mining Minister D. Gankhuyag and central bank President N. Zoljargal signed a memorandum with

Director of the Petroleum Department G. Uliziiburen and other representatives of petroleum

imports to maintain a consistent price for petroleum fuels. Importers have agreed to sell their fuel

at a currency rate set by the central bank. The central bank has agreed to pay the different in the

event of a large discrepancy between the agreed upon and current exchange rate.

Source: Unuudur

MONGOL BANK EQUIPS ITSELF TO BATTLE INFLATION IN 2013

The Bank of Mongolia will employ special programs with the government in an attempt to keep

inflation in the single digits while delivering support to the banking sector with reduced risk next

year, said central bank Vice President E. Batshugar while speaking on its plans for the 2013

monetary policy.

―Our task is to keep stability in the macro-economy and will be included this policy. Keeping

stability is an effort to keep economic growth by the central bank.‖

As for the exchange rate, the central bank official said the bank would continue its policy in support

of a flexible exchange rate.

―The central bank has maintained a policy for the currency rate against the U.S. dollar to keep it

flexible, combined with market factors and to intervene during currency destabilization in times of

imbalanced demand and supply. This policy will be continued.‖

Source: News.mn

TWO FREIGHT TRAINS SET TO TRAVEL TO CHINESE BORDER DAILY

Ulaanbaatar Railways plans to mobilize two express freight trains a day traveling between Zamyn-

Uud and Ulaanbaatar in an effort to keep down the price of imported goods.

The trains will run each day a 9 a.m. and 7 p.m. in an effort to bring goods keep the prices of goods

cheaper and deliver them more quickly. The government also hopes the trains will help resolve

supply issues for the construction sector, which has contributed to rising costs there.

Source: Unuudur

FRESH AIR FUND TO SPEND UP TO MNT 90 BILLION ON CLEAN FUELS FOR GER DISTRICTS

The Fresh Air Fund is prepared to spend up to MNT 90 billion this year on fuels with low carbon

output, said an environmental worker.

The government has put restrictions on specific districts on what kinds of fuels they are permitted

to burn. However, in 2011 between seven and eight tons of fuels was distributed before the

restrictions were put in place. According to air specialist G. Bayarsaikhan, the fund has signed

contracts with various companies for the delivery of 14,000 tons of fuels.

The environmental organization is promoting the use of coking coal because it contributes less to

smoke pollution. Limited production possibilities does, however, put its target into question.

Bayarsaikhan said partner Noka Energy Co. has already failed to meet its commitment for fuel

delivery.

Source: Unuudur

NGO ORGANIZES ARTISANAL MINERS UNION

A group promoting miners‘ rights in Bayankhongor Aimag has created a co-operative union to

legalize the activities of artisan miners.

The Union for the Protection of Rights of Private Miners has enlisted 470 members and will provide

them evenly distributed incomes as well as a rescue team to protect them from work hazards. The

structure of the deal has a local mining firm provide a portion of its licensed territory to artisan

miners in return for the right to operate.

It took three years of negotiations with the provincial government for the organization to barter a

deal to legalize the independent miners‘ activities, with citizen representatives and the union

organization signing a memorandum. The deal requires Special Mining, a mining firm operating in

the area, to provide 30 hectares of land from their licensed territory to allow members of the union

to mine for gold. The union will be responsible for the safety of its members as well as land

reclamation responsibilities and cooperation with local governments.

This union is the second achievement of this kind by the Swiss Development Agency‘s mico-mining

project. Its first was in Tuv Aimag between Mon Dulan Trade and a local non-government

organization (NGO) in Zaamar Soum.

Source: Zuunii Medee

TOPOGRAPHY MAP PROJECT TO AID URBAN DEVELOPMENT

Korean International Cooperation Agency (KOICA) has had continued progress in its effort to develop

a 1:1000 scale map of Ulaanbaatar.

The Korean aid organization developed a topography map of Ulaanbaatar's 100 square meter city

center that included building structures and construction sites with the Geodesy Map Department in

the 2010-2011 period. The new map will include 165 square meters of the ger district's square

through a USD 3.2 million grant from the government within the next three years.

The project includes the development of a facility to create a database network for the information

gathered. The end-result map will be used by the city administration for urban planning and will be

published on the Internet.

Source: Unuudur

COAL MARKET IN RECOVERY

Coal exports are making a recovery with a 7.1 percent increase in October compared with the same

period last year, reported the National Statistical Office.

Preliminary estimates from the first half of October showed USD 3.4 billion worth of coal had been

exported, a 6.99 percent decline from the year before, compared with the final total for the month

of USD 5.4 billion.

Several months of decline in coal exports have rebounded with 441,700 tons exported this month.

Coal represents 43.9 percent of all exports from Mongolia, with 2.6 million tons of coal exported in

the first 10 months of this year.

Source Unuudur

DEPUTY MINISTER SEES MINE SUPPLY TO CHINA TO NORMALIZE IN 5 TO 10 MONTHS

Mongolia expects to recover its mine supply to the Chinese market in five to 10 months, the vice

minister of the country‘s Ministry of Economic Development, O. Chuluunbat said.

Addressing the Mongolia Investment Summit 2012, Chuluunbat said China has reduced its purchase

of minerals they buy from Mongolia in all kinds of commodities such as coal, iron, copper, zinc, and

others, as China‘s economy is slowing down under the impact of global economic crisis. Chuluunbat

said they witnessed lots of mine companies having shut down in Brazil, Australia and Indonesia

because of the global economic slowdown, while the Mongolian companies survive competitively in

this difficult time.

―We do hope maybe in five months or 10 months, Mongolian mines will be on service and will be

competitive to supply the commodities to the Chinese market,‖ he said.

Chuluunbat said Mongolia enters a crucial phase in its development with large mining projects going

into production and a new government coming into power. He said the new government is working

on updating its foreign direct investment and domestic strategies, especially on mining business, to

attract international investors.

The two-day summit, with a total of 56 expert speakers and panelists, was aimed to update

Mongolia‘s foreign investment climate, new investment opportunities in the mining and non-mining

sectors, as well as the challenges lying ahead.

Source: Xinhua News Agency

MONGOLIA GROWTH RATE MAY SINK BY ONE-THIRD, CENTRAL BANKER SAYS

Mongolia‘s Central Bank governor said that the nation‘s growth rate may slow by a third this year

from a record 17 percent in 2011 as inflows of foreign investment cool.

―It‘s a reality check for us,‖ N. Zoljargal said in an interview with Bloomberg Television in Hong

Kong today, saying that the pace of expansion may be a ―very healthy‖ 11 to 12 percent.

Standard & Poor‘s Rating Services this week revised down its outlook for Mongolia‘s debt rating to

stable from positive, citing increased risks of volatility in an underdeveloped economy. The World

Bank said in February that the nation should guard against ―another boom-and-bust cycle,‖ while

foreign investors are concerned after Rio Tinto Group said it was asked to renegotiate a deal for at

USD 6 billion mine.

Zoljargal said Mongolia is focusing on investment in infrastructure to improve the competitiveness

of the mining industry, which is the drawcard for overseas investors

The International Monetary Fund (IMF) said last month that growth is likely to be in ―double digits‖

this year and to accelerate in 2013 as the Oyu Tolgoi copper and gold mine starts to produce and

the Tavan Tolgoi coal mine expands. While the central bank has tightened its monetary policy,

raising the official policy rate to 13.25 percent and increasing reserve requirements, ―inflation

remains high and pressures on the balance of payments are increasing,‖ the IMF said in last month‘s

report.

Mineral exports, which account for more than 90 percent of the country‘s goods sold abroad, fell 41

percent in September from a year earlier to USD 324 million, on reduced demand from China,

government statistics show. That was the biggest decline in three and a half years.

Perceived uncertainty over investment rules after a political debate over renegotiating the Oyu

Tolgoi contract is hurting Mongolia‘s standing among foreign investors, the IMF said.

Source: Bloomberg

ECONOMY TO MAINTAIN GOOD GROWTH BUT FACES THREATS, SAYS WORLD BANK

Mongolia‘s economy would grow 11 to 12 percent in 2012 but still faced major challenges, the

World Bank said.

World Bank Country Manager to Mongolia Coralie Gevers said the main growth sectors were

construction, agriculture, and communications, and the bank was positive that agriculture had

finally recovered from the dzud (extreme weather conditions that include dramatic cold and heavy

snow).

She said industrial production had not been expanding as fast as before, with the mining sector

contracting 6 percent in August compared to the previous year. The decline was also reflected in

gross domestic product (GDP) growth from July to the end of September, which registered 6.5

percent growth.

―There is a positive factor that inflation is also slowing at the same time; however, it is still in the

double digits,‖ Gevers said. ―In August inflation was 15 percent for Mongolia and 15.6 percent for

the capital city of Ulaanbaatar, which is still quite high.‖ She said as long as the country had high

fiscal spending, it would have high inflation.

The manager also expressed concern over the foreign trade situation. Mongolia‘s exports had been

falling, particularly coal exports to China, she said, adding exports were falling faster than imports,

which was leading to a widening trade deficit and the depreciation of the tugrug. The Bank of

Mongolia has been using its reserves to intervene in international foreign exchange markets to buy

tugrug and sell dollars, which led to the reserve's decline, she said.

Global demand for minerals was declining, due to the slowing world economy, Gevers said, and

Mongolia was particularly at risk due to its heavy dependence on commodities exports, which

accounted for nearly 90 percent of its total exports. She said if Mongolia managed its economy well,

it had the potential to realize great economic achievements. Mongolia‘s economy grew 10.2 percent

in the first three quarters of 2012 compared with the same period last year.

Source: NZ Week

DOMESTIC AGRICULTURE MEETS NATION'S DEMAND FOR POTATOES AND WHEAT

Nationwide harvesting is nearly completed with the potatoes, wheat, and other vegetables

produced hitting the markets.

Recent weather conditions have resulted in frost to crops in 12,800 hectares of land, resulting in

22,000 tons less in production than was projected for the year, said agriculture officials.

Preliminary data suggest that Mongolia will be able to provide for the entirety of the nation‘s

demand for wheat and potatoes and 52 percent of all other major food items. Preliminary data

shows Mongolian farmers produced 470,218 tons of cereals, 456,862 tons of wheat, 232,182 tons of

potatoes, 97,071 tons of other vegetables and 20,148 of crops to be used to create cooking oil.

Source: Info Mongolia

EYEING ECONOMIC HORIZONS

Healthy trade figures and predictions that Mongolia will rank among the world‘s top-10 fastest-

growing economies in the next 40 give confidence for the country's long-term potential, but

concerns over trade, regulatory uncertainty and budget deficits threaten the outlook for the near

term.

While investors' concern that growth could be affected by this year's elections continues, newly

elected Prime Minister N. Altankhuyag emphasized the importance of foreign investment when

meeting with heads of diplomatic missions and international organizations on 9 September.

Altankhuyag said that the new government will remain open to foreign investment and government

would continue to improve transparency and strengthen the legal framework for foreign investors,

stressing that his administration would maintain cooperation with China and Russia.

Optimism raised by Altankhuyag's remarks has been backed up by trade figures revealed by the

National Statistical Office (NSO) in September. External trade turnover reached USD 7.53 billion in

the first eight months of 2012, a rise of 7 percent year-on-year. Meanwhile, exports, which were

dominated by coal (44.5 percent) reached USD 2.87 billion year-on-year, an increase of 0.8 percent.

However there are signs that Altankhuyag's administration will need to carefully manage resource

revenues to ensure the country stays on track to meet long-term growth predictions. Critics have

argued that the trade shortfall can be eased by adding value to mineral resources before they are

exported. However, a number of global financial institutions say that tackling the budget deficit

will require a reduction in government spending. Despite tax revenue increasing 18.7 percent to

MNT 437.5 billion, total expenditure and net lending rose to MNT 1.05 trillion, an increase of 41.6

percent.

To reduce the trade deficit, officials said the government has implemented several measures to

encourage and promote value-added production in the country by differentiating value-added tax

and applying royalty rates to the exportation of raw commodities. The USD 10 billion Sainshand

industrial complex will also have minerals processing facilities, which should help improve the

country's valued-added production. Construction is slated to begin in 2013.

Source: Oxford Business Group

GOVERNANCE WEAK AT DEVELOPMENT BANK

The lack of regulations over the development bank has made it more vulnerable to political

influence rather than greater independence. This will be a weakness to the bank as long as

government controls where the funding it generates goes.

The government has three financial tools at its disposal to direct the Mongolian economy: the Bank

of Mongolia, the Development Bank of Mongolia and state-owned commercial bank Toriin Bank. In

times of emergency, the central banks is there to buffer the impact of economic falls, while the

Toriin Bank and Development Bank act to maintain the peace the rest of the time. However,

according to N. Munkhnasan, a researcher at the World Bank, governance over the Development

Bank is still weak.

The Development Bank raised USD 600 million this year through its debt offerings, or 6 percent of

the country's gross domestic product (GDP) and 50 percent of all domestic investment. However,

none of the projects enacted by the Development Bank have had any returns, which will have it

continually looking for more.

Munkhnasan pointed out that there are few regulations over the bank, but Parliament maintains its

influence over itss board of directors because of its control over which projects will receive

funding. Meanwhile, a vacuum over the bank's leadership exists as it currently has no head figure.

The bank hopes to fund a number of infrastructure projects including the Homes for 100,000

Families as well as road and rail construction. However, these issues will continue to be politicized

as long as political personalties rather than regulations continue to direct its actions.

Source: Mongolian Economy

THE MONGOLIAN TANGO

It seems recent press concerning Mongolia has been universally negative, leaving the private sector

to wonder if investors have fled Mongolia for good.

The Mongolia tango, ―known for its two steps forward, and one step backwards moves,‖ per

Christopher de Gruben, Managing Partner, M.A.D Investment Solutions, raises the question if the

political dance will lead to a long-lasting relationship. Over the past four months, Mongolia has seen

resource nationalism come back to haunt indirect majority stakeholder of the Oyu Tolgoi project

Rio Tinto PLC as well as new tax proposals for the project, delays in the Tavan Tolgoi project, and a

new foreign investment law rushed into passage that could potentially derail foreign investment.

Should the situation not improve dramatically, there is a serious risk that the precarious balance

between foreign investors and the Mongolian government will be tipped in a negative swing, leaving

investors to take their wallets elsewhere.

When looking at Mongolia, it is important to keep a sense of perspective compared to other

countries. Politicians the world over have populist ideas and rarely make the right decisions. For

example, China's foreign investment regulations are considerably more stringent and unstable than

Mongolia's. Australia has introduced its own controversial new mining taxes, pushing back its

economy, and Canada, too, is hesitant to hand over strategic deposits to China.

Mongolia still has the best-performing economy in the world with 11.9 percent gross domestic

product (GDP) growth. There is little doubt Mongolia's economy is a roller coaster ride and will

remain that way for the next couple of decades. It is time for investors and the government to lay

the first foundations of a real relationship.

Investment opportunities in real estate, agriculture, infrastructure, the mining supply chain,

education, auditing, construction, and renewable energy remain intact. 2013 could be an

exceptional year for investment in Mongolia with economic slow down weighing down opportunities

elsewhere. It is an opportunity that could be wasted if Mongolia cannot build a united front with a

stable regime for foreign investors.

Source: M.A.D. Investment Solutions

MONGOLIA AMONG TOP FIVE COUNTRIES EXPERIENCING DESERTIFICATION

Mongolia has joined the list of the world‘s top five countries suffering most from desertification.

In 2004, 90 percent of Mongolia‘s landmass was reported as threatened by desertification. More

recent data from the Anti-desertification Convention‘s Drought Index, however, shows that 72.5

percent of Mongolia‘s land has already experienced its effects.

The report identified global warming and human activities as the two main causes for

desertification in Mongolia. It said the depletion of natural resources, rapid economic growth and

urbanization were all factors that can lead to climate change. While climate change could result in

as much as 20 percent more vegetation in East and Southeast Asia, it could reduce up it by up to 30

percent in Central Asia. This could result in eventual food insecurity, especially in countries with

dramatic population growth.

Source: Unuudur

MONGOLIA RANKS 59TH ON PROSPERITY INDEX

Mongolia was ranked 59th out of 144 countries on the Legatum Institute‘s Prosperity Index.

Among the criterion laid out in the report, Mongolia ranked highest for ―Social Capital‖ at 33 and

worst for the economy at 98th.

The index incorporates tradition economic measures of prosperity with measurements of wellbeing

and life satisfaction. It strives to provide an empirical basis for the intuitive sense that true

prosperity is a complex blend of income and wellbeing.

Key findings from this year‘s report include that both prosperity and safety and security are on the

decline worldwide while the East continues to climb the rungs. It also highlighted the progress of so

called ―Asian Tiger Cubs‖ Vietnam, Thailand, Indonesia, and Malaysia, who are nipping on the heels

of regional leaders.

Source: Legatum Institute

CAREC NATIONS AGREE TO DIRECT USD 23 BILLION FOR REGIONAL TRANSPORTATION

Ministers of the ten Central Asia Regional Economic Cooperation (CAREC) Programme Nations have

agreed to implement more than USD 23 billion in new regional transportation infrastructure

projects, the Asian Development Bank (ADB) reported this week.

The ADB said the program would also include energy and trade initiatives, aimed at creating

seamless connectivity and greater prosperity in the region.

―Regional cooperation is essential to promote inclusive and environmental sustainable growth,‖ ADB

president Haruhiko Kuroda said in a keynote address to the 11th CAREC Ministerial Conference in

Ulaanbaatar. ―Poor connectivity arising from inadequate transport and communications

infrastructure can impede trade expansion and investment attraction,‖

The Wuhan Action Plan, unveiled at the ministers' meeting on Wednesday, prioritizes 68 transport

projects that will contribute to six major corridors linking the ports in eastern People's Republic of

China with the Caucasus and beyond, and connecting northern Kazakhstan to the trading hubs in

Karachi and Gwadar in Pakistan.

This will be complemented by efforts to improve border and customs services to allow people and

goods to move easily between nations, according to the ADB. CAREC nations will also try to raise

funds for the improvement and construction of energy assets.

Source: Bernama

FREE MONGOLIAN LANGUAGE RESOURCES AVAILABLE

A lack of resources has proven to be the greatest obstacle foreigners face when looking to learn

Mongolian language. The Mongolist website is now providing free materials for independent study.

The website provides a language section aiming to make learning Mongolian a more accessible goal.

The language section is updated throughout a month and will continue that way over the next

couple of months. The course structure comprises a series of modules that replicate similar courses

for independent study of computer programming.

The course comes from the work of Brian White, Curt Madison and D. Narantsetseg, who have

worked to develop an online Mongolian language course since the fall of 2009. The plan was to

provide Mongolian language materials online using any and all forms of digital media. It comes from

an informal agreement between the American Center for Mongolian Studies, where White served as

the U.S. director, and the Universities of Alaska Fairbanks University of Maine in Augusta.

Source: The Mongolist

POLITICS

CHINA READY TO DELIVER ENERGY TO OT, SAYS AMBASSADOR

The Chinese ambassador has expressed that China is ready to begin supplying energy to the Oyu

Tolgoi project.

Deputy Prime Minister D. Terbishdagva received Chinese Ambassador Wang Xialong this week to

discuss the strategic partnership between their nations, particularly in relation to economic

collaboration. During the meeting Wang said China was committed to assisting Mongolia with

developing its rails and the supply of energy to Oyu Tolgoi. The project has remained in limbo while

the Mongolian and Chinese governments arrange an agreement to purchase energy over national

borders.

―The railroad is the base of Mongolian development, therefore we will collaborate beneficially to

implement the biggest projects with effective practices,‖ said Terbishdagva.

However, during that same conversation, the deputy prime minister referenced his support for a

change to the terms of the 2009 investment agreement.

―However, by implementing the Oyu Tolgoi project it would affect primarily the Mongolia economy.

But in order to enhance its responsibility to the people, the government of Mongolia should make

some changes to the investment agreement.‖

Oyu Tolgoi LLC and stakeholders Rio Tinto PLC and Ivanhoe Mines Ltd. have taken a united stance

that they would not agree to any changes in the 2009 investment agreement despite repeated

attempts by Parliament and government officials.

Source: Info Mongolia

PARLIAMENT READY FOR SOVEREIGN BOND SALE

A large sovereign debt offering could see the light of day sometime this month, according to an

Economic Standing Committee official.

The motion to release USD 5 billion worth of bonds received majority approval from Parliament.

According to B. Garangaibaatar, head of the Economic Standing Committee, the first USD1.5 billion

bonds could be released as early as this month.

‖We are expecting that the first part of bonds might be available in November for the fourth-

quarter finance report,‖ said Garagaibaatar. ―This would allow us to look at and control expenses

with the standing committee day by day, if need be.‖

Source: Udriin Sonin

PREMIER‟S COAL DISTRIBUTION PLAN UNDER FIRE

Prime Minister N. Altankhuyag‘s promise to supply Ulaanbaatar inhabitants with cheap, good-quality

coal has met contention from the opposition party.

Members of the Mongolian People‘s Party (MPP), most of who represent fringe districts in

Ulaanbaatar, argue that the coal from Baganuur is of low-quality and that the challenge of

distribution would be too great.

However, the Democratic Party (DP) has fought back, saying the MPP has only raised the issue due

to concerns for the next election. Baganuur currently supplies 70 to 75 percent of coal consumed

domestically, or 4.9 million tons, and quality has never been an issue. Distribution will be done via

payments at banks and pickup at distribution centers, meaning there would not be any great logistic

issues.

Source: Udriin Sonin

DP DETAILS 2013 BUDGET

The Democratic Party (DP) has more clearly outlined its financial objectives for next year‘s budget

and the national economy.

The Ministry of Economic Development and a working group from Parliament have presented a plan

for the first USD 1.5 billion from the proposed USD 5 billion worth of bond sold by the Development

Bank of Mongolia. They proposed those funds should be used to begin construction of the Sainshand

industrial complex as well as 1,800 kilometers of railroads. It also proposed that some of those

funds be used to provide loans for small-and medium-sized enterprises.

At the meeting DP members stressed the importance of stabilizing the prices of goods. Thus far the

government has brokered deals with businesses to maintain the price of flour at MTN 550 per

kilogram as well as regularized meat prices.

Members also discussed the final MNT 1 million payments to be distributed to the elderly and

disabled people, noting that social and economic development are tightly linked. While discussing

an amendment to the education law regarding funds allotted for teachers‘ salaries, it opted to

grant and additional MNT 30 million compared with the initially proposed MNT 150 billion, and that

it would be shared with health care workers.

Source: Udriin Sonin

DEPUTY MINISTER INVESTIGATED FOR ALLEGEDLY INTERFERING WITH INTERPOL INVESTIGATION

A deputy minister for the Ministry of Justice has been targeted by the Independent Authority

Against Corruption (IAAC) for crimes related to former President N. Enkhbayar.

Deputy Minister E. Erdenjamiyan complained IAAC investigators came to his office under false

pretenses, saying they wished to meet for a business matter when in actuality they wished to

interrogate him.

―I don not know anything except that they entered the deputy minister's room with permission and

tried to question me illegally,‖ said Endenjamiyan.

E. Amarbat of the IAAC's Investigation Department said that its investigation into suspected

collaborators of Enkhbayar's crimes was facing difficulties due to some who escaped to foreign

countries. He said Erdenjamiyan is suspected of trying to interrupt Interpol's efforts to bring those

suspects back to Mongolia.

―We found out that E. Erdenjamiyan had sent a written request to the general secretary of Interpol

to stop an international investigation of the main suspects, N. Enkhtuya and B. Khuyag, on N.

Enkhbayar's case.‖

Enkhbayar war arrested last April and eventually sentenced to four years in prison in September. He

now waits for his case to appear before the Constitutional Court after his appeal was denied.

Source: News.mn

PREMIER FACES QUESTIONS FROM DIPLOMATIC COUNCIL

Prime Minister N. Altankhuyag attended his first meeting this week with members of the diplomatic

council and foreign press to answer questions regarding plans for 2013.

Altankhuyag spoke on the three main targets for next year, according to the 2012-2016 Government

Action Plan, the measures Mongolia would take to combat corruption, and how the government

would address poverty in the country. Altankhuyag was also questioned on the move for improved

state services and the sweeping change in the public sector, which resulted in mass firings of civil

workers.

Source: News.mn

NEW LAW TO BAN SMOKING IN PUBLIC AREAS

A new law bans smoking in all public areas, including bars, restaurants, office buildings,

playgrounds, parks, and apartment stairwells

Violators of the law will be slapped with a MNT 50,000 fine. Businesses that allow smoking will be

hit with a MNT 3 million fine, while officials that permit smoking will receive a fine of MNT 1

million. The law comes into effect on 1 March. Smoking habits in Mongolia are a growing problem,

said Ts. Bayandorj, a national officer for non-communicable diseases at the World Health

Organization (WHO). According to WHO data collected in 2009, 48 percent of Mongolian men and 7

percent of Mongolian women smoke regularly. The situation has grown worse over the past 20 years

due to increased production and importation of cheap cigarettes, mainly from China and Russia,‖

said Bayandorj.

Young people are particularly susceptible and are a target for domestic tobacco companies, he said.

In a 2010 survey, 23.3 percent of Mongolians aged between 13 and 15 admitted smoking regularly.

Although specific data on lung disease attributable to smoking in Mongolia was not available,

research indicated non-communicable diseases, such as cancers, were the country's number one

killer.

Source: Michael Kohn

MORE HELP ON THE WAY FROM AUSTRALIA FOR SOUTHGOBI LAWYER

Australia's Department of Foreign Affairs is flying in an extra official to help Australian lawyer Sarah

Armstrong, who has been stopped from leaving Mongolia.

Foreign Minister Bob Carr said that an extra diplomat was traveling from Seoul to help Australia's

consul-general to Mongolia, David Lawson. Carr said there would be a meeting with Mongolian

authorities on Saturday and that Armstrong would be accompanied with consular staff if she

wanted. He said he could not comment on specifics on the case or how long she might be held in

Mongolia.

He said that while he was ready to call Mongolian Foreign Minister G. Zandanshatar, he was waiting

for the go-ahead from the Department of Foreign Affairs and Trade (DFAT).

―The danger is you make the call before the other side is ready to move forward and you've fired

your best shot,‖ he said. ―I don't want to set back a case by a premature intervention.‖ He said

DFAT had already conveyed Australia's concern to the Mongolian Embassy in Canberra.

A mining lawyer for Rio Tinto PLC subsidiary SouthGobi Resources Ltd., Armstrong was stopped by

police at Ulaanbaatar's airport last Friday because they wanted to quiz her about allegations of

money laundering and corruption. Armstrong's mother, Yvvone, said her daughter had told her she

could be involved in the investigation ―until Christmas.‖

Source: Western Australia Today

TYRANNOSAURUS CASE REVEALS FOSSILS VULNERABLE TO BLACK MARKET

A final hearing will take place in December to decide whether or not the allegedly smuggled

Tyrannosaurus baatar skeleton will be returned to Mongolia, said the minister for culture

Minister Ts. Oyungerel said Mongolia has gathered evidence including photos showing U.S. fossils

dealer Eric Prokopi digging antD transporting the fossils from Umnugobi Aimag, which would refute

his claim that the fossils could have possibly come from somewhere other than Mongolia. Oyungerel

said although the decision whether the fossils will be delivered to Mongolia will depend on a court

decision, the United States will have to force their return if the fossils can be proven to have come

from Mongolia.

―Eric Prokopi wants the fossils back, claiming that there is no act to protect culture heritage

between the United States and Mongolia. However, both Mongolia and the US are members of

UNESCO; therefore the US should give the fossils back to Mongolia.‖

The minister added that there was no evidence that a Mongolian national aided Prokopi in the

alleged smuggling, but the incident does expose Mongolia‘s vulnerability to this sort of crime. She

added that this was not even Prokopi‘s first time smuggling fossils from Mongolia.

―We suspect Eric Prokopi smuggled four dinosaur skeletons from Mongolia. We hope this case will be

the first step to stopping an illegal business network of black market goods.

Source: News.mn

ANNOUNCEMENTS

MONGOLIA INVESTMENT CONGRESS 2012 IN SHANGHAI, 10 December

Mongolian Investment Congress 2012 will be held in Shanghai, China on 10 December. The event is

presented by BCM along with the Mongolian Stock Exchange and Mongolian National Mining

Association, and INBC Global.

From mining, export infrastructure, and power generation to financial services, energy projects,

property development and more, Mongolian Investment Congress 2012 offers investment and

development opportunities at every turn.

Highlights for topics of discussion include international investment opportunities in Mongolia,

challenges for foreign investors in the mining industry and the coal reserves and resources.

The Clean Coal Asia Summit 2012 in Shanghai, 11-12 December

The event serves as the information and networking platform for commercializing clean coal

technologies in Asia and the world. Highlights for discussion include China's government policies in

the clear energy of China's 12th five-year plan (2011-2015) and innovation and new projects in coal

gasification and liquefaction.

___________________________________________

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, Friday‟s at 19:15

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 19:15 to 19:25 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

Several presentations already posted include the World Bank‘s Mongolia Quarterly Economic

Update–June 2012 and 11 speeches from the 2nd Coaltrans forum, held on 23 to 24 May in

Ulaanbaatar.

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

government website Open-Government.mn are regularly updated.

___________________________________________

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

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available to find recent

postings from BCM‘s 24 September monthly meeting and 9 presentations from Discover Mongolia

2012. The ―Mongolia Reports‖ section includes THE FISCAL REGIME FOR MINING—AWAY FORWARD by

IMF Fiscal Affairs Department; Mongolia- A supplement to Mining Journal from Mining Journal

October, 2012; Taxes for Expatriates in Mongolia from PricewaterhouseCoopers and the 2012

Mongolia Investment Climate Statement by the Economic and Commercial Section of the U.S.

Embassy.

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.

NewsWire will continue to be issued each Friday, incorporating items already on the home page for

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

SUPERMARKET PRICE COMPARISON – OCTOBER 2012

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]

September 30, 2012 *14.8% [source: NSOM]

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

Note: 15.1% y-o-y, Ulaanbaatar city, September 30, 2012

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]

CURRENCY RATES – NOVEMBER 1, 2012

Currency Name Currency Rate

US dollar USD 1,397.08

Euro EUR 1,807.89

Japanese yen JPY 17.53

British pound GBP 2,253.56

Hong Kong dollar HKD 180.29

Chinese Yuan CNY 223.90

Russian Ruble RUB 44.50

South Korean won KRW 1.28

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.