BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmmongolia.org

info@bcmongolia.org

Issue 108, March 5 2010

NEWS HIGHLIGHTS:

Business:

OT material and service requirements to be announced on March 12;

NEA threatens cancellation of license, Khan Resources sticks to its guns;

Khan Resources charges ARMZ with “opaque political maneuvering”;

ARMZ withdraws bid for Khan Resources, CNNC offer launched;

Mardai licenses to be regularized;

Tavan Tolgoi investors asked to meeting;

Partnership essential to face challenges, stresses OT executive;

Rio Tinto beefs up position in Ivanhoe Mines;

Government to name members of OT board soon;

Altandornod reported to have won case at tribunal;

Sprit Bal Buram introduces platinum-and-silver dual filters;

Trendfield buys licenses in South Gobi.

Economy:

Japan Bank approaches Mongolia for Samurai bond sales;

Bond sale planned for last quarter of 2010;

Sovereign debt losing advantage;

Proposals received to build oil refinery;

Compensation for canceled mining licenses still an issue;

ADB project to study economics of climate change in Mongolia;

New World Bank country director named;

Mongolia short of cashmere as prices rise globally:

MINETECH-2010, trade show of mining equipment and services, in April;

UNDP plans radio programs on pasture management;

Seminar discusses health insurance;

MCA-M holds workshop on capacity building in TVET;

China data drives copper prices higher;

China stocks at 5-week high, upside seen limited;

China faces labor shortage as stimulus creates jobs locally.

Politics:

South Korea announces grant of USD13 million;

No charge to be brought against any suspect in July 1 deaths;

MNT18.8 trillion needed to make Ulaanbaatar smoke-free;

Media asked to leave MCA-M Board meeting;

MPRP conference will bring internal bickering into the open;

Coming inner-party elections to determine the image of DP;

New Union says it is pro-democracy, not anti-government;

The coalition experiment has failed, says Democratic Party MP;

Official defends spending MNT 5.5 billion on removing animal carcasses;

100 frozen wolves seized at border;

U.S.-Mongolia Annual Bilateral Consultations held in Washington;

British MPs recall UK-Mongolia ties during debate;

Mongolia ready to help six-party talks resume;

Vegetarianism sprouts in Mongolia;

Mongolian acrobat in USA plans trip home against domestic violence;

Zambia, China sign mining cooperation deal;

Understanding Beijing's "Go Global" strategy. *Click on titles above to link to articles.

BUSINESS OT MATERIAL AND SERVICE REQUIREMENTS TO BE ANNOUNCED ON MARCH 12 Oyu Tolgoi LLC will be meeting with Mongolian suppliers and service providers, especially those already operating in Umnugobi aimag, on March 12 to provide information on its requirements for the Oyu Tolgoi project. The investment agreement stipulates that a fair amount of the equipment, raw material, and supply material for the project will be Mongolian, provided trade terms are acceptable, the quality competitive, and the supply schedule reliable. The event will be attended by representatives from the Government Secretariat, the Ministry of Mineral Resources and Energy, the Ministry of Finance, and the National Development and Innovations Committee. Source: Undesnii Shuudan NEA THREATENS CANCELLATION OF LICENSE, KHAN RESOURCES STICKS TO ITS GUNS The Nuclear Energy Agency has reminded Khan Resources of provisions of the Nuclear Energy Law of Mongolia pertaining to sale of shares and asked it to ―note‖ that failure on the part of the license holder to fulfill its legal obligations ―shall invalidate the license". A statement delivered to the company says the Agency has ―learned from the Internet that CNNC Inc offered to buy shares of Khan Resources registered at the Toronto stock Exchange‖. Article 7.1 of the Nuclear Energy Law stipulates that any sale, collateralization or transfer to others of more than 5 percent of shares of a company ―can be valid‖ only when the transaction is confirmed by the Agency. A similar permission is required before a company can be re-structured ―by merging, integrating, splitting and separating‖. Article 7.2 of the law further stipulates that the Agency must receive a copy of the authorized decision of the company to enter into any such deal involving more than 5 percent of shares in a company, along with other documents, within 14 days of the decision being taken. The Agency could then ask for more information if it finds this necessary. ―If a license holder does not fulfill its obligations specified in article 7.4 of the Nuclear Energy Law the state administrative authority in charge of nuclear energy issues shall invalidate the license," the Agency statement concludes. The company has not so far indicated that it has received any direct communications from the Agency. However, it said on Monday it had noted that a statement has been posted on the website of the Agency to the effect that the CNNC offer requires the approval of the NEA in accordance with the law, and that the licenses held by Khan's subsidiaries in Mongolia may be revoked if such approval is not sought and obtained. ―Although these statements are not official government actions and have no legal effect, Khan's indirect wholly-owned subsidiary Khan Resources LLC and its indirect 58% subsidiary Central Asian Uranium Company, LLC are writing to the NEA to register their objection to the statements. Khan has obtained legal opinions that Articles 7.1 and 7.2 apply only to transfers of shares of the direct holders of Mongolian mining and exploration licenses in Mongolia. They do not apply to an acquisition of shares of Khan Resources Inc., a Canadian company,‖ a company statement on March 1 said. Source: Montsame, www.khanresources.com KHAN RESOURCES CHARGES ARMZ WITH “OPAQUE POLITICAL MANEUVERING” Acknowledging the intention of Atomredmetzoloto JSC (ARMZ), a Russian state-owned nuclear energy corporation, to withdraw its unsolicited offer to purchase all outstanding common shares of Khan Resources, the company has said ―it is unclear‖ if the reasons cited by ARMZ for the abandonment are based on fact. ARMZ said its decision was influenced by the recent announcement

by the working group established by the Standing Committee on Security and Foreign Policy that a number of uranium exploration and mining licenses in the Dornod province should be invalidated because of alleged and unspecified violations of Mongolian law. It is unclear if the licenses held by Khan's Mongolian subsidiaries are implicated in these allegations as Khan has received no notifications from the Government of Mongolia on this matter. Khan believes that it and its Mongolian subsidiaries have always operated and continue to operate in strict compliance with all applicable Mongolian laws, including the Mineral Law and the Law on Mineral Energy, as well as the more recent Nuclear Energy Law. Khan says it has learnt that ARMZ has alleged in the Russian media that Khan's licenses have been annulled and further, that it plans to proceed with a joint venture with Mongolia, called the Dornod Uranium joint venture, which agreement was signed in August 2009 and excludes any mention of Khan‘s legitimate property rights to the Dornod property. ―Although unsolicited, we were hopeful that ARMZ‘s offer for Khan demonstrated their recognition of the validity of transparent Western rules designed to protect shareholders and their investment in public companies,‖ said Mr. Martin Quick, CEO of Khan. ―Instead, it is clear that ARMZ plans to continue to advance its interests in the Dornod property through opaque political maneuvering and unsubstantiated allegations without recognizing Khan‘s or its shareholders‘ rights.‖ Source: www.khanresources.com

ARMZ WITHDRAWS BID FOR KHAN RESOURCES, CNNC OFFER LAUNCHED Khan Resources of Canada announced on February 26 that CNNC Overseas Uranium Holding (CNNC) has launched its offer to buy the uranium junior, offering CAD0.96 a share. Khan has recommended that shareholders accept the offer. Khan's flagship asset is a stake in the Dornod uranium project. The company has been defending itself against a hostile takeover bid by Russia's Atomredmetzoloto, but the Russian company announced on Friday it would allow its CAD0.65 a share offer to expire on March 1. ARMZ said the decision not to increase or extend its offer was a response to uncertainty over licensing and ownership of the uranium property. "ARMZ has determined that continuing our offer at the current time is not prudent," director-general Vadim Zhivov has said in a statement. The CNNC offer for Khan requires approval by at least two-thirds of Khan's shareholders, and will be open for acceptance until April 6, unless withdrawn or extended. CNNC Overseas Uranium Holding Ltd. (a wholly-owned branch of China Uranium Corporation Ltd.) is incorporated in Hong Kong and is an indirect wholly-owned private subsidiary of China National Nuclear Corporation, China's leading uranium development and nuclear fuel company. Source: www.khanresources.com

MARDAI LICENSES TO BE REGULARIZED According to a briefing by the Director of the Government Office, Mr.Ch.Khurelbaatar, the Government meeting last week heard the report of the Director of the Nuclear Energy Authority on several issues in the uranium sector, including how licenses are issued and how foreign license holders have been selling their shares. It was decided that all the licenses in Mardai, which had been issued apparently in violation of the law but have been re-registered after December 15, will now be regularized. A working group will be asked to suggest ways how this can be done in conformity with laws now in vogue. Among the companies that hold the licenses are Emeelt Mines, Western Prospector, and Adamas Mining. The Government also decided to advertise the nuclear law and its provisions so that companies in Mongolia and abroad clearly know what they can or cannot do. For example, no company can sell or transfer more than five percent of its shares without permission from the Nuclear Energy Authority. Unconfirmed reports say the Prime Minister did not hide his annoyance over the role of the head of the Nuclear Energy Agency in the whole matter and had favored revocation of all licenses granted against the law. Others who did not wish to go so far prevailed on him but some administrative measure against Mr. S. Enkhbat, the Agency head, is a distinct possibility.

Source: Onoodor, Zuunii Medee

TAVAN TOLGOI INVESTORS ASKED TO MEETING Despite assurances from Minister for Minerals and Energy D.Zorigt that there will be no dearth of takers for the contract mining offer favored by Prime Minister S.Batbold to allow Mongolia to retain 100% ownership of Tavan Tolgoi, there has so far been no indication of how investors see the proposal. With Erdenes MGL inviting the 11 shortlisted investors to a discussion this week, this may now be known. The final decision is scheduled to be discussed at the Spring session of Parliament, to begin in April.

It is believed the Government will ask the investors to bear all the costs of developing the massive coal deposit without owning any equity in the project.

Source: Ardiin Erkh

PARTNERSHIP ESSENTIAL TO FACE CHALLENGES, STRESSES OT EXECUTIVE ―There are going to be a lot of challenges, a lot of risks. We will not be able to manage the risks and seize the opportunities unless we do it in partnership with qualified experts,‖ says Mr. Layton Croft, Executive Vice President for Corporate Affairs and Social Responsibility at Oyu Tolgoi LLC. The scale and the nature of OT's operations are certain to have a variety of direct and indirect socio-economic and cultural impacts on communities and stakeholders, both positive and negative. The company has already floated tenders for consultancy in designing a long-term Cultural Heritage Program, and for a Health Safety and Security Program. More than 30 groups, from Mongolia and nine other countries, are believed to have submitted bids. Some of them are well-known and experienced, while for others it will be a new challenge. A base line study of Umnugobi province was prepared in 2008 by Ivanhoe Mines together with the province authorities and assisted by the NGO Responsible Mining. A similar study was made in 2009, with the focus narrowed to the project‘s direct impact area – Khanbogd district - and to the indirect impact districts of Manalai, Bayan-Ovoo, and Dalanzadgad. These two are the bases for all activities planned in the coming five years. As stated in the investment agreement, OT together with government agencies is engaged in long term infrastructure planning, development, and management on both national and regional levels. The team is focused on urban planning, infrastructure planning, public services, public service delivery issues, and influx management. Read more… The evaluation committee for proposals in the culture program includes a mixture of several stakeholders. OT published the list of questions the evaluators will have to answer, the proportional weight of each aspect in the proposal, and the evaluation process itself. OT is interested in quality. Therefore the weight of the proposed cost is only 20 percent; 40 percent is allotted for the quality of the proposed method, and 40 percent for the quality of the team. Besides, the project is collaborating with the School of Economic Studies at the National University of Mongolia, with technical advice from the Rio Tinto Economics Department in London, in the preparation of the macro-economic assessment of what Rio Tinto calls the Multi-Year Community Plan. This will analyze the impact of the project on the economy on the local, regional and national levels. Its report will be published and should become an essential tool for economic planning in Mongolia. Mining entails complex environmental challenges. The initial work regarding environmental issues will be the Environmental Information Disclosure. Long-term design of monitoring and preventive programs will follow. OT's Procurement and Commercial departments are engaged in long term local business and economic development initiatives. Their aim is to promote local entrepreneurship, and sustainable economic growth that is not dependent solely on mining, so that when the mining is terminated, the towns that were economically dependent on employment at the mines do not collapse economically. Source: Mongolia-web.com

RIO TINTO BEEFS UP POSITION IN IVANHOE MINES Rio Tinto will increase its stake in Ivanhoe Mines by 2.7 percent to 22.4 percent for USD233 million, in a move tied to plans to jointly develop the giant Oyu Tolgoi copper-gold mine. The move beefs up Rio Tinto's position in Ivanhoe just after the Canadian group announced plans for possible corporate action to lift shareholder value. Ivanhoe hired investment bankers from Citigroup and mining sector specialist Hatch Corporate Finance last month to look at a range of options, including offering new shares or bonds and "various corporate transactions‖. Rio, which has long coveted Oyu Tolgoi, said on Monday it will buy 15 million Ivanhoe shares at C$16.31 per share, a 3 percent discount to Ivanhoe's close on February 26. The share issue fulfills an arrangement Rio had with Ivanhoe in 2008 to finance equipment for the Oyu Tolgoi complex. "Our further investment in Ivanhoe Mines underlines our confidence in the quality of the world class deposit and its priority in our project portfolio," Rio Tinto's copper chief executive Andrew Harding said in a statement. The two companies are working to complete their investment agreement with the Mongolian

Government ahead of moving into developing the project. Under its partnership agreement with Ivanhoe, Rio can lift its stake to the "high 40s percentage" of Ivanhoe's shares over the next two years, based on factors that are all in Rio Tinto's control, a Rio Tinto spokesman said. Source: Reuters.com

GOVERNMENT TO NAME MEMBERS OF OT BOARD SOON Minerals and Energy Minister D.Zorigt has said the Government will soon decide on the names of those representing the Mongolian side to sit on the Executive Board of Oyu Tolgoi LLC. He also said that the Government will announce its final decision on Tavan Tolgoi negotiation in April after further talks with the 10 bidders for the deposit. Source: www.business-mongolia.com

ALTANDORNOD REPORTED TO HAVE WON CASE AT TRIBUNAL Sources close to Mr. S. Paushok report that his Altandornod Company has won its case against the Mongolian Government in an international arbitration tribunal. The Russian-owned company had sought exemption from paying the 68% windfall tax on grounds of previous agreements which continued to be in force. The sources say the tribunal upheld the Altandornod claim that its investment in Mongolia was protected by a bilateral agreement between Mongolia and the Russian Federation, and it was discriminatory to impose any fresh tax on it. Mr. T. Altangerel, Head of Policy Implementation and Coordination at the Ministry of Justice and Internal Affairs, has been in charge of the case. He has denied that the tribunal has given its opinion. ―Any news is supposed to come to me directly, and nothing has,‖ he has said. Mr. Paushok had earlier said that in the event of his success at the tribunal, he would ask for USD500 million in compensation for three years‘ lost business. The Government spent MNT6 billion on presenting its case before tribunal which heard the case in May. Source: Udriin Sonin

SPRIT BAL BURAM INTRODUCES PLATINUM-AND-SILVER DUAL FILTERS Sprit Bal Buram has introduced dual filters with platinum and silver in its alcohol production. This use of most recent technology will help filter fluid with precision up to 0.01 mkm. The new filters have a capacity of 3000-4000 liters per hour. Source: Zuunii Medee

TRENDFIELD BUYS LICENSES IN SOUTH GOBI Hong Kong-based THL Mongolia Ltd, a fully owned subsidiary of Trendfield Holdings Ltd, a pre-IPO mining and consulting group, has purchased 70% of KMNG LLC holdings with the option to purchase another 20% within 3 years. KMNG is located in Ulaanbaatar and owns 3 exploration licenses covering 1,935.5 sq. km in the South Gobi. Trendfield feels these permits, their location and proximity to Oyu Tolgoi makes this a win-win project for all parties involved. ―We see this as an opportunity to expand our commodity base and begin to develop our projects and partnerships on the ground in Asia. We believe that these licenses may offer interesting exploration prospects for copper, gold, and rare earth elements,‖ Mr. Ying Yu Tang, President, THL Mongolia Ltd, has said in a statement. Trendfield Energy and Resources has offices in China, Mauritania, Niger, Mongolia and Hong Kong and representation offices in Ecuador, Guinea and Korea. Source: www.trendfieldonline.com

ECONOMY JAPAN BANK APPROACHES MONGOLIA FOR SAMIRAI BOND SALES Japan Bank for International Cooperation, the state-run lender that backed a USD1.1 billion Samurai bond issue by the Philippines last month, has approached Vietnam and Mongolia to discuss similar sales. ―The process will take time because we need to do due diligence on its credit profile,‖ Mr. Hiroki Sekine, a senior JBIC official, has said. Samurai bond sales plunged 43 percent last year after Lehman Brothers Holdings Inc. became the first U.S. borrower to default on its yen notes in Japan. Mongolia plans to sell as much as USD1.2 billion of bonds overseas this year in the nation‘s first ―benchmark‖ offering of dollar-denominated debt. Finance Minister S. Bayartsogt has said the Government favors dollars for the sale, but ―Japanese banks are giving us very attractive proposals‖. According to Mr. Sekine, discussions with Mongolia are ―still in a preliminary stage‖.

Source: Bloomberg.com

BOND SALE PLANNED FOR LAST QUARTER OF 2010 Mongolia‘s planned global bond sale to raise up to USD1.2 billion is likely to take place in the fourth quarter this year, according to an unidentified Finance Ministry official. The money will be used to fund major development projects in areas such as mining and infrastructure. Source: Reuters.com

SOVEREIGN DEBT LOSING ADVANTAGE Mr. Bill Gross, manager of the world's largest mutual fund, the USD200 billion Pimco Total Return Fund, says the debt of some nations may in the future be no better than private debt issued by corporations. Sovereign debt has typically offered lower yields than corporate credit because of the presumed ability of governments to self-finance. Mr. Gross thinks the worst-hit countries of the financial crisis might see that advantage erode. National debts have spiraled as governments try to dig out of the global recession, spurring concern that the quality of those credits will be impaired. ―Government bailouts and guarantees such as those evidenced and envisioned in Dubai and Greece, as well as those for the last 18 months with banks and large industrial corporations across the globe, suggest a more homogeneous 'unicredit' type of bond market,‖ Mr. Gross wrote in his latest Investment Outlook, published Monday. ―If core sovereigns such as the U.S., Germany, U.K. and Japan 'absorb' more and more credit risk, then the credit spreads and yields of these sovereigns should look more and more like the markets that they guarantee,‖ he wrote. ―Sovereign yields will narrow in spreads compared to other high-quality alternatives. In other words, sovereign yields will become more credit-like.‖ This would make it more expensive for countries to finance themselves because it would raise the cost of servicing their debts, which could hurt their economies. And, at a time when many countries are still battling recession and high unemployment, this ―places a potential ‗cap‘ on the ‗debt‘ that supposedly can be created to get out of the ‗debt crisis‘,‖ Mr. Gross wrote. Read more… It also suggests potential pitfalls for investors: No longer could they assume sovereign debt is airtight. ―Investors should obviously focus on those sovereigns where fundamentals promise lower credit or inflationary risk,‖ wrote Mr. Gross. This worry over some sovereign-debt issuers is part of his broader view of what he calls the ‗New Normal‘, in which aggregate demand and output will be at lower levels than in recent years, and unemployment will be higher. ―A deficiency of global aggregate demand and the potential impotency of policy makers to close the gap are evolving into a life or death outcome for the weakest sovereigns,‖ he wrote. Source: The Wall Street Journal Asia

PROPOSALS RECEIVED TO BUILD OIL REFINERY The Mineral Wealth Council of Mongolia has approved the estimated reserve of 199.2 million tons of oil in the Toson Uul – XIX oil field in Tamsag basin of Dornod aimag. According to Mr. D.Amarsaikhan, Head of the Oil Authority of Mongolia, this takes the proven reserve of oil in Mongolia to 1.6 billion tons, making it the 33rd largest country in the world in terms of oil deposits. More than 10 proposals have already been received to build an oil refinery in Dornod province with production capacity of 150,000-200,000 tons. Total investment in the oil sector has crossed USD1.1 billion. Source: www.business-mongolia.com

COMPENSATION FOR CANCELED MINING LICENSES STILL AN ISSUE Mr. M.Ariunbayar, Director of Geology in the Mining Department, has said the total number of special mining licenses in the country has reached 4,704, of which 1,091 are for extraction and 3,613 for exploration. The licenses are held by 1,910 companies, 77.8 percent of them domestic, 14.5 percent fully foreign, and 7.7 percent joint companies. Asked by media about the ability of Mongolia to raise money from international markets for the mining sector, as the Government wants, he said it should not be difficult to raise such money for mines with clear estimates of their reserve. ―Our chances are bright, but we need to make proper preparations. A training course on how to raise money in stock exchanges was held recently. Our mining professionals are fully capable of acquiring this new skill,‖ he said. Asked why the law prohibiting mining operations near water sources and rivers, passed several months ago, is yet to be implemented, and if any Ministry is actually against the implementation,

Mr. Ariunbayar said the work on marking the borders of the prohibited areas is over. ―If there has been a request to postpone the implementation it must have come from the Ministry of Nature and Environment. The Ministry for Minerals and Energy did not certainly make any such request. We support the law,‖ he said. He clarified that the issue of paying compensation for cancellation of licenses is still being discussed. This may be as much as MNT300 billion but is applicable only to exploration licenses. The law says a special license will be treated as canceled only after the compensation is fully paid. It may take 2-3 years to settle the accounts of over 900 companies and they will keep adding to their reimbursable costs in this period. His view was that ―imposing such restrictions usually does not work out well‖. In any case, Mongolia already has ―enough laws enforcing protection of nature‖. The problem is that these are not enforced. ―The present law will be better after some amendments bring it in tandem with the other existing laws,‖ the official hoped. Source: en.News.mn

ADB PROJECT TO STUDY ECONOMICS OF CLIMATE CHANGE IN MONGOLIA An Asian Development Bank (ADB) comprehensive study on the economics of climate change in four Northeast Asian countries - China, Japan, South Korea and Mongolia - will help regional and country-level decision makers address the issue of climate change and to develop low-carbon growth strategies in their countries and the region. The study is being financed by a USD1 million technical assistance grant from the ADB, and a USD800,000 grant from South Korea. It will complement parallel climate change studies being carried out by the ADB in South Asia and Pacific developing member countries, as well as draw on findings from ongoing and planned climate change initiatives in participating countries. It is set to run for 24 months, ending in November 2011. The study will cover four distinct phases. First, it will map out and assess current climate policy and adaptation measures in the four countries and at the regional level. Second, it will involve the preparation of marginal abatement cost curves to analyze the greenhouse gas mitigation potential of technology options. Third, a climate policy simulation tool will be developed to generate economic indicators to conduct quantitative and qualitative assessments and eventually show the economic consequences of different packages of climate policies. Last, a final report will be prepared covering all the findings. Source: www.adb.org

NEW WORLD BANK COUNTRY DIRECTOR NAMED Mr. Klaus Rohland has been named the next World Bank Country Director of Mongolia, China and the Republic of Korea. He will be based in Beijing. This is his fourth term as Country Director with the Bank. He has served in the same capacity in Russia, and before that in Vietnam. A German national, Mr. Rohland has been with the Bank since 1981. He knows the region well, having managed the World Bank Program in China in the mid-1990s. Source: Montsame

MONGOLIA SHORT OF CASHMERE AS PRICES RISE GLOBALLY National cashmere manufacturers have been taken by surprise by prices of the wool doubling to MNT 40,000 per kilo in only a short while and find that they do not have enough stock. What should have been a great opportunity to Mongolia, has actually meant that companies here are importing from China cashmere that was originally produced in Mongolia. They are also making deals in Afghanistan. According to Mr. G.Yondonsambuu, Director of the Mongolian Wool and Cashmere Union, Parliament‘s decision to annul the MNT 4,000 export tax on cashmere is largely to blame for the situation as this facilitated 60-65 percent of the total being taken to China. Mongolia has 12 factories that process cashmere and then manufacture garments. Some 50 others are engaged in some more basic stages of processing. Around 200 small factories import yarn from China, South Korea and Taiwan and make garments and other products. Given that in the 1990s Gobi was the only company in the sector, it may seem that the industry is blooming, but the rise in numbers is misleading. Gobi used to export USD20-30 million worth of products a year and contributed USD17-25 million to the state budget. This amount has not increased over the years. With restricted access to capital, most of the big players use only 20-30 percent of their capacity. Mongolians began cashmere production in 1976 after being trained by Japanese and with UN assistance. Now the main problem is that Mongolian cashmere has become 1 micron thicker. This makes products less durable. A Canadian who studied the industry concluded that global demand for Mongolian cashmere is still strong, but its reputation is gradually falling. Mongolia needs to

create its own brand identity to succeed in the global market, he said. Source: Ardiin Erkh

MINETECH-2010, TRADE SHOW OF MINING EQUIPMENT AND SERVICES, IN APRIL The Mongolian National Mining Association will be holding MINETECH-2010, an exhibition of mining machinery and equipment on April 2-3 at Misheel Expo Center. The exhibition is planned as an annual trade and exchange event for mining machinery and equipment producers and service providers, and buyers in the industry. Distributors and dealers are also expected to be present in numbers.

Source: www.miningmongolia.mn

UNDP PLANS RADIO PROGRAMS ON PASTURE MANAGEMENT The UNDP has launched a program called Livestock Husbandry Tomorrow together with the National Radio. It is part of the bigger Sustainable Land Management for Combating Desertification Project, aimed at educating the general public and herding communities on causes and effects, and methods to combat desertification and land degradation that pose a serious threat to Mongolia's economy and undermining livelihoods, especially those of herders, and promoting sustainable pasture/land management practices. The radio program is to be aired every Wednesday at 7.30 p.m., the peak time for radio listeners in rural Mongolia, according to the Mongolian Radio survey. It will concentrate on community-based natural resources management as a main strategy to cope with effects of climate change, and will be broadcast for 3 years. ―We strive to increase awareness, which leads to a knowledge base, change in attitudes, development of skills, and finally to a solid practice. In combating desertification and land degradation, the public awareness is the first crucial step to change people‘s attitudes and practice of pasture and land use,‖ the UNDP Mongolia Country Office has said. Source: UNDP

SEMINAR DISCUSSES HEALTH INSURANCE A national seminar was held this week to formulate guidelines for a health insurance policy on local and national levels and also to ensure methods of its easy implementation. The seminar was organized by the Standing Committee on Social Policy, Education, Culture and Science and was attended by representatives from all 21 provinces. The proceedings are planned to be published as recommendations. Source: Montsame

MCA-M HOLDS WORKSHOP ON CAPACITY BUILDING IN TVET The Millennium Challenge Account-Mongolia (MCA-M) Technical and Vocational Education and Training Project (TVET) organized a workshop on capacity building of specialists last week, as part of its sub-project on Policy and Operational Framework Reform (POFR). The workshop discussed on-going reforms in the Vocational Education and Training (VET) sector, and ways of strengthening Public Private Partnerships (PPP) at regional and local levels. In the past year, the project has trained 19 national specialists in institutional capacity building. They reported their achievements at the workshop, and also presented their future work plans. Participants stressed the need to involve those already trained as well as other competent specialists in future activities of the project and the sub-projects to ensure the sustainability of the POFR project outputs. Source: Montsame

CHINA DATA DRIVES COPPER PRICES HIGHER China, not Chile, remains in the driving seat for copper as the market shifts focus from earthquake-related production problems to still-strong growth in the Asian giant. Although the world's largest copper producer continues to reel from a quake that caused outages at mines and severe damage to infrastructure, brokers and investors say the related price reaction was going to be short-lived. Copper leapt 5.6% from Friday's close when London Metal Exchange trade started in Asia on Monday, to peak at a six-week high of USD7,600 a metric ton, but the market pared gains to about USD7,400/ton as the impact on Chile's metal production was deemed only temporary. Attention then turned to data released by the China Federation of Logistics and Purchasing —helping push prices higher, to USD7,440/ton. China's government-backed Purchasing Manufacturers Index fell to 52.0 in February from 55.8 in January, revealing a slower, but still very strong, pace of growth in the country. While disappointing, this easing on the pedal of China's growth engine was to be

expected, economists say, given the Lunar New Year holiday. Copper bulls have naturally seized on the still-strong growth data as a reason to keep their faith in the industrial metal. They cite tight supplies, noting still-reduced capacity utilization rates at plants following the global economic downturn, strikes and production shortfalls at various operations. Even the short-term disruptions in Chile will only add to existing supply problems and increase support for prices. Source: The Wall Street Journal Asia

CHINA “HAS TO KEEP BUYING GOLD”, SAYS OFFICIAL China has to keep buying gold over a long period and any price fall will present a good buying opportunity, Mr. Xia Bin, head of the financial institute of the Development Research Centre, a think-tank under the Cabinet, has said. "The long-term strategy should be very clear, that is, China has to keep buying gold; but the detailed timing should be decided by the price curve." China had to increase its gold reserves to underpin the yuan's international role, he said, but did not give details on when China should buy. "It is not my job to judge whether the price is low or high," he said. "Price is a relative thing - the price is high now compared with before, but for the future, who knows? It may rise to USD2,000, who knows?" He had no idea if China would buy the 191 tons of gold being offered for sale by the International Monetary Fund, but said China should be open to both buying in the international market and investing in overseas gold mines. Source: Reuters.com

CHINA STOCKS AT 5-WEEK HIGH, UPSIDE SEEN LIMITED China's key stock index rose 1.18 percent on Monday to its highest close in five weeks, led by copper miners, as a sharper-than-expected slowdown in a business survey boosted expectations this month's Chinese parliamentary session would reaffirm a relatively loose monetary policy. Copper mining stocks jumped as copper prices rose on supply worries after an 8.8-magnitude earthquake in top producer Chile. The index stood above the 125-day moving average for the first time since late January, indicating market sentiment had improved, but analysts warned against excessive optimism about the near-term trend as the supply of liquidity in the market had decreased after official quantitative tightening over the past two months. "Supervision of bank lending has been greatly enhanced, effectively cutting off funds that flowed improperly into the market via grey-area channels," said one. Source: Reuters.com

CHINA FACES LABOR SHORTAGE AS STIMULUS CREATES JOBS LOCALLY Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage. Unskilled factory workers in China‘s industrial heartland are being offered signing bonuses, with factory wages having risen as much as 20 percent in recent months. Telemarketers are turning away potential customers because recruiters have fully booked them to cold-call people and offer them jobs. Some manufacturers, already weeks behind schedule because they can‘t find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American and other global consumers pay for all sorts of Chinese-made goods. Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest. The immediate cause of the shortage is that millions of migrant workers who traveled home for the long lunar New Year earlier this month are not returning to the coast. Thanks to a half-trillion-dollar government stimulus program, jobs are being created in the interior. But many economists say the recent global downturn also obscured a longer-term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories. Since China does not release reliable, timely statistics on employment, wages are considered the best barometer of labor shortages. And temp agencies in Guangzhou last week raised their rate for factory workers to USD1.17 an hour, from 95 cents an hour before the New Year holiday. The rate was 80 cents an hour two years ago, before the global financial crisis temporarily depressed wages and demand. At many factories, white-collar managers and engineers were forced to spend time on assembly lines to meet deadlines before the lunar New Year, because laborers were in such short supply. Read more… Higher wages could ease labor shortages by prompting factories to reduce their work forces. But

many factories already pay well above the minimum wage. They are wary of further pay increases because it is not certain they can pass the increased costs on to their customers. Rising wages suggest the re-emergence of a worker shortage that was becoming evident before the financial crisis. A government survey three years ago of 2,749 villages in 17 provinces found that in 74 percent of them, there was no one left behind who was fit to go work in city factories — the labor pool was dry. Mass layoffs in late 2008 and early 2009 because of the global financial crisis temporarily masked the developing shortage of industrial workers. But two powerful trends were still working to reduce the supply of young people headed for factories. For one, the Chinese government has rapidly expanded postsecondary education. Universities and other institutions of higher learning enrolled 6.4 million new students last year, compared to 5.7 million in 2007 and just 2.2 million in 2000. At the same time, China‘s birth rate has been sliding steadily ever since the introduction of the ―one child‖ policy in 1977. Labor shortages have returned quickly in recent weeks as these long-term trends have collided with a recovery in overseas demand for Chinese goods. Far more jobs are available these days in China‘s interior. Government projects like rail and highway construction have absorbed millions of workers, particularly after Beijing allocated nearly USD600 billion to economic stimulus spending in 2009 and 2010. Source: The New York Times

POLITICS SOUTH KOREA ANNOUNCES GRANT WORTH USD13 MILLION South Korean Prime Minister Chung Un-chan has told visiting Parliament Speaker D.Demberel that his Government will extend USD13 million in non-refundable aid to Mongolia.

Source: Undesnii Shuudan

NO CHARGE TO BE BROUGHT AGAINST ANY SUSPECT IN JULY 1 DEATHS The families of the five people killed on July 1, 2008 were formally told last week that no case will be filed against any of the suspects. Investigations have finally cleared all officials of any charge. The families are not happy. The father of one of the victims has said he will address foreign organizations if Mongolian courts do not settle the issue. Source: Onoodor

MNT18.8 TRILLION NEEDED TO MAKE ULAANBAATAR SMOKE-FREE The working group entrusted with developing the Smokeless Ulaanbaatar program has said in its report to the Government that MNT18.8 trillion will be required for the entire work. The program will focus on developing low-pressure stoves to burn coal at home, on less polluting means of transportation, building apartments, reducing internal migration and increasing greenery. If the work is taken up, air pollution will be reduced by 30 percent by 2012 and by 50 percent in 2016. Prime Minister S. Batbold, who assigned the group the task, said the problem has to be met nationally, with help from foreign countries with the necessary experience and technology. The draft program will be submitted to Parliament in April for consideration. The group says the priority is to construct apartments in the ger districts, and MNT8 trillion is needed to build 100,000 of them. It also proposes to spent MNT6 trillion to construct new roads to connect provinces with one another and thus divert migration to Ulaanbaatar. MNT 33 billion is needed to change over to gas as public transportation fuel. Director of Eco-Asia Institute Ts.Adiyasuren criticized the approach of the group. Pollution producers must be penalized and everything cannot be left to the State. He also opposed so much new construction in Ulaanbaatar, instead of moving out of the city.

Source: Ardiin Erkh

MEDIA ASKED TO LEAVE MCA-M BOARD MEETING Media covering last week‘s meeting of the executive board of Millennium Challenge Account – Mongolia were asked to leave the hall to allow Finance Minister S. Bayartsogt to clarify an issue related to the non-inclusion of the financial component in tenders for the 2009 procurement plan. Minister of Education, Culture, and Science Yo. Otgonbayar had faulted the practice, and Mr. S. Bayarbaatar, Executive Director of the MCA-M, who had presented a performance report to the Board for its approval, had defended it by saying ―such explicit mention was likely to cause difficulties and complicate the selection process‖. Prime Minister S. Batbold, who is Chairman of the Board, was present.

Later, the Press Office of the Government sent an email to all media organizations saying that the report had been approved, adding that ―there was no need to publicize details of the proceedings or give much more information‖. It is believed one more meeting will be held to discuss the matter. Source: Udriin Sonin

MPRP CONFERENCE WILL BRING INTERNAL BICKERING INTO THE OPEN After 89 years of presenting a united façade in public, the coming general conference of the MPRP is likely to take the cover off the ugly fractures in the oldest political party in Mongolia. The conference, initially scheduled for last autumn, is now to be held in April. The date was set after the party Secretary General U.Khurelsukh, Minister for Food, Agriculture and Light Industry T.Badamjunai, and Minister for Minerals and Energy D.Zorigt had met the ailing party chairman S.Bayar in the USA last month. The agenda as decided among them does not include changing the leader. There is a strong demand for the coalition to be dismantled by 2011 and for the MPRP to form a Government on its own with Mr. S.Batbold remaining Prime Minister. Those against it say continuing with the coalition will help at the election. The DP can be blamed for all failures of the Government. This does make political sense. With the DP in charge of Finance, Health, Road, Transportation, Construction and City Development, and Nature, Environment and Tourism, it will be easy to make it the fall guy if there is a problem with Oyu Tolgoi, for the swine flu scare, and for environmental issues. The inclusion of Mr. Zorigt in the small team to visit Mr. Bayar in the USA shows his growing importance in the party. He himself keeps a low profile, saying he is new to politics and does not have enough experience to become the MPRP leader. But his grooming has begun. Mr. Bayar wants to use him as a role model to attract younger people to the party, to help break the stranglehold of aging leaders. Read more… All eyes will be on the dispute between Mr. N.Enkhbayar and Mr. Bayar, even if played out by proxy. The former President has several times attributed his defeat in the election last May to the party under Mr. Bayar not providing enough assistance to him. He has not concealed his desire to come back to mainstream politics, but Mr. Bayar does not have the slightest intention to make this possible. He postponed the by-election in Chingeltei from before Naadam to mid-October to be able to come up with a good plan to keep Mr. Enkhbayar away. His final choice of Zorigt as the party‘s candidate was well received, and after Zorigt had won, Bayar resigned as Prime Minister, relieved that there would be no Mr. Enkhbayar in Parliament to claim his chair. He will keep his position as the party head as long as the threat of an Enkhbayar comeback is there. Mr. Bayar is expected to return to Mongolia this month, and will have time to plan his strategy. Source: Ardiin Erkh

COMING INNER-PARTY ELECTIONS TO DETERMINE THE IMAGE OF DP This month‘s rotational election to the National Consultative Council of the Democratic Party will indicate the specific nature of the alignment of forces inside the junior partner in the coalition government. The party came into being when many disparate groupings and movements came together and this is why the party has always had several broad factions fighting among themselves for dominance. The periodic election of a section of members of the council indicates which way the wind blows. The present one is especially important because the faction in power will be able to choose more of its own as candidates at the next election to Parliament. Every candidate to the present election has to deposit MNT1 million. Most of them find a sponsor, and thus begins with a debt. Once in the NCC, they will make similar deals to gain the support of members in the provinces. This will be the order of the day no matter which of the two factions prevails -- the Altangadas, to which most of the party‘s Ministers belong, or the Mongolian Democratic Union, whose members have been against joining the coalition. The former now has the edge but MDU is determined to regain its lost power. Where is the next generation of DP leadership? This seems to be more of a problem here than for the MPRP. For long a few senior leaders have played musical chair to grab the top spot. The factions they lead have not thrown up new faces. Source: Ardiin Erkh

NEW UNION SAYS IT IS PRO-DEMOCRACY, NOT ANTI-GOVERNMENT The first general meeting of the Union of Democratic Forces will be held on March 10. Some 800 representatives from all over the nation will discuss its theme -- ―Let‘s create a new Mongolia‖ --

and adopt a program to develop the country and to find the right leaders for the job. The leader of the Union, MP Z.Enkhbold, told media that though he and the six vice presidents of the union are all Democratic Party MPs, they do not see themselves as just a pressure group inside the party or aim to disband the coalition government. They would not allow their party affiliation to restrict their activity. All citizens ready to work for strengthening democratic principles will be welcome, and, in return, the union will work for the interests of all who believe in such principles. ―Nobody in Mongolia should be victimized for their democratic views. Instead, they must be rewarded,‖ he said, adding that reforming the way all political parties operated in the country must be a part of any wider national restructuring. ―Ours is not a party; it is akin to an NGO with a democratic vision open to all who wish to build a new Mongolia. We find the present decision making process narrow and partisan but shall not seek to overthrow the government until and unless it commits serious mistakes and strays from the action plan adopted when the coalition was formed,‖ Mr. Enkhbold asserted. Source: Undesnii Shuudan THE COALITION EXPERIMENT HAS FAILED, SAYS DEMOCRATIC PARTY MP Recalling that he was among the very few people who opposed the formation of a coalition government, Democratic Party MP S.Erdene has said the past months have amply vindicated his stand. Governance can be good only under the watchful eyes of an effective opposition, and the coalition has, as feared, succeeded in diluting democratic principles. There has been no real consensus on most issues, merely patchwork compromises. ―We could not amend the Constitution, work on a new election law, adopt a rational policy on distributing the mining wealth, solely because we could not agree on any of them,‖ he said. The Oyu Tolgoi agreement, much heralded as made possible only by a coalition, ―is beginning to fall apart‖, he has told media, adding, ―There is total lack of clarity on Tavan Tolgoi. Mongolians like to copy from elsewhere, forgetting that conditions in other countries, rich or developing, are very different from ours.‖ Source: en.News.mn

OFFICIAL DEFENDS SPENDING MNT5.5 BILLION ON REMOVING ANIMAL CARCASSES Defending the decision to spend MNT5.5 billion on removing carcasses of livestock, Mr. D.Namsrai, Deputy Director of the General Emergency Authority, has clarified that the amount is an estimate made on the basis that the number of dead animals may well reach five million by May, and not on the present number of 2.7 million. He admitted, however, that the MNT230 million the Government has already provided to each of the 12 hardest hit provinces include MNT35 million to be spent on removing carcasses and sterilization. Source: Zuunii Medee

100 FROZEN WOLVES SEIZED AT BORDER For the moment, the Zamiin-Uud border port has turned into an animal morgue. Around 100 frozen wolves were seized on their way to China where they are the new upscale choice as Lunar New Year gifts. Since the port has no special freezers, the carcasses have begun to defrost and smell but they cannot be disposed of until the court gives a judgment. The wolves had been stored in trucks in a specially concealed area for about a month and the crossing was attempted one day just before the border was to close. There is some irony in that exigencies of commerce have led to Mongolians killing and exporting wolves, an animal imbued with spiritual significance here. The gift of a wolf guarantees favor in China. The skin has high value and the meat sells for about USD450. A tongue costs USD20 and the liver USD15. Source: en.News.mn

U.S.-MONGOLIA ANNUAL BILATERAL CONSULTATIONS HELD IN WASHINGTON The USA and Mongolia held their Annual Bilateral Consultations (ABC) last week in Washington. The ABC, which rotates between the two capitals, covers the broad range of activity between the two nations. Assistant Secretary for East Asian and Pacific Affairs Kurt M. Campbell and Mongolian Ministry of Foreign Affairs State Secretary D. Tsogtbaatar chaired the two delegations at the 2010 ABC. The topics of discussions included:

U.S. and Mongolian views on regional and global relations;

Expanding senior level exchanges in 2010;

Continuing defense and security cooperation between the armed forces of the two countries;

Status of the ongoing humanitarian and livestock crisis caused by extreme winter conditions in Mongolia;

Improving bilateral economic relationships, through channels such as the Transparency Agreement, Extractive Industries Transparency Initiative, and Open Skies - civil aviation agreement;

U.S. and Mongolian involvement in climate change issues; and

Continued cooperation in development, health, and cultural exchange. Source: The U.S. Department of State

BRITISH MPs RECALL UK-MONGOLIA TIES DURING DEBATE During a debate on Mongolia-UK relations in the British Parliament last week, Mr. John Grogan (Labor) referred to the declaration made at the time Prime Minister Tony Blair met the Mongolian President in April 2007, which said, ―Our long association has given the UK a special position in Mongolia, with the Mongolians looking to Britain for advice in their transition to democracy and a market economy.‖ Mongolia's current gross domestic product per head is only about USD2,500, but it is rising. The involvement of Rio Tinto in the Oyu Tolgoi project ―means that there is very much a British interest‖ in Mongolia. He said ―all political parties in Mongolia are determined to ensure that ordinary Mongolian people get a benefit‖ from the ―8,000 deposits of 440 different minerals across Mongolia‖ of which only 200 are currently being exploited. Mr. Grogan is chairman of the all-party group on Mongolia, and a co-chair of the British-Mongolian chamber of commerce. He expressed the hope that MIAT will introduce direct flights to Ulaanbaatar ―before too long‖, and recalled how Mongolia ―voted at the last minute for London to host the Olympics, rejecting the blandishments of Paris, and we are eternally grateful for that‖. Many institutions in Mongolia, he said, look to Britain for advice and examples. ―The old public service television channel has remodeled itself on the BBC, and is independent of Government. The Education Minister, who visited Britain only a few weeks ago, is very keen to introduce some of the Cambridge education board's standards to Mongolia.‖ Read more… Mr. Chris Bryant, Parliamentary Under-Secretary, Foreign and Commonwealth Office, offered all British help to ensure that ―the 3 million people who live in Mongolia have not just the structures of democracy, but the freedom of expression and association that go with them‖. He congratulated President Ts. Elbegdorj on his announcement of a moratorium on the use of the death penalty. He said the British Government was ―conscious that we need to do more to reinforce our relationship with Mongolia‖ and would continue to work so that ―the reciprocal interests between Mongolia and the United Kingdom are upheld‖. Source: TheyWorkForYou.com

MONGOLIA READY TO HELP SIX-PARTY TALKS RESUME Mr. D. Tsogtbaatar, State Secretary of the Ministry of Foreign Affairs and Trade, told a breakfast meeting of The Korea Society in New York City last week that sandwiched between two nuclear neighbors, Mongolia is an unassuming country and has sworn to stay nuclear free and made known it is no danger to anyone. This is Mongolia‘s highest contribution to its region and it could be an example to North Korea when that State decides to attempt change. Mongolia feels it can smooth the way to the six-party talks. As Mongolia embraced democracy, North Korea began to look down upon it and closed its embassy in 1999, citing economic conditions as the reason. Mongolia watched the South Korean Sunshine Policy towards North Korea and started to get more and more interested in what goes on in the Korean Peninsula and in Japan. North Korea is isolated by its own choice – but someone must get interested in North Korea. Mongolia does not think that the North Koreans are totally irrational. It also does not believe that sanctions will work – they only punish the people who then clam up and there is no progress. Mr. Tsogtbaatar also felt issues related to nuclear weapons could not be resolved by signing agreements as if one could take legal action against any later breach. Source: Sustainabilitank.info

VEGETARIANISM SPROUTS IN MONGOLIA An unlikely vegetarian movement is beginning to take root in Mongolia, where livestock outnumbers

people 14 to 1 and meat consumption tops 200 pounds per person a year. Some estimate that vegetarians number around 30,000 or 40,000, just over one per cent of the population. The first vegetarian restaurant in Mongolia, Ananda's Café, opened in 2006. Today more than 20 vegetarian and vegan restaurants pepper Ulaanbaatar, and a handful of others are scattered throughout the country. Ananda's has launched a catering service and another popular restaurant, Luna Blanca, now sells frozen faux-mutton dumplings in supermarkets. The restaurateurs, mostly Mongolians, belong to Christian- and Buddhist-influenced spiritual movements that promote vegetarianism. Mongolians are turning to vegetarianism mostly because of health. Increased trade with Russia and China and expanding internet access are providing more information about food and nutrition. Read more… Mongolia's brand of Buddhism does not emphasize sparing the lives of animals for food, probably out of pragmatism. Some in Mongolia consider meat the only real food. The staples here are often bland, relying heavily on flour, rice and meat, particularly mutton. Dishes that most Mongolians refer to as the "national foods", buuz and huushuur — mutton-filled dumplings steamed or fried, respectively — and tsuivan, steamed noodles mixed with meat and root vegetables, originated in China. Even more than meat, the traditional Mongolian diet depends on dairy products. One of the challenges of starting a vegetarian restaurant in Mongolia is getting people to realize that the menu isn't just dairy. The Mongolian terms are only subtly different; the phrases for dairy products (tsagaan idée) and vegetarian food (tsagaan khool) both translate to "white food". The menus of most vegetarian restaurants here use soya-based meat substitutes to mimic traditional Mongolian dishes. The food's originality, or lack thereof, is often beside the point. Source: The Christian Science Monitor

MONGOLIAN ACROBAT IN USA PLANS TRIP HOME AGAINST DOMESTIC VIOLENCE Thrilling, gravity-defying acrobatics and dazzling dance routines were how Southeast Minneapolis resident Haltarhuu Erdenechimeg (Chimgee) sought escape from domestic violence. Now 45, she was born in Mongolia, a country where such violence is commonplace and resources for survivors are scarce. Her late husband beat her so severely her jaw shattered. She saw an opportunity to escape when Ringling Brothers Barnum and Bailey Circus chose her to perform with them in America in 1991. Now, almost 20 years later, Chimgee plans to return to her homeland to share her story and offer hope through a series of circus performances and outreach speeches. "I want to tell women to stand up for themselves," she said. "We are strong. Be yourself; don't be afraid." She grew up with acrobatics, studying gymnastics and auditioning for the Mongolian State Circus School when she was 16. Out of 550 children auditioning, she was one of eight chosen to study at the school. Now, she is a head coach at Circus Juventas in St. Paul and beginning to fundraise for her trip back to Mongolia in August. Read more… Chimgee plans to travel for one month through the countryside, entertaining villages with circus acts and speaking to the villagers about the issue of domestic violence. She plans to fly into Ulaanbaatar with her family circus, Circus Manduhai. Her son, Tamir; her husband, Eron Woods; Stewart Lippe, a juggler from Florida; two students from Circus Juventas and five or six hired Mongolian performers will also be traveling with her. The group plans to rent vans and drive deep into the northern rural areas of Hovsgul, which is close to Russia. She has been coordinating with the National Center Against Violence, one of Mongolia's primary outreach centers. Mongolian women have few resources to turn to because the law against abuse is newly established, Chimgee said. Women used to have to pay money if they called the police and their husbands were put in jail. While there are some shelters, women in rural areas have little access to them. Though she is excited about the trip, she is concerned that some people won't like to hear what she has to say. She would like to hire a police officer or other security escort if she can afford it.

Source: www.circusjuventas.org

ZAMBIA, CHINA SIGN MINING COOPERATION DEAL Zambian President Rupiah Banda and his Chinese counterpart Hu Jintao last week signed a mining cooperation pact in Beijing that should bolster ties between Africa's largest copper producer and its biggest single investor. There was no figure put on the memorandum of understanding covering geology and mining, but China has already poured over USD1.2 billion into the southern African

state, and most of that has gone to the minerals sector. Four other deals signed at the same time covered construction of a road and an industrial park and other economic, technical and cultural cooperation. Opposition politicians in Zambia have not been as keen about the booming relationship, and say Chinese mining firms have created "slave labor" conditions at their Zambian ventures. In 2005, about 50 Zambians died in an explosives accident at a copper mine run by state-owned China Nonferrous Metals Industry. In later pay protests, five Zambians were shot and wounded by Chinese managers. Chinese mining firms say they offer reasonable wages and operate within Zambian labor laws. Last December China's commerce minister visited Lusaka and signed deals to fund a stadium and a conference center, as well as sending agricultural experts to boost the sector. Source: www.miningweekly.com

UNDERSTANDING BEIJING’S “GO GLOBAL” STRATEGY China has captured the imagination of chief executives and major companies around the world. To date the focus has largely been on selling in the domestic market, locating production facilities there or sourcing from Chinese factories. Yet with a growing tide of investments from Chinese enterprises moving abroad, all this is about to change. Foreign executives' "China strategy" can no longer focus only on competing in the Chinese market, but must also engage with Chinese enterprises in global markets. China's outward investment in 2009 was USD43.3 billion, according to estimates from the Ministry of Commerce, compared to an average of USD2.4 billion per year between 1990 and 2000. And authorities such as the Organization for Economic Cooperation and Development have suggested that these figures substantially underestimate the scale and range of a much larger "Go Global" strategy. Many of the most important deals, such as multibillion dollar loans for resources deals, don't even enter the foreign investment statistics. Such loans, plus aid tied to contracts for Chinese firms, have outstripped Chinese direct investment in Africa by a significant margin. The vast majority of this outbound investment has been in services, not natural resources. China Development Bank's acquisition of a minority stake in Britain's Barclays Bank, Industrial and Commercial Bank of China's purchase of a 20% stake in South Africa's Standard Bank, Bank of China's acquisition of Singapore Leasing, and China Construction Bank's acquisition of Bank of America (Asia) are just four recent investments in the financial sector. Enterprises such as China International Trust and Investment Company, China Overseas Shipping (Group) Company and China State Construction Engineering Corporation have been making outward investments in trade-related services, transportation, construction and others for years. The current investment boom is creating platforms to support even larger outbound investments in the future. Read more… China's growing corporate presence abroad is creating new competitive pressures for Western companies. Chinese enterprises enjoy many advantages over foreign rivals, including a lower cost of capital, lower wages at home and limited accountability to shareholders. They benefit from an unparalleled ability to mobilize the state on their behalf, as when they take advantage of Beijing's political linkages with developing countries to obtain preferential access to resources and business opportunities. In part, China's investment expansion is the natural next step for a country that has risen with unprecedented speed. But it is also part of a broad strategy by the Government and the Communist Party to strengthen Chinese enterprises in domestic and international markets, and to project soft and hard power on the international stage. This means that some enterprises will venture abroad even if it is commercially unprofitable for them to do so. Western companies will ignore this background at their peril, finding themselves competing with enterprises whose motivations won't always be purely commercial. To prepare for this new competition, executives need better strategies and better intelligence. It is not enough to track the investments of individual Chinese enterprises in particular geographic areas or product markets. Western companies must understand how overseas investments by Chinese enterprises fit into China's overall "internationalization" strategy, how the enterprises might be linked to other entities and how they're likely to measure success. A more sophisticated understanding of China's moves overseas will also highlight the opportunities open to foreign companies. Chinese enterprises are inexperienced when it comes to global markets and have limited international marketing and distribution capabilities. Those expanding abroad will need suppliers, advisors and partners, providing business opportunities for non-Chinese firms. Aiding Chinese enterprises abroad could be part of a strategy for developing better relations both with

corporate peers and with the government, and better access within China as a result. The key to meeting the challenges posed by Chinese enterprises will be what it has always been: understanding the nature of the competition and dealing with it in a comprehensive fashion. A piecemeal approach to China's internationalization is doomed to failure. Source: The Wall Street Journal Asia

NEW MONGOLIAN LAWS The following Law was published in a recent weekly Government bulletin. Unless otherwise decided by Parliament, it takes effect (10) days after publication.

Date Laws 02/26/2010 Law on Capital Assessment

Please visit BCM‘s website, Legislative Working Group, for a summary of new Mongolian laws. BCM members who wish complete versions of the laws and regulations in Mongolian language are welcome to call or email the BCM office: 332345 or info@bcmongolia.org.

ANNOUNCEMENTS 2nd ANNUAL MONGOLIA-ASIA INVESTMENT FORUM, MARCH 25, THE WESTIN BEIJING

Euromoney Conferences invites you to apply for your free place at the 2nd Annual Mongolia-Asia Investment Forum at the Westin Beijing on March 25.

The Panels: Investing in Mongolia‘s Mining Assets; Investing in Infrastructure to support the mining industry; Developing Mongolia‘s capital markets; Mining Supply Chain Management; Investing in Mongolia‘s property market. Click here for a copy of the latest agenda.

BCM will again partner with Euromoney on organizing this Forum, to be held in Beijing for the first time, to strengthen cooperation and trade relationships between Mongolia and the rest of Asia.

There are still a few opportunities left for exhibiting at the conference. Euromoney Conferences welcomes any organizations who wish to take advantage of this opportunity to showcase their company to this high profile audience. For further information please contact: Nick Wakefield on +852 2842 6939 or nick.wakefield@euromoneyasia.com

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SEARCH FOR FINANCIAL DIRECTOR

Areva Mongol is looking for a Financial Director, reporting directly to the CEO, in Ulaanbaatar. This is a new position in the company. The FD will be responsible for financial, accounting, tax, administration, and project funding issues. Contact: Mr. Eric de Seze, General Director and CEO, Areva Mongol, at 976-7011-0675 or eric.deseze@areva.com.

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“MM TODAY” ON MNB-TV 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 for 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM NewsWire.

SPONSORS

ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended February 26, 2010, trading activity on the Mongolian Stock Exchange (MSE) totaled 3.0 million shares with 35 companies traded. Total market value of transactions was MNT 1.1 billion. Total market capitalization of the 358 stock companies listed on the MSE was MNT 713.4 billion, and increased by MNT 45.1 billion or 6.7% from Feb 19, 2010.

The Top-20 Index increased by 645.44 points or 9.4% compared to the previous week, closing at 7535.52 points. MSE Composite Index increased by 293.73 points or 8.9% compared to the previous week, closing at 3,639.40 points.

Most active stocks traded were: Khukh gan (1,506,300 shares), Jenco tour bureau (1,035,900 shares), BD Sec (200,000 shares), Apu (118,200 shares), and Gobi (64,000 shares).

Major share price percentage gainers were: Tavan tolgoi (40.6%), Zoos goyol (40.4%), Bayangol ZB (19.0%), Gazar suljmel (15.0)), and Apu (15.0%).

Major share price percentage losers were: Eermel (13.9%), Talkh chikher (11.7%), Hai bi oil (10.0%), Darkhan nekhii (4.1), and Naco tulsh (4.0%).

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] January 31, 2010 *5.7% [source:NSOM] *Year-over-year (y-o-y)

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]

CURRENCY RATES – March 4, 2010

Currency name Currency Rate

US dollars USD 1,440.90

Euro EUR 1,961.71

Japanese yen JPY 16.23

British pound GBP 2,161.71

Hong Kong dollar HKD 185.60

Chinese yuan CNY 211.09

Russian ruble RUB 48.31

South Korean won KRW 1.26

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.